BURLINGTON, N.J., March 07, 2024 (GLOBE NEWSWIRE) — Burlington Stores, Inc. (NYSE: BURL), a nationally recognized off-price retailer of high-quality, branded apparel, footwear, accessories, and merchandise for the home at everyday low prices, today announced its results for the 14 weeks and 53 weeks ended February 3, 2024 and, for purposes of comparison, for the 13 weeks and 52 weeks ended January 27, 2024. The comparable prior-year periods included 13 weeks and 52 weeks, respectively.
Michael O’Sullivan, CEO, stated, “Our performance in the fourth quarter exceeded our guidance. On a 13-week basis, total sales increased 10%, comparable store sales grew 2%, adjusted operating margin expanded by 110 basis points, and adjusted EPS increased 25%.”
Mr. O’Sullivan continued, “This completed a strong year for our business. On a 52-week basis, comparable store sales grew 4%, adjusted operating margin improved 130 basis points, and adjusted EPS increased 46%. We hit a major milestone, opening our 1000th store, and we significantly strengthened our pipeline for new store openings through the previously announced acquisition of Bed Bath & Beyond leases.”
Mr. O’Sullivan continued, “Looking ahead to 2024, we remain confident in the comparable store sales and margin assumptions we shared in November. There is a lot of uncertainty in the external environment, so we are planning our business flexibly, and we are ready to chase if the sales trend is stronger.”
Mr. O’Sullivan continued, “Although it makes sense to be cautious in the short term, we are very excited about the long-term outlook for our business. As discussed in November, we believe we have the potential to reach $16 billion in total sales and $1.6 billion in adjusted operating income in the next five years.”
Fiscal 2023 Fourth Quarter Operating Results
- Total sales increased 14% on a 14-week basis compared to the 13-week period last year to $3,121 million. On a 13-week basis, total sales increased 9% to $2,983 million, while comparable store sales increased 2%.
- Gross margin on a 14-week basis was $1,333 million. On a 13-week basis, gross margin expanded by 190 basis points to 42.6% versus last year’s gross margin of 40.7%. On a 13-week basis, merchandise margins increased 140 basis points and freight improved by 50 basis points.
- Product sourcing costs, which are included in selling, general and administrative expenses (SG&A), were $210 million on a 14-week basis. On a 13-week basis, product sourcing costs were $197 million vs. $187 million last year. Product sourcing costs include the costs of processing goods through the Company’s supply chain and buying costs.
- SG&A was $931 million on a 14-week basis. Adjusted SG&A, on a 13-week basis, was 22.7% as a percentage of net sales vs. 21.7% last year.
- The effective tax rate was 27.5% on a 14-week basis vs. 26.2% during the 13-week period last year. On a 13-week basis, the Adjusted Effective Tax Rate was 25.7% vs. 25.3% last year.
- Net income was $227 million, or $3.53 per share on a 14-week basis vs. $185 million, or $2.83 per share for the 13-week period last year. On a 13-week basis, Adjusted Net Income, excluding approximately $4 million of expenses, net of tax, associated with the acquisition of Bed Bath & Beyond leases, was $238 million, or $3.69 per share vs. $194 million, or $2.96 per share last year.
- Diluted weighted average shares outstanding amounted to 64.4 million during the quarter compared with 65.4 million during the fourth quarter of Fiscal 2022.
- Adjusted EBITDA, on a 13-week basis, excluding approximately $6 million of expenses associated with the acquisition of Bed Bath & Beyond leases, was $412 million vs. $342 million last year, an increase of 130 basis points as a percentage of sales. Adjusted EBIT, on a 13-week basis, excluding approximately $6 million of expenses associated with the acquisition of Bed Bath & Beyond leases, was $330 million vs. $274 million last year, an increase of 110 basis points as a percentage of sales.
Full Year Fiscal 2023 Results
- On a 53-week basis, total sales increased 12% compared to the 52-week period last year. Net income increased 48%, or $110 million, to $340 million, or $5.23 per share vs. $3.49 per share last year, an increase of 50%.
- On a 52-week basis, total sales increased 10% compared to the same period last year. Excluding approximately $18 million of expenses associated with the acquisition of Bed Bath & Beyond leases, Adjusted EBIT increased 39%, or $166 million, to $596 million, Adjusted Net Income increased 44%, or $124 million, to $405 million, and Adjusted EPS was $6.24 vs. $4.26, an increase of 46%.
Inventory
- Merchandise inventories at Fiscal 2023 year-end were $1,088 million vs. $1,182 million at the end of Fiscal 2022. Comparable store inventories decreased 5%. Reserve inventory was 39% of total inventory at the end of Fiscal 2023 compared to 48% at the end of Fiscal 2022.
