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 third quarter ended October 28,
2023.
Michael O’Sullivan, CEO, stated, “We were pleased
with our performance during the third quarter. We had a strong
trend in August and September, and this drove 6% comparable store
sales growth for the full quarter despite the negative impact of
unseasonably warm weather in October. This trend together with
strong merchandise margins delivered earnings at the high end of
expectations.”
Mr. O’Sullivan continued, “November is off to a
solid start, helped by cooler weather at the beginning of the
month. We feel very good about how we are set up for Holiday. That
said, the critical high-volume weeks are still ahead of us, and we
recognize that there is a lot of uncertainty in the external
environment, so we are maintaining our previously issued Q4
guidance.”
Mr. O’Sullivan added, “Right now our 2024 working
assumption is for total sales growth of approximately 11% vs. 2023.
This is driven by our expectations for 2% comp sales growth plus
100 net new store openings. Based on these growth rates, we would
expect to be able to achieve about 50 basis points of adjusted EBIT
margin expansion vs. 2023. We will provide formal guidance in March
2024.”
Mr. O’Sullivan concluded, “Looking further ahead,
we are excited about the potential for our business over the next
several years. We have a significant total sales growth opportunity
driven by our new store program and comp sales growth, as well as
meaningful operating margin expansion potential. We believe our
strategic initiatives have the potential to drive significant sales
and earnings growth for Burlington in the years ahead.”
Fiscal 2023 Third Quarter Operating
Results (for the 13-week period ended October 28, 2023, compared
with the 13-week period ended October 29, 2022)
- Total sales increased 12% compared to the
third quarter of Fiscal 2022 to $2,285 million, while comparable
store sales increased 6% compared to the third quarter of Fiscal
2022.
- Gross margin rate as a percentage of net sales
was 43.2% vs. 41.2% for the third quarter of Fiscal 2022, an
increase of 200 basis points. Merchandise margin improved by 150
basis points and freight expense improved 50 basis points.
- Product sourcing costs, which are included in
selling, general and administrative expenses (SG&A), were $200
million vs. $177 million in the third quarter of Fiscal 2022.
Product sourcing costs primarily include the costs of processing
goods through our supply chain and buying costs.
- SG&A was 36.2% as a percentage of net
sales vs. 35.7% in the third quarter of Fiscal 2022, higher by 50
basis points. Adjusted SG&A was 27.3% as a
percentage of net sales vs. 26.8% in the third quarter of Fiscal
2022, an increase of 50 basis points.
- The effective tax rate was 27.4% vs. 26.4% in
the third quarter of Fiscal 2022. The Adjusted Effective
Tax Rate was 25.0% vs. 26.7% in the third quarter of
Fiscal 2022.
- Net income was $49 million, or $0.75 per share
vs. $17 million, or $0.26 per share for the third quarter of Fiscal
2022. Adjusted Net Income was $64 million, or
$0.98 per share, vs. $28 million, or $0.43 per share for the third
quarter of Fiscal 2022. Adjusted Net Income, excluding
approximately $10 million of expenses associated with the
acquisition of Bed Bath & Beyond leases, was $71 million, or
$1.10 per share for the third quarter.
- Diluted weighted average shares outstanding
amounted to 64.8 million during the quarter compared with 65.5
million during the third quarter of Fiscal 2022.
- Adjusted EBITDA was $176 million vs. $123
million in the third quarter of Fiscal 2022, an increase of 170
basis points over the prior year quarter as a percentage of sales.
Adjusted EBIT was $99 million vs. $55 million in
the third quarter of Fiscal 2022, an increase of 170 basis points
as a percentage of sales. Adjusted EBIT, excluding
approximately $10 million of expenses associated with the
acquisition of Bed Bath & Beyond leases, was $109 million.
First Nine Months of Fiscal 2023
Results
- Total sales increased 11% compared to the first nine months of
Fiscal 2022. Net income increased 150% compared to the same period
in Fiscal 2022 to $112 million, or $1.73 per share vs. $0.68 per
share in the prior period. Adjusted EBIT increased by $97 million
compared to the first nine months of Fiscal 2022, to $254 million,
an increase of 120 basis points as a percentage of sales. Adjusted
Net Income of $158 million increased 81% vs. the prior period,
while Adjusted EPS was $2.43 vs. $1.32 in the prior period, an
increase of 84%.
