10-QPeriod: Q1 FY2024

Burlington Stores, Inc. Quarterly Report for Q1 Ended Apr 29, 2023

Filed May 25, 2023For Securities:BURL

Summary

Burlington Stores, Inc. reported a strong first quarter for fiscal year 2023, with net sales increasing by 10.8% to $2.13 billion year-over-year. This growth was driven by a 4% increase in comparable store sales and the contribution of new store openings. Net income more than doubled to $32.7 million from $16.2 million in the prior year's first quarter, signaling improved profitability. The company also demonstrated effective cost management, with cost of sales as a percentage of net sales decreasing due to lower freight costs, and selling, general, and administrative expenses showing leverage. The company continues to execute its growth strategy, including opening new stores and enhancing its merchandising and store experience, while maintaining a disciplined real estate strategy focused on unit economics. Burlington Stores highlights its focus on driving comparable store sales growth through agile trend chasing, leaner inventories, and merchandising investments.

Financial Highlights

47 data points
Beta

Revenue

$2.14B

42.4% Gross Margin

Net Income

$32.75M

1.5% Net Margin

EPS (Diluted)

$0.50

Total Assets

$7.00B

Cash & Equivalents

$532.44M

Free Cash Flow

-$173.64M

Financial Statements
Beta
Revenue$2.14B
Cost of Revenue$1.23B
Gross Profit$905.31M
SG&A Expenses$755.63M
Operating Expenses$2.09B
Net Income$32.75M
EPS (Basic)$0.50
EPS (Diluted)$0.50
Shares Outstanding (Basic)64.95M
Shares Outstanding (Diluted)65.29M

Key Highlights

  • 1Net sales increased by 10.8% to $2.13 billion in Q1 FY2023, driven by a 4% increase in comparable store sales and new store openings.
  • 2Net income more than doubled to $32.7 million in Q1 FY2023, up from $16.2 million in the prior year's quarter.
  • 3Gross margin percentage improved to 42.3% from 41.0% year-over-year, primarily due to decreased freight costs.
  • 4The company opened 13 new stores (including 4 relocations) and closed 3 stores in Q1 FY2023, bringing the total store count to 933.
  • 5Inventory levels decreased slightly year-over-year to $1.23 billion, reflecting a reduction in reserve inventory and an increase in comparable store inventory.
  • 6The company repurchased $51.4 million of its common stock during Q1 FY2023 under its $500 million share repurchase program, with $295.9 million remaining authorization.
  • 7Adjusted Net Income increased by $18.9 million to $55.0 million, indicating strong underlying operational performance beyond GAAP net income.

Frequently Asked Questions

Burlington's sales growth in the first quarter was primarily driven by a combination of a 4% increase in comparable store sales and incremental sales from new store openings. This indicates a healthy increase in customer traffic and spending at existing stores, as well as successful expansion of their store footprint.

Burlington demonstrated effective cost management. The cost of sales as a percentage of net sales decreased due to lower freight costs, although this was partially offset by lower merchandise margins due to increased markdowns. Selling, general, and administrative expenses also showed leverage as a percentage of net sales, partly due to reduced litigation costs compared to the prior year, despite increases in product sourcing and store payroll.

Burlington is focusing on operating with leaner inventories compared to historical levels. This strategy aims to ensure customers find a higher mix of fresh receipts, drive faster inventory turns, reduce markdowns, and improve the overall shopping experience. While total inventory decreased year-over-year, comparable store inventory increased, and they are managing reserve inventory levels strategically.

Burlington's key strategic initiatives include driving comparable store sales growth through agile trend chasing and leaner inventories, investing in merchandising capabilities, enhancing existing and introducing new product categories, and expanding and enhancing their retail store base through a market-focused and financially disciplined real estate strategy. They also aim to improve operating margins through operational flexibility and optimizing markdowns.