01—Abstract
Summary
Summary of the 10-Q filed November 21, 2023. Cited figures are marked; the original filing is the authoritative source.
Burlington Stores, Inc. reported a strong third quarter for fiscal year 2023, with net sales increasing by 12.2% to $2,284.7 milliona, driven by a 6% rise in comparable store sales and contributions from new store openings.
The company demonstrated improved profitability, with net income rising to $48.6 millionb from $16.8 million in the prior year quarter. This performance was supported by an expansion in gross margin to 43.2% from 41.2% a year ago, attributed to better merchandise margins and lower freight costs. For the nine-month period, net sales grew 10.8% to $6,587.9 million, with comparable store sales up 5%.
Net income significantly increased to $112.2 millionc from $44.9 million in the prior year period. The company continued its store expansion, adding 65 new stores (including 9 relocations) during the nine-month period, bringing the total store count to 977. Burlington also successfully refinanced some of its debt by exchanging older convertible notes for new ones with a lower interest rate, incurring some extinguishment charges but improving its debt profile.
02—Key points
Key Highlights
- Net sales for the third quarter increased by 12.2% to $2.28 billion, with comparable store sales up 6%.
- Net income for the third quarter more than doubled, reaching $48.6 million compared to $16.8 million in the prior year.
- Gross margin improved to 43.2% from 41.2% in the prior year's third quarter, driven by higher merchandise margins and reduced freight costs.
- The company expanded its store footprint, opening 65 new stores (including 9 relocations) during the first nine months of the fiscal year, ending with 977 locations.
- Inventory levels decreased year-over-year to $1.33 billion from $1.45 billion, reflecting better inventory management.
- Burlington successfully exchanged a portion of its 2025 Convertible Notes for new 2027 Convertible Notes, reducing future interest expense despite incurring debt extinguishment charges.
- The company reported strong growth in Adjusted Net Income and Adjusted EBITDA, indicating improved operational performance excluding certain charges.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 21, 2023Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $2.29B$2.04B | +12.2% |
| Cost of Revenue | $1.30B$1.20B | +8.3% |
| Gross Profit | $991.54M$842.56M | +17.7% |
| SG&A Expenses | $826.82M$726.93M | +13.7% |
| Operating Expenses | $2.22B$2.02B | +10.1% |
| Net Income | $48.55M$16.78M | +189.3% |
| EPS (Basic) | $0.75$0.26 | +188.5% |
| EPS (Diluted) | $0.75$0.26 | +188.5% |
| Shares Outstanding (Basic) | 64.71M65.36M | −1.0% |
| Shares Outstanding (Diluted) | 64.80M65.50M | −1.1% |
05—Questions
Frequently Asked Questions
What drove the significant increase in net income during the third quarter?
The significant increase in net income was primarily driven by a substantial rise in net sales, which grew by 12.2% year-over-year, coupled with an expansion in the gross margin rate. Improved merchandise margins and decreased freight costs contributed to the gross margin improvement, while higher sales volumes also helped absorb fixed costs more effectively.
How is Burlington managing its inventory levels?
Burlington has focused on operating with leaner inventories, which decreased to $1.33 billion at the end of the third quarter compared to $1.45 billion in the prior year. The company aims to improve inventory turns, reduce markdowns, and offer customers a higher mix of fresh receipts by managing inventory more effectively, including strategic use of reserve merchandise to chase sales trends.
What is the company's strategy for store expansion?
Burlington is pursuing a market-focused and financially disciplined real estate strategy, with a long-term goal of operating 2,000 stores in the U.S. They continue to open new stores, with 65 net new openings (including relocations) in the first nine months of fiscal 2023. The company focuses on unit economics, returns, and enhancing the store experience through strategic relocations and downsizes to optimize store performance and reduce costs.
How has the company managed its debt structure recently?
Burlington proactively managed its debt by exchanging a significant portion of its higher-interest 2025 Convertible Notes for new 2027 Convertible Notes with a lower interest rate (1.25% vs. 2.25%). While this resulted in debt extinguishment charges of $13.6 million in the third quarter and $38.3 million year-to-date, it is expected to lower future interest expenses. The company also amended its Term Loan Facility to transition from LIBOR to SOFR-based rates.
06—Continue