Inventory
- Merchandise inventories were $1,329 million vs. $1,445 million
at the end of the third quarter of Fiscal 2022, an 8% decrease,
while comparable store inventories increased 2% compared to the
third quarter of Fiscal 2022. Reserve inventory was 30% of total
inventory at the end of the third quarter of Fiscal 2023 compared
to 31% at the end of the third quarter of Fiscal 2022. Reserve
inventory is largely composed of merchandise that is purchased
opportunistically and that will be sent to stores in future months
or next season.
Liquidity and Debt
- The Company ended the third quarter of Fiscal 2023 with $1,440
million in liquidity, comprised of $616 million in unrestricted
cash and $824 million in availability on its ABL facility.
- During the third quarter of Fiscal 2023, the Company exchanged
$241 million in aggregate principal amount of its 2.25% Convertible
Senior Notes due 2025 (2025 Convertible Notes) for $255 million in
aggregate principal amount of its 1.25% Convertible Senior Notes
due 2027 (2027 Convertible Notes). The Company also issued $42
million in aggregate principal amount of 2027 Convertible Notes in
a private placement to certain investors.
- The Company ended the third quarter with $1,412 million in
outstanding total debt, including $940 million on its Term Loan
facility, $453 million in Convertible Notes, and no borrowings on
its ABL facility.
Common Stock Repurchases
- During the third quarter of Fiscal 2023 the Company repurchased
348,948 shares of its common stock under its share repurchase
program for $52 million. As of the end of the third quarter of
Fiscal 2023, the Company had an aggregate of $718 million remaining
under its share repurchase authorizations.
Outlook For the full
Fiscal Year 2023 (the 53-weeks ending February 3, 2024), the
Company now expects:
- Total sales to increase approximately 11%, which includes
approximately 2% from the 53rd week, on top of a 7% decrease in
Fiscal 2022; this assumes comparable store sales will increase
approximately 3%, on top of the 13% decrease during Fiscal
2022;
- Capital expenditures, net of landlord allowances, to be
approximately $560 million;
- To open approximately 80 net new stores;
- Depreciation and amortization, exclusive of favorable lease
costs, to be approximately $310 million;
- Adjusted EBIT margin to increase 70 to 80 basis points versus
last year; this Adjusted EBIT margin increase includes
approximately $18 million of anticipated expenses related to the
recently acquired Bed Bath & Beyond leases. Excluding these
incremental expenses, Adjusted EBIT margin is expected to increase
90 to 100 basis points versus last year;
- Net interest expense to be approximately $60 million;
- An effective tax rate of approximately 26%; and
- Adjusted EPS to be in the range of $5.52 to $5.67, which
includes $0.20 of expected incremental expenses associated with the
recently acquired Bed Bath & Beyond leases. Excluding these
expenses, Adjusted EPS is expected to be in the range of $5.72 to
$5.87. This assumes a fully diluted share count of approximately 65
million, as compared to Fiscal 2022 diluted EPS of $3.49 and
Adjusted EPS of $4.26. These Adjusted EPS amounts include an
expected benefit from the 53rd week of approximately $0.05 per
share.
For the fourth quarter of Fiscal 2023
(the 13 weeks ending January 27, 2024), the Company
expects:
- Total sales to increase in the range of 5% to 7%; this assumes
comparable store sales to be in the range of -2% to 0% versus the
fourth quarter of Fiscal 2022;
- Adjusted EBIT margin to be in the range of a decrease of 10 to
an increase of 20 basis points versus the fourth quarter of Fiscal
2022; this EBIT margin increase includes approximately $5 million
of expenses related to the recently acquired Bed Bath & Beyond
leases. Excluding these expenses, adjusted EBIT margin is expected
to increase 0 to 40 basis points;
- An effective tax rate of approximately 27%; and
- Adjusted EPS in the range of $3.04 to $3.19, as compared to
$2.83 in diluted EPS and $2.96 in Adjusted EPS last year. This
includes $0.06 per share of expected incremental expenses
associated with the recently acquired Bed Bath & Beyond leases.
Excluding these expenses, adjusted EPS is expected to be in the
range of $3.10 to $3.25.
- When including the $0.05 benefit from the 53rd week, adjusted
EPS is expected to be in the range of $3.15 to $3.30.
The Company has not presented a quantitative
reconciliation of certain 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 Operating Margin), and
Adjusted Effective Tax Rate. The Company believes these
supplemental measures are useful in evaluating the performance of
our business and provide greater transparency into our results of
operations. In particular, we believe that excluding certain items
that may vary substantially in frequency and magnitude from what we
consider to be our core operating results are useful supplemental
measures that assist investors and management in evaluating our
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.