Liquidity and Debt
- The Company ended the fourth quarter of Fiscal 2023 with $1,634 million in liquidity, comprised of $925 million in unrestricted cash and $709 million in availability on its ABL facility. The Company ended the fourth quarter with $1,409 million in outstanding total debt, including $937 million on its term loan facility, $453 million in convertible notes, and no borrowings on the ABL facility.
Common Stock Repurchases
- During the fourth quarter the Company repurchased 605,311 shares of its common stock under its share repurchase program for $103 million. As of the end of the fourth quarter, the Company had $500 million remaining on its current share authorization, which expires in August 2025.
Outlook
For Fiscal 2024 (the 52-weeks ending February 1, 2025), the Company expects:
- Total sales to increase in the range of 9% to 11% on top of the 10% increase for the 52-weeks ended January 27, 2024; this assumes comparable store sales will increase in the range of 0% to 2%, on top of the 4% increase for the 52-weeks ended January 27, 2024;
- Capital expenditures, net of landlord allowances, to be approximately $750 million;
- To open approximately 100 net new stores;
- Depreciation & amortization to be approximately $350 million;
- Adjusted EBIT margin to increase in the range of 10 to 50 basis points versus the 52 weeks ended January 27, 2024; this Adjusted EBIT margin increase excludes approximately $9 million of anticipated expenses related to the acquired Bed Bath & Beyond leases in Fiscal 2024 versus $18 million incurred in Fiscal 2023;
- Net interest expense to be approximately $43 million;
- The Adjusted Effective Tax Rate to be approximately 27%; and
- Adjusted EPS in the range of $7.00 to $7.60, which excludes $0.11, net of tax, of anticipated expenses, associated with the acquired Bed Bath & Beyond leases. This assumes a fully diluted share count of approximately 64 million shares.
For the first quarter of Fiscal 2024 (the 13-weeks ending May 4, 2024), the Company expects:
- Comparable store sales to increase 0% to 2%, on top of the 4% increase during the first quarter of Fiscal 2023;
- Adjusted EBIT margin to increase in the range of 20 to 60 basis points; this Adjusted EBIT margin increase excludes approximately $8 million of anticipated expenses related to the acquired Bed Bath & Beyond leases;
- An Adjusted Effective Tax Rate of approximately 29%; and
- Adjusted EPS in the range of $0.95 to $1.10, as compared to $0.84 of Adjusted EPS last year; this excludes $0.09, net of tax, of anticipated expenses related to the acquired Bed Bath & Beyond leases.
The Company has not presented a quantitative reconciliation of the forward-looking non-GAAP financial measures set out above to their most comparable GAAP financial measures because it would require the Company to create estimated ranges on a GAAP basis, which would entail unreasonable effort. Adjustments required to reconcile forward-looking non-GAAP measures cannot be predicted with reasonable certainty but may include, among others, costs related to debt amendments, loss on extinguishment of debt, and impairment charges, as well as the tax effect of such items. Some or all of those adjustments could be significant.
Note Regarding Non-GAAP Financial Measures
The foregoing discussion of the Company’s operating results includes references to Adjusted SG&A, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Share (or Adjusted EPS), Adjusted EBIT (or Adjusted Operating Income), Adjusted EBIT Margin (Adjusted Operating Margin), and Adjusted Effective Tax Rate. The Company believes these supplemental measures are useful in evaluating the performance of its business and provide greater transparency into its results of operations. In particular, the Company believes that excluding certain items that may vary substantially in frequency and magnitude from what it considers to be its core operating results are useful supplemental measures that assist investors in evaluating its ability to generate earnings and leverage sales, and to more readily compare core operating results between past and future periods. These non-GAAP financial measures are defined and reconciled to the most comparable GAAP measures later in this document.
About Burlington Stores, Inc.
Burlington Stores, Inc., headquartered in New Jersey, is a nationally recognized off-price retailer with Fiscal 2023 net sales of $9.7 billion. The Company is a Fortune 500 company and its common stock is traded on the New York Stock Exchange under the ticker symbol “BURL.” The Company operated 1007 stores as of the end of Fiscal 2023, in 46 states, Washington D.C. and Puerto Rico, principally under the name Burlington Stores. The Company’s stores offer an extensive selection of in-season, fashion-focused merchandise at up to 60% off other retailers’ prices, including women’s ready-to-wear apparel, menswear, youth apparel, baby, beauty, footwear, accessories, home, toys, gifts and coats.
For more information about the Company, visit www.burlington.com.
