10-QPeriod: Q1 FY2022

Burlington Stores, Inc. Quarterly Report for Q1 Ended May 1, 2021

Filed May 27, 2021For Securities:BURL

Summary

Burlington Stores, Inc. reported a significant rebound in its first quarter of fiscal year 2021, ending May 1, 2021, with net sales surging by 174.5% year-over-year to $2.19 billion. This strong performance was largely driven by the company's recovery from the adverse impacts of COVID-19-related store closures in the prior year, which had resulted in a substantial net loss. The company achieved net income of $171.0 million, a stark contrast to the $333.7 million net loss reported in the same period of fiscal year 2020. Key operational metrics also showed considerable improvement. Comparable store sales increased by 20% compared to the first quarter of fiscal year 2019 (used as a baseline due to pandemic disruptions), indicating a healthy recovery in customer traffic and purchasing. The company's gross margin significantly expanded to 43.3% from 2.0% in the prior year, benefiting from reduced inventory charges and improved sales leverage. Burlington is strategically managing its inventory, aiming for leaner stock levels to enhance product freshness and faster turns. The company also continues its expansion strategy, opening 26 new stores in the quarter and planning for further growth, targeting a long-term store count of 2,000 locations.

Financial Highlights

47 data points
Beta

Revenue

$2.19B

43.4% Gross Margin

Net Income

$171.03M

7.8% Net Margin

EPS (Diluted)

$2.51

Total Assets

$7.05B

Cash & Equivalents

$1.53B

Free Cash Flow

$151.74M

Financial Statements
Beta
Revenue$2.19B
Cost of Revenue$1.24B
Gross Profit$951.11M
SG&A Expenses$664.83M
Operating Expenses$1.98B
Net Income$171.03M
EPS (Basic)$2.58
EPS (Diluted)$2.51
Shares Outstanding (Basic)66.40M
Shares Outstanding (Diluted)68.03M

Key Highlights

  • 1Net sales dramatically increased by 174.5% to $2.19 billion compared to the prior year, recovering from COVID-19 impacts.
  • 2The company returned to profitability, reporting a net income of $171.0 million, a significant improvement from a net loss of $333.7 million in the same period last year.
  • 3Comparable store sales showed a strong rebound, increasing by 20% compared to the first quarter of fiscal year 2019.
  • 4Gross margin expanded significantly to 43.3% from 2.0% in the prior year, driven by higher sales and reduced inventory markdowns.
  • 5The company opened 26 new stores during the quarter, continuing its strategic expansion plans.
  • 6Cash flow from operations turned positive, reaching $223.4 million, a substantial improvement from a negative $271.7 million in the prior year.
  • 7Burlington ended the quarter with a strong liquidity position, holding $1.53 billion in cash and cash equivalents and having $549.5 million available under its ABL Line of Credit.

Frequently Asked Questions

The primary driver was the recovery from the severe impact of COVID-19 in the prior year's first quarter. In Q1 FY2020, Burlington experienced widespread store closures, leading to a substantial net loss. The strong performance in Q1 FY2021 reflects the reopening of stores and a rebound in consumer spending, compounded by a 20% increase in comparable store sales compared to the pre-pandemic Q1 FY2019 baseline.

Burlington is implementing a strategy of operating with leaner inventories, aiming for higher inventory turns and reduced markdowns. This strategy, along with the absence of significant inventory impairment charges seen in the prior year ($271.9 million), contributed to a substantial increase in gross margin to 43.3% in Q1 FY2021, up from 2.0% in Q1 FY2020. The company is also building up reserve merchandise to better chase sales trends.

Burlington continues to pursue an aggressive store expansion strategy, opening 26 new stores in Q1 FY2021 and planning for 75 net new stores in fiscal year 2021. The company has identified opportunities to operate up to 2,000 stores long-term, focusing on a market-driven and financially disciplined real estate strategy that prioritizes attractive unit economics and returns on capital.

In response to COVID-19 uncertainties, Burlington took steps to enhance financial flexibility by issuing convertible and secured notes in April 2020 and utilizing its ABL Line of Credit. While debt levels remain significant, the company reported $1.53 billion in cash and cash equivalents and $549.5 million available under its ABL Line of Credit as of May 1, 2021, indicating a strong liquidity position. The company also announced plans to call its $300 million Secured Notes, expecting a pre-tax debt extinguishment charge of approximately $30 million in Q2 FY2021.