From time to time when discussing its comparable
store sales trends, the Company references its geometric stack,
which is defined as a stacked comparable sales growth rate that
accounts for the compounding of comparable store sales from Fiscal
2019 to Fiscal 2023.
Third Quarter 2023 Conference
Call
The Company will hold a conference call on
November 21, 2023, at 8:30 a.m. ET to discuss the Company’s third
quarter results and longer term expectations for the business. The
U.S. toll free dial-in for the conference call is 1-800-715-9871
(passcode: 3725256) and the international dial-in number is
1-646-307-1963. A live webcast of the conference call will also be
available on the investor relations page of the Company's website
at www.burlingtoninvestors.com.
For those unable to participate in the conference
call, a replay will be available after the conclusion of the call
on November 21, 2023 beginning at 11:30 a.m. ET through November
28, 2023 11:59 p.m. ET. The U.S. toll-free replay dial-in number is
1-800-770-2030 and the international replay dial-in number is
1-609-800-9909. The replay passcode is 3725256.
About Burlington Stores, Inc.
Burlington Stores, Inc., headquartered in New
Jersey, is a nationally recognized off-price retailer with Fiscal
2022 net sales of $8.7 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 977
stores as of the end of the third quarter of Fiscal 2023, in 46
states 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.
Investor Relations Contacts:
David J. Glick Daniel Delrosario 855-973-8445
Info@BurlingtonInvestors.com
Allison Malkin ICR, Inc. 203-682-8225
Safe Harbor for Forward-Looking and
Cautionary Statements This release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other
than statements of historical fact included in this release,
including those about our long-term prospects, the effects of our
Burlington 2.0 initiatives, the economic environment, expected
sales trend and market share and supply chain plans, as well as
statements describing our outlook for future periods, are
forward-looking statements. Forward-looking statements discuss our
current expectations and projections relating to our financial
condition, results of operations, plans, objectives, future
performance and business. You can identify forward-looking
statements by the fact that they do not relate strictly to
historical or current facts. We do not undertake to publicly update
or revise our forward-looking statements, except as required by
law, even if experience or future changes make it clear that any
projected results expressed or implied in such statements will not
be realized. If we do update one or more forward-looking
statements, no inference should be made that we will make
additional updates with respect to those or other forward-looking
statements. All forward-looking statements are subject to risks and
uncertainties that may cause actual events or results to differ
materially from those we expected, including general economic
conditions, such as inflation, and the domestic and international
political situation and the related impact on consumer confidence
and spending; the impact of the COVID-19 pandemic and actions taken
to slow its spread and the related impacts on economic activity,
financial markets, labor markets and the global supply chain;
competitive factors, including pricing and promotional activities
of major competitors and an increase in competition within the
markets in which we compete; seasonal fluctuations in our net
sales, operating income and inventory levels; the reduction in
traffic to, or the closing of, the other destination retailers in
the shopping areas where our stores are located; our ability to
identify changing consumer preferences and demand; unseasonable
weather conditions caused by climate change or otherwise adversely
impacting demand; natural and man-made disasters, including fire,
snow and ice storms, flood, hail, hurricanes and earthquakes; our
ability to successfully implement one or more of our strategic
initiatives and growth plans; our ability to execute our
opportunistic buying and inventory management process; the
availability of desirable store locations on suitable terms; the
availability, selection and purchasing of attractive merchandise on
favorable terms; our ability to attract, train and retain quality
employees and temporary personnel in appropriate numbers; labor
costs and our ability to manage a large workforce; the solvency of
parties with whom we do business and their willingness to perform
their obligations to us; import risks, including tax and trade
policies, tariffs and government regulations; domestic and
international events affecting the delivery of merchandise to our
stores; unforeseen cyber-related problems or attacks;
payment-related risks; our ability to effectively generate
sufficient levels of customer awareness and traffic through our
advertising and marketing programs; damage to our corporate
reputation or brand; issues with merchandise safety and shrinkage;
lack of or insufficient insurance coverage; the impact of current
and future laws and the interpretation of such laws; the impact of
increasingly rigorous privacy and data security regulations; any
unforeseen material loss or casualty or the existence of adverse
litigation; use of social media in violation of applicable laws and
regulations; our substantial level of indebtedness and related
debt-service obligations; consequences of the failure to comply
with covenants in our debt agreements; possible conversion of our
2025 Convertible Notes and 2027 Convertible Notes; the availability
of adequate financing; and each of the factors that may be
described from time to time in our filings with the U.S. Securities
and Exchange Commission. For each of these factors, the Company
claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform
Act of 1995, as amended.
