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Burlington Stores, Inc. 8-K Report, Financial Results (Nov 26, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed November 26, 2024
Period End
November 26, 2024
Security
BURL
In the record · 2016–202610-K1110-Q328-K106

BURL filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 106 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Jul ’18Jul ’18
  2. Leadership change8-K · Jul ’20Jul ’20
  3. Material agreement8-K · Jul ’22Jul ’22
  4. Leadership change8-K · Aug ’26Aug ’26

01—Abstract

Summary

Summary of the 8-K filed November 26, 2024. Cited figures are marked; the original filing is the authoritative source.

Burlington Stores (BURL) reported third-quarter fiscal 2024 results for the 13 weeks ended November 2, 2024: total sales rose 11% to $2,526 milliona on top of 12% growth a year earlier, but comparable store sales grew only 1%.

Management attributed the comp slowdown largely to unseasonably warm weather from mid-September, which hit Cold Weather categories (about 15% of Q3 sales). Excluding those categories, comps rose 4%, consistent with the underlying trend since March. Profitability improved meaningfully: GAAP net income was $91 millionb ($1.40 diluted EPS), and Adjusted EPS rose 41% to $1.55.

Adjusted EBIT margin expanded 80 basis points, driven by a 70 basis point gross margin improvement (lower markdowns and higher markup) and leverage on supply chain costs. Inventory is a point of attention. Merchandise inventories rose 8% year over year to $1,441 millionc while comparable store inventories fell 2%, and reserve inventory climbed to 32% of the total from 30%.

Management says the position leaves the company well positioned for the holidays and that November is off to a good start, but it is planning the fourth quarter cautiously, maintaining its 0% to 2% comp guidance. Management also said it is ready to chase inventory if demand proves stronger. On the balance sheet, liquidity was $1,705 milliond, including $858 million of cash.

The company upsized its Term Loan to $1,250 million, cut the SOFR margin by 36 basis points, and extended maturity to September 2031. Full-year FY24 Adjusted EPS guidance was raised to $7.76-$7.96, while the Q4 Adjusted EPS outlook of $3.55-$3.75 implies a decline from $3.69 last year. Q4 Adjusted EBIT margin is guided down 50 to 80 basis points, so the second-half margin story is weaker than the year-to-date results suggest.

02—Key points

Key Highlights

  1. Total sales grew 11% to $2,526 million, but comparable store sales rose only 1%, against 6% last year. Excluding Cold Weather categories (about 15% of Q3 sales), comps grew 4%.
  2. GAAP net income was $91 million ($1.40 diluted EPS), versus $49 million ($0.75) a year earlier. Adjusted EPS rose 41% to $1.55 from $1.10.
  3. Gross margin rate increased 70 basis points to 43.9%, driven by 50 basis points of merchandise margin improvement from lower markdowns and higher markup, plus 20 basis points from freight.
  4. Adjusted EBIT margin expanded 80 basis points in Q3, and nine-month Adjusted EBIT rose to $395 million from $266 million.
  5. Merchandise inventories rose 8% to $1,441 million while comparable store inventories fell 2%. Reserve inventory increased to 32% of the total from 30%, a potential margin risk if promotions are needed.
  6. FY24 Adjusted EPS guidance was raised to $7.76-$7.96, but Q4 Adjusted EPS guidance of $3.55-$3.75 implies a decline from $3.69 last year, and the Q4 comp guidance is 0% to 2%.
  7. Liquidity stood at $1,705 million, with $858 million in cash and $847 million available on the ABL facility. Total debt was $1,714 million, and the company repurchased $56 million of stock in the quarter.

03—Questions

Frequently Asked Questions

  1. Why did comparable store sales slow so sharply in the third quarter?

    Management said comps started strongly, but warmer temperatures from mid-September onward slowed sales, particularly in Cold Weather categories that make up about 15% of Q3 sales. Excluding those categories, comps grew 4%, which management described as consistent with the underlying trend since March.

  2. Is the inventory build a concern for investors?

    Inventories rose 8% while comparable store inventories fell 2%, and reserve inventory rose to 32% of the total from 30%. Management said it proactively controlled receipts, especially of Cold Weather merchandise, and is 'well poised' for the holidays. Investors should watch whether the reserve inventory converts to sales at full margin or requires markdowns in the fourth quarter.

  3. What does the guidance imply for the fourth quarter?

    Q4 total sales are guided up 5% to 7%, with comps of 0% to 2%. Adjusted EBIT margin is expected to fall 50 to 80 basis points, and Adjusted EPS of $3.55-$3.75 compares with $3.69 last year. The full-year Adjusted EPS guidance of $7.76-$7.96 was raised, but the Q4 outlook implies margin pressure as the year closes.

  4. How strong is Burlington's balance sheet and financing position?

    Liquidity was $1,705 million at quarter end, including $858 million in cash and $847 million in ABL availability, with no ABL borrowings. The company upsized its Term Loan to $1,250 million, reduced the SOFR margin by 36 basis points, and extended maturity to September 2031. Total debt was $1,714 million, including $453 million of Convertible Notes.

  5. Are the adjusted non-GAAP results comparable to GAAP results?

    The Q3 adjustments were modest. Net favorable lease costs of $2.9 million, a $1.4 million loss on debt extinguishment, $4.6 million of debt amendment costs, $3.0 million of impairment charges, and $0.6 million of litigation costs were excluded. GAAP EPS of $1.40 compares with Adjusted EPS of $1.55. The company does not provide a GAAP reconciliation for its forward-looking non-GAAP guidance and warns that adjustments could be significant.

04—Continue

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