Why is the Adjusted EPS in the headline ($1.42) different from the reconciliation table in the filing ($1.35)?

The headline figure excludes approximately $4 million (net of tax) of expenses tied to the acquired Bed Bath & Beyond leases, which lifts Adjusted Net Income to about $91 million and Adjusted EPS to $1.42 on 64.3 million diluted shares. The reconciliation table in the filing reconciles only net favorable lease costs, impairment charges, and tax effects, producing Adjusted Net Income of $86.8 million and $1.35 per share. Investors should be aware of this difference when comparing figures across the release.

How much of the margin improvement is sustainable?

Management said roughly 40 basis points of the 170 basis point Adjusted EBIT margin gain, or about $0.10 of Adjusted EPS, came from expense timing that is not expected to repeat in the same way. The remaining improvement was driven by gross margin gains from lower markdowns and by supply chain expense leverage. The company's full-year guidance calls for an Adjusted EBIT margin increase of 40 to 60 basis points, which suggests management expects the benefits to moderate over the year.

Is the sales slowdown in early 2024 a concern?

February was weak, which management attributed to disruptive weather and delayed tax refunds. Comparable store sales then rose 4% in March and April combined, which points to recovery. However, management kept comparable sales guidance at 0-2% and said it is prepared to 'chase' if underlying trends improve, reflecting continued uncertainty in consumer demand and the external environment.

What does the inventory decline mean for the business?

Merchandise inventories fell 7% year over year to $1.14 billion, and comparable store inventories fell 6%. Reserve inventory, which is bought opportunistically for future store or season use, declined to 40% of total inventory from 44%. This lower reserve share generally suggests tighter buying and less markdown exposure, which supports the gross margin improvement. The trade-off is that lower inventory can limit flexibility if demand strengthens and the company needs to chase sales.

What are the company's near-term capital allocation and balance sheet priorities?

The company ended the quarter with $742 million in cash, $779 million of undrawn ABL availability, and $1.405 billion of total debt, including $931 million on its Term Loan and $453 million of Convertible Notes. It repurchased shares worth $63 million in the quarter, with $442 million remaining on its authorization. Full-year guidance includes approximately $750 million in net capital expenditures for about 100 net new stores, implying continued investment in growth alongside shareholder returns.

BURL 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed May 30, 2024. Cited figures are marked; the original filing is the authoritative source.

Burlington Stores (BURL) reported Q1 fiscal 2024 results (13 weeks ended May 4, 2024) that beat on profitability and raised full-year profit guidance, even though sales growth was modest.

Total revenue rose 11% to $2.36 billion^a, and comparable store sales grew 2%, at the high end of guidance. The quarter started slowly in February, which management attributed to weather and delayed tax refunds, but comparable sales rose 4% in March and April combined. GAAP net income was $79 million ($1.22 per diluted share), versus $33 million ($0.50) a year earlier.

Adjusted EPS was $1.42^b, up 68%, and the adjusted EBIT margin expanded 170 basis points. Management noted that about 40 basis points of that margin gain, or roughly $0.10 of Adjusted EPS, came from expense timing rather than structural improvement. The main drivers were a 120 basis point gross margin improvement, with merchandise margin up 90 basis points on lower markdowns, and strong supply chain leverage.

The balance sheet and guidance also drew attention. Merchandise inventories fell 7% year over year to $1.14 billion^c, and comparable store inventories fell 6%, with reserve inventory at 40% of the total versus 44% a year earlier. Liquidity was $1.52 billion, including $742 million in cash and $779 million of ABL availability.

Total debt was $1.405 billion^d, with no ABL borrowings. Management raised FY2024 Adjusted EPS guidance to $7.35-$7.75, an 18-24% increase over FY2023 on a 52-week basis, and kept comparable sales guidance at 0-2%, citing macro uncertainty.

Q2 Adjusted EPS guidance is $0.83-$0.93 against $0.63 last year. Investors should note that the headline Adjusted EPS of $1.42 includes approximately $4 million of Bed Bath & Beyond lease-related expenses being excluded, and the reconciliation table in the filing shows $1.35 because it does not make that adjustment.

02—Key points

Key Highlights

Total sales rose 11% to $2,357 million (net sales), with comparable store sales up 2%, at the high end of guidance; comparable sales grew 4% in March and April combined after a weak February.
GAAP net income was $79 million, or $1.22 per diluted share, versus $0.50 a year earlier. Adjusted EPS was $1.42, up 68%, excluding about $4 million of Bed Bath & Beyond lease-related expenses.
Gross margin rose 120 basis points to 43.5%, driven by a 90 basis point merchandise margin gain from lower markdowns and a 30 basis point freight improvement.
Adjusted EBIT margin expanded 170 basis points, but about 40 basis points (around $0.10 of Adjusted EPS) reflected expense timing, which management flagged as non-recurring in nature.
FY2024 Adjusted EPS guidance was raised to $7.35-$7.75 (18-24% growth), while comparable sales guidance was held at 0-2%, signaling caution on the external environment.
Inventory fell 7% to $1.14 billion and reserve inventory dropped to 40% of total from 44%, a sign of cleaner inventory positioning heading into the year.
Liquidity was $1.52 billion ($742 million cash plus $779 million ABL availability) against $1.405 billion of total debt; the company repurchased 312,238 shares for $63 million with $442 million of authorization remaining.

03—Questions

Frequently Asked Questions

Why is the Adjusted EPS in the headline ($1.42) different from the reconciliation table in the filing ($1.35)?
The headline figure excludes approximately $4 million (net of tax) of expenses tied to the acquired Bed Bath & Beyond leases, which lifts Adjusted Net Income to about $91 million and Adjusted EPS to $1.42 on 64.3 million diluted shares. The reconciliation table in the filing reconciles only net favorable lease costs, impairment charges, and tax effects, producing Adjusted Net Income of $86.8 million and $1.35 per share. Investors should be aware of this difference when comparing figures across the release.
How much of the margin improvement is sustainable?
Management said roughly 40 basis points of the 170 basis point Adjusted EBIT margin gain, or about $0.10 of Adjusted EPS, came from expense timing that is not expected to repeat in the same way. The remaining improvement was driven by gross margin gains from lower markdowns and by supply chain expense leverage. The company's full-year guidance calls for an Adjusted EBIT margin increase of 40 to 60 basis points, which suggests management expects the benefits to moderate over the year.
Is the sales slowdown in early 2024 a concern?
February was weak, which management attributed to disruptive weather and delayed tax refunds. Comparable store sales then rose 4% in March and April combined, which points to recovery. However, management kept comparable sales guidance at 0-2% and said it is prepared to 'chase' if underlying trends improve, reflecting continued uncertainty in consumer demand and the external environment.
What does the inventory decline mean for the business?
Merchandise inventories fell 7% year over year to $1.14 billion, and comparable store inventories fell 6%. Reserve inventory, which is bought opportunistically for future store or season use, declined to 40% of total inventory from 44%. This lower reserve share generally suggests tighter buying and less markdown exposure, which supports the gross margin improvement. The trade-off is that lower inventory can limit flexibility if demand strengthens and the company needs to chase sales.
What are the company's near-term capital allocation and balance sheet priorities?
The company ended the quarter with $742 million in cash, $779 million of undrawn ABL availability, and $1.405 billion of total debt, including $931 million on its Term Loan and $453 million of Convertible Notes. It repurchased shares worth $63 million in the quarter, with $442 million remaining on its authorization. Full-year guidance includes approximately $750 million in net capital expenditures for about 100 net new stores, implying continued investment in growth alongside shareholder returns.

04—Continue

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