BURLINGTON
STORES, INC. CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (unaudited) (All amounts
in thousands, except per share data) |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 28, |
|
|
October 29, |
|
|
October 28, |
|
|
October 29, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
2,284,673 |
|
|
$ |
2,035,927 |
|
|
$ |
6,587,912 |
|
|
$ |
5,945,459 |
|
Other
revenue |
|
|
4,673 |
|
|
|
4,760 |
|
|
|
13,197 |
|
|
|
12,862 |
|
Total revenue |
|
|
2,289,346 |
|
|
|
2,040,687 |
|
|
|
6,601,109 |
|
|
|
5,958,321 |
|
COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales |
|
|
1,297,805 |
|
|
|
1,198,126 |
|
|
|
3,795,661 |
|
|
|
3,546,340 |
|
Selling,
general and administrative expenses |
|
|
826,822 |
|
|
|
726,926 |
|
|
|
2,357,736 |
|
|
|
2,092,756 |
|
Costs
related to debt amendments |
|
|
— |
|
|
|
— |
|
|
|
97 |
|
|
|
— |
|
Depreciation
and amortization |
|
|
76,087 |
|
|
|
67,634 |
|
|
|
219,749 |
|
|
|
201,908 |
|
Impairment
charges - long-lived assets |
|
|
814 |
|
|
|
10,599 |
|
|
|
6,367 |
|
|
|
17,556 |
|
Other income
- net |
|
|
(12,384 |
) |
|
|
(2,828 |
) |
|
|
(27,549 |
) |
|
|
(18,833 |
) |
Loss on
extinguishment of debt |
|
|
13,630 |
|
|
|
— |
|
|
|
38,274 |
|
|
|
14,657 |
|
Interest
expense |
|
|
19,680 |
|
|
|
17,412 |
|
|
|
58,570 |
|
|
|
47,454 |
|
Total costs and expenses |
|
|
2,222,454 |
|
|
|
2,017,869 |
|
|
|
6,448,905 |
|
|
|
5,901,838 |
|
Income before income tax expense |
|
|
66,892 |
|
|
|
22,818 |
|
|
|
152,204 |
|
|
|
56,483 |
|
Income tax
expense |
|
|
18,341 |
|
|
|
6,035 |
|
|
|
40,013 |
|
|
|
11,560 |
|
Net income |
|
$ |
48,551 |
|
|
$ |
16,783 |
|
|
$ |
112,191 |
|
|
$ |
44,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net
income per common share |
|
$ |
0.75 |
|
|
$ |
0.26 |
|
|
$ |
1.73 |
|
|
$ |
0.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares - diluted |
|
|
64,802 |
|
|
|
65,504 |
|
|
|
65,024 |
|
|
|
66,058 |
|
BURLINGTON
STORES, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited) (All amounts
in thousands) |
|
|
|
October
28, |
|
|
January
28, |
|
|
October
29, |
|
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
615,863 |
|
|
$ |
872,623 |
|
|
$ |
428,583 |
|
Restricted
cash and cash equivalents |
|
|
— |
|
|
|
6,582 |
|
|
|
6,582 |
|
Accounts
receivable—net |
|
|
91,579 |
|
|
|
71,091 |
|
|
|
80,641 |
|
Merchandise
inventories |
|
|
1,329,129 |
|
|
|
1,181,982 |
|
|
|
1,445,087 |
|
Assets held
for disposal |
|
|
23,299 |
|
|
|
19,823 |
|
|
|
7,054 |
|
Prepaid and
other current assets |
|
|
154,962 |
|
|
|
131,691 |
|
|
|
131,834 |
|
Total current assets |
|
|
2,214,832 |
|
|
|
2,283,792 |
|
|
|
2,099,781 |
|
Property and
equipment—net |
|
|
1,767,626 |
|
|
|
1,668,005 |
|
|
|
1,666,523 |
|
Operating
lease assets |
|
|
3,130,574 |
|
|
|
2,945,932 |
|
|
|
2,951,614 |
|
Goodwill and
intangible assets—net |
|
|
285,064 |
|
|
|
285,064 |
|
|
|
285,064 |
|
Deferred tax
assets |
|
|
2,870 |
|
|
|
3,205 |
|
|
|
3,643 |
|
Other
assets |
|
|
92,734 |
|
|
|
83,599 |
|
|
|
94,885 |
|
Total assets |
|
$ |
7,493,700 |
|
|
$ |
7,269,597 |
|
|
$ |
7,101,510 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
939,658 |
|
|
$ |
955,793 |
|
|
$ |
953,680 |
|
Current
operating lease liabilities |
|
|
412,303 |
|
|
|
401,111 |
|
|
|
391,056 |
|
Other
current liabilities |
|
|
588,645 |
|
|
|
541,413 |
|
|
|
520,145 |
|
Current
maturities of long term debt |
|
|
13,970 |
|
|
|
13,634 |
|
|
|
13,528 |
|
Total current liabilities |
|
|
1,954,576 |
|
|
|
1,911,951 |
|
|
|
1,878,409 |
|
Long term
debt |
|
|
1,397,618 |
