10-QPeriod: Q1 FY2021

Burlington Stores, Inc. Quarterly Report for Q1 Ended May 2, 2020

Filed May 29, 2020For Securities:BURL

Summary

Burlington Stores, Inc. reported a significant net loss of $333.7 million for the first quarter of fiscal year 2020, a sharp contrast to the $77.8 million net income in the prior year. This downturn is primarily attributable to the widespread temporary closure of all stores and distribution centers due to the COVID-19 pandemic, which began in March 2020. Net sales plummeted by 51.0% to $798.0 million. The company took aggressive measures to preserve liquidity, including borrowing $400 million on its revolving credit facility and issuing $805 million in convertible senior notes and $300 million in senior secured notes. Despite the significant financial hit from the pandemic, Burlington is actively managing its operational and financial resilience. The company has begun reopening stores, implementing safety protocols, and managing operating expenses closely. A substantial inventory markdown of $271.9 million was recognized due to aged merchandise resulting from store closures. While the near-term outlook remains uncertain due to the ongoing pandemic, the company is focused on managing its liquidity and preparing for a gradual return to normalized operations.

Financial Highlights

48 data points
Beta

Revenue

$798.00M

2.0% Gross Margin

Net Income

-$333.73M

-41.8% Net Margin

EPS (Diluted)

$-5.09

Total Assets

$6.64B

Cash & Equivalents

$1.49B

Free Cash Flow

-$334.20M

Financial Statements
Beta
Revenue$798.00M
Cost of Revenue$782.18M
Gross Profit$15.81M
SG&A Expenses$485.09M
Operating Expenses$1.34B
Net Income-$333.73M
EPS (Basic)$-5.09
EPS (Diluted)$-5.09
Shares Outstanding (Basic)65.57M
Shares Outstanding (Diluted)65.57M

Key Highlights

  • 1Net loss of $333.7 million for Q1 FY2020, compared to a net income of $77.8 million in Q1 FY2019.
  • 2Net sales decreased by 51.0% to $798.0 million due to widespread store closures caused by the COVID-19 pandemic.
  • 3Total assets grew to $6.64 billion as of May 2, 2020, largely driven by increased cash and cash equivalents.
  • 4Total liabilities increased significantly to $5.96 billion, primarily due to new debt issuances totaling $1.105 billion.
  • 5The company borrowed $400 million under its ABL Line of Credit and issued $805 million in Convertible Notes and $300 million in Secured Notes to enhance financial flexibility.
  • 6Recognized a substantial inventory markdown of $271.9 million due to aged inventory resulting from store closures.
  • 7Implemented significant cost-saving measures, including executive salary reductions and the suspension of the share repurchase program.

Frequently Asked Questions

The primary driver was the unprecedented impact of the COVID-19 pandemic. Widespread temporary store closures beginning in March 2020 severely impacted sales and led to a significant net loss.

Burlington took several steps to bolster liquidity. These included drawing $400 million on its asset-based revolving credit facility and issuing $805 million in convertible senior notes and $300 million in senior secured notes. The company also focused on managing operating expenses and suspended its share repurchase program.

As of the filing date, approximately 400 stores had reopened, with plans for most remaining stores to reopen by mid-June 2020. The company has implemented safety protocols and is monitoring the situation closely. However, the duration and extent of the pandemic's impact remain uncertain.

The extended store closures resulted in aged inventory. Consequently, Burlington recognized inventory markdowns of $271.9 million during the quarter, which significantly impacted the cost of sales and gross margin.