|
|
|
1,462,072 |
|
|
|
1,464,563 |
|
Long term
operating lease liabilities |
|
|
2,982,549 |
|
|
|
2,825,292 |
|
|
|
2,828,574 |
|
Other
liabilities |
|
|
70,572 |
|
|
|
69,386 |
|
|
|
68,687 |
|
Deferred tax
liabilities |
|
|
237,909 |
|
|
|
205,991 |
|
|
|
222,549 |
|
Stockholders' equity |
|
|
850,476 |
|
|
|
794,905 |
|
|
|
638,728 |
|
Total liabilities and stockholders' equity |
|
$ |
7,493,700 |
|
|
$ |
7,269,597 |
|
|
$ |
7,101,510 |
|
BURLINGTON
STORES, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (unaudited) (All
amounts in thousands) |
|
|
|
Nine Months Ended |
|
|
|
October 28, |
|
|
October 29, |
|
|
|
2023 |
|
|
2022 |
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
Net income |
|
$ |
112,191 |
|
|
$ |
44,923 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities |
|
|
|
|
|
|
Depreciation and amortization |
|
|
219,749 |
|
|
|
201,908 |
|
Deferred income taxes |
|
|
27,254 |
|
|
|
(12,339 |
) |
Loss on extinguishment of debt |
|
|
38,274 |
|
|
|
14,657 |
|
Non-cash stock compensation expense |
|
|
57,792 |
|
|
|
51,195 |
|
Non-cash lease expense |
|
|
(4,068 |
) |
|
|
674 |
|
Cash received from landlord allowances |
|
|
7,739 |
|
|
|
9,799 |
|
Changes in
assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
(20,611 |
) |
|
|
(26,801 |
) |
Merchandise inventories |
|
|
(147,146 |
) |
|
|
(424,078 |
) |
Accounts payable |
|
|
(20,249 |
) |
|
|
(133,305 |
) |
Other current assets and liabilities |
|
|
(6,074 |
) |
|
|
258,843 |
|
Long term assets and liabilities |
|
|
1,113 |
|
|
|
(1,135 |
) |
Other
operating activities |
|
|
4,232 |
|
|
|
25,236 |
|
Net
cash provided by operating activities |
|
|
270,196 |
|
|
|
9,577 |
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
Cash paid
for property and equipment |
|
|
(304,442 |
) |
|
|
(338,979 |
) |
Lease
acquisition costs |
|
|
(20,481 |
) |
|
|
(3,515 |
) |
Proceeds
from sale of property and equipment and assets held for sale |
|
|
13,639 |
|
|
|
23,383 |
|
Net
cash used in investing activities |
|
|
(311,284 |
) |
|
|
(319,111 |
) |
FINANCING ACTIVITIES |
|
|
|
|
|
|
Principal
payments on long term debt—Term B-6 Loans |
|
|
(7,211 |
) |
|
|
(7,211 |
) |
Proceeds
from long term debt— 2027 Convertible Note |
|
|
297,069 |
|
|
|
— |
|
Principal
payment on long term debt—2025 Convertible Notes |
|
|
(386,519 |
) |
|
|
(78,236 |
) |
Purchase of
treasury shares |
|
|
(140,482 |
) |
|
|
(265,344 |
) |
Other
financing activities |
|
|
14,889 |
|
|
|
(2,183 |
) |
Net
cash used in financing activities |
|
|
(222,254 |
) |
|
|
(352,974 |
) |
Decrease in
cash, cash equivalents, restricted cash and restricted cash
equivalents |
|
|
(263,342 |
) |
|
|
(662,508 |
) |
Cash, cash
equivalents, restricted cash and restricted cash equivalents at
beginning of period |
|
|
879,205 |
|
|
|
1,097,673 |
|
Cash, cash equivalents, restricted cash and restricted cash
equivalents at end of period |
|
$ |
615,863 |
|
|
$ |
435,165 |
|
Reconciliation of Non-GAAP Financial
Measures (Unaudited) (Amounts in thousands, except per
share data)
The following tables calculate the Company’s
Adjusted Net Income, Adjusted EPS, Adjusted EBITDA, Adjusted EBIT,
Adjusted SG&A and Adjusted Effective Tax Rate, all of which are
considered non-GAAP financial measures. Generally, a non-GAAP
financial measure is a numerical measure of a company’s
performance, financial position or cash flows that either excludes
or includes amounts that are not normally excluded or included in
the most directly comparable measure calculated and presented in
accordance with GAAP.
Adjusted Net Income is defined as net income,
exclusive of the following items, if applicable: (i) net favorable
lease costs; (ii) loss on extinguishment of debt; (iii) costs
related to debt amendments; (iv) impairment charges; (v) amounts
related to certain litigation matters; and (vi) other unusual,
non-recurring or extraordinary expenses, losses, charges or gains,
all of which are tax effected to arrive at Adjusted Net Income.
Adjusted EPS is defined as Adjusted Net Income
divided by the diluted weighted average shares outstanding, as
defined in the table below.
Adjusted EBITDA is defined as net income,
exclusive of the following items, if applicable: (i) interest
expense; (ii) interest income; (iii) loss on extinguishment of
debt; (iv) costs related to debt amendments; (v) income tax
expense; (vi) depreciation and amortization; (vii) net favorable
lease costs; (viii) impairment charges; (ix) amounts related to
certain litigation matters; and (x) other unusual, non-recurring or
extraordinary expenses, losses, charges or gains.
Adjusted EBIT (or Adjusted Operating Margin) is
defined as net income, exclusive of the following items, if
applicable: (i) interest expense; (ii) interest income; (iii) loss
on extinguishment of debt; (iv) costs related to debt amendments;
(v) income tax expense; (vi) impairment charges; (vii) net
favorable lease costs; (viii) amounts related to certain litigation
matters; and (ix) other unusual, non-recurring or extraordinary
expenses, losses, charges or gains.
Adjusted SG&A is defined as SG&A less
product sourcing costs, favorable lease costs and amounts related
to certain litigation matters.
Adjusted Effective Tax Rate is defined as the GAAP
effective tax rate less the tax effect of the reconciling items to
arrive at Adjusted Net Income (footnote (g) in the table
below).
The Company presents Adjusted Net Income, Adjusted
EPS, Adjusted EBITDA, Adjusted EBIT, Adjusted SG&A and Adjusted
Effective Tax Rate, because it believes they are useful
supplemental measures in evaluating the performance of the
Company’s business and provide greater transparency into the
results of operations. In particular, the Company believes that
excluding certain items that may vary substantially in frequency
and magnitude from what the Company considers to be its core
operating results are useful supplemental measures that assist
investors and management in evaluating the Company’s ability to
generate earnings and leverage sales, and to more readily compare
core operating results between past and future periods.
The Company believes that these non-GAAP measures
provide investors helpful information with respect to the Company’s
operations and financial condition. Other companies in the retail
industry may calculate these non-GAAP measures differently such
that the Company’s calculation may not be directly comparable.
The following table shows the Company’s
reconciliation of net income to Adjusted Net Income and Adjusted
EPS for the periods indicated:
|
|
(unaudited) |
|
|
|
(inthousands, except per share data) |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 28, |
|
|
October 29, |
|
|
October 28, |
|
|
October 29, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Reconciliation of net income to Adjusted Net
Income: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
48,551 |
|
|
$ |
16,783 |
|
|
$ |
112,191 |
|
|
$ |
44,923 |
|
Net favorable lease costs (a) |
|
|
3,788 |
|
|
|
4,791 |
|
|
|
11,830 |
|
|
|
14,262 |
|
Loss on extinguishment of debt (b) |
|
|
13,630 |
|
|
|
— |
|
|
|
38,274 |
|
|
|
14,657 |
|
Costs related to debt amendments (c) |
|
|
— |
|
|
|
— |
|
|
|
97 |
|
|
|
— |
|
Impairment charges - long-lived assets |
|
|
814 |
|
|
|
10,599 |
|
|
|
6,367 |
|
|
|
17,556 |
|
Litigation matters (d) |
|
|
— |
|
|
|
— |
|
|
|
1,500 |
|
|
|
10,500 |
|
Tax effect (e) |
|
|
(2,955 |
) |
|
|
(4,148 |
) |
|
|
(12,561 |
) |
|
|
(14,867 |
) |
Adjusted Net Income |
|
$ |
63,828 |
|
|
$ |
28,025 |
|
|
$ |
157,698 |
|
|
$ |
87,031 |
|
Diluted weighted average shares outstanding (f) |
|
|
64,802 |
|
|
|
65,504 |
|
|
|
65,024 |
|
|
|
66,058 |
|
Adjusted Earnings per Share |
|
$ |
0.98 |
|
|
$ |
0.43 |
|
|
$ |
2.43 |
|
|
$ |
1.32 |
|
The following table shows the Company’s
reconciliation of net income to Adjusted EBITDA for the periods
indicated:
|
|
(unaudited) |
|
|
|
(in thousands) |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 28, |
|
|
October 29, |
|
|
October 28, |
|
|
October 29, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Reconciliation of net income to Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
48,551 |
|
|
$ |
16,783 |
|
|
$ |
112,191 |
|
|
$ |
44,923 |
|
Interest expense |
|
|
19,680 |
|
|
|
17,412 |
|
|
|
58,570 |
|
|
|
47,454 |
|
Interest income |
|
|
(5,328 |
) |
|
|
(658 |
) |
|
|
(14,902 |
) |
|
|
(4,242 |
) |
Net favorable lease costs (a) |
|
|
3,788 |
|
|
|
4,791 |
|
|
|
11,830 |
|
|
|
14,262 |
|
Loss on extinguishment of debt (b) |
|
|
13,630 |
|
|
|
— |
|
|
|
38,274 |
|
|
|
14,657 |
|
Costs related to debt amendments (c) |
|
|
— |
|
|
|
— |
|
|
|
97 |
|
|
|
— |
|
Impairment charges - long-lived assets |
|
|
814 |
|
|
|
10,599 |
|
|
|
6,367 |
|
|
|
17,556 |
|
Litigation matters (d) |
|
|
— |
|
|
|
— |
|
|
|
1,500 |
|
|
|
10,500 |
|
Depreciation and amortization |
|
|
76,087 |
|
|
|
67,634 |
|
|
|
219,749 |
|
|
|
201,908 |
|
Income tax expense |
|
|
18,341 |
|
|
|
6,035 |
|
|
|
40,013 |
|
|
|
11,560 |
|
Adjusted EBITDA |
|
$ |
175,563 |
|
|
$ |
122,596 |
|
|
$ |
473,689 |
|
|
$ |
358,578 |
|
The following table shows the Company’s
reconciliation of net income to Adjusted EBIT for the periods
indicated:
|
|
(unaudited) |
|
|
|
(in thousands) |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 28, |
|
|
October 29, |
|
|
October 28, |
|
|
October 29, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Reconciliation of net income to Adjusted
EBIT: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
48,551 |
|
|
$ |
16,783 |
|
|
$ |
112,191 |
|
|
$ |
44,923 |
|
Interest expense |
|
|
19,680 |
|
|
|
17,412 |
|
|
|
58,570 |
|
|
|
47,454 |
|
Interest income |
|
|
(5,328 |
) |
|
|
(658 |
) |
|
|
(14,902 |
) |
|
|
(4,242 |
) |
Net favorable lease costs (a) |
|
|
3,788 |
|
|
|
4,791 |
|
|
|
11,830 |
|
|
|
14,262 |
|
Loss on extinguishment of debt (b) |
|
|
13,630 |
|
|
|
— |
|
|
|
38,274 |
|
|
|
14,657 |
|
Costs related to debt amendments (c) |
|
|
— |
|
|
|
— |
|
|
|
97 |
|
|
|
— |
|
Impairment charges - long-lived assets |
|
|
814 |
|
|
|
10,599 |
|
|
|
6,367 |
|
|
|
17,556 |
|
Litigation matters (d) |
|
|
— |
|
|
|
— |
|
|
|
1,500 |
|
|
|
10,500 |
|
Income tax expense |
|
|
18,341 |
|
|
|
6,035 |
|
|
|
40,013 |
|
|
|
11,560 |
|
Adjusted EBIT |
|
$ |
99,476 |
|
|
$ |
54,962 |
|
|
$ |
253,940 |
|
|
$ |
156,670 |
|
The following table shows the Company’s
reconciliation of SG&A to Adjusted SG&A for the periods
indicated:
|
|
(unaudited) |
|
|
|
(in thousands) |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 28, |
|
|
October 29, |
|
|
October 28, |
|
|
October 29, |
|
Reconciliation of SG&A to Adjusted
SG&A: |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
SG&A |
|
$ |
826,822 |
|
|
$ |
726,926 |
|
|
$ |
2,357,736 |
|
|
$ |
2,092,756 |
|
Net favorable lease costs (a) |
|
|
(3,788 |
) |
|
|
(4,791 |
) |
|
|
(11,830 |
) |
|
|
(14,262 |
) |
Product sourcing costs |
|
|
(200,299 |
) |
|
|
(177,237 |
) |
|
|
(570,092 |
) |
|
|
(490,791 |
) |
Litigation matters (d) |
|
|
— |
|
|
|
— |
|
|
|
(1,500 |
) |
|
|
(10,500 |
) |
Adjusted SG&A |
|
$ |
622,735 |
|
|
$ |
544,898 |
|
|
$ |
1,774,314 |
|
|
$ |
1,577,203 |
|
The following table shows the reconciliation of
the Company’s effective tax rates on a GAAP basis to the Adjusted
Effective Tax Rates for the periods indicated:
|
|
(unaudited) |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 28, |
|
|
October 29, |
|
|
October 28, |
|
|
October 29, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Effective tax rate on a GAAP basis |
|
|
27.4 |
% |
|
|
26.4 |
% |
|
|
26.3 |
% |
|
|
20.5 |
% |
Adjustments to arrive at Adjusted Effective Tax Rate (g) |
|
|
(2.4 |
) |
|
|
0.3 |
|
|
|
(1.3 |
) |
|
|
2.8 |
|
Adjusted Effective Tax Rate |
|
|
25.0 |
% |
|
|
26.7 |
% |
|
|
25.0 |
% |
|
|
23.3 |
% |
The following table shows the Company’s reconciliation of net
income to Adjusted Net Income for the prior period Adjusted EPS
amounts used in this press release for the periods indicated:
|
|
(unaudited) |
|
|
|
(in thousands, except per share data) |
|
|
|
Three Months
Ended |
|
|
Twelve
Months Ended |
|
|
|
January 28, 2023 |
|
|
January 28, 2023 |
|
Reconciliation of net income to Adjusted Net
Income: |
|
|
|
|
|
|
Net income |
|
$ |
185,200 |
|
|
$ |
230,123 |
|
Net favorable lease costs (a) |
|
|
4,329 |
|
|
|
18,591 |
|
Loss on extinguishment of debt (b) |
|
|
— |
|
|
|
14,657 |
|
Impairment charges |
|
|
3,846 |
|
|
|
21,402 |
|
Litigation matters (d) |
|
|
— |
|
|
|
10,500 |
|
Tax effect (e) |
|
|
364 |
|
|
|
(14,503 |
) |
Adjusted Net Income |
|
$ |
193,739 |
|
|
$ |
280,770 |
|
Diluted weighted average shares outstanding (f) |
|
|
65,385 |
|
|
|
65,901 |
|
Adjusted Earnings per Share |
|
$ |
2.96 |
|
|
$ |
4.26 |
|
(a) Net favorable lease costs represents the
non-cash expense associated with favorable and unfavorable leases
that were recorded as a result of purchase accounting related to
the April 13, 2006 Bain Capital acquisition of Burlington Coat
Factory Warehouse Corporation. These expenses are recorded in the
line item “Selling, general and administrative expenses” in our
Condensed Consolidated Statements of Income. (b) Amounts relate to
the partial repurchases of the 2025 Convertible Notes in the first
quarters of Fiscal 2023 and Fiscal 2022, as well as the exchange of
a portion of the 2025 Convertible Notes in the third quarter of
Fiscal 2023. (c) Relates to the Term Loan Credit Agreement
amendment in the second quarter of Fiscal 2023 changing from
Adjusted LIBOR Rate to the Adjusted Term SOFR Rate. (d) Represents
amounts charged for certain litigation matters. (e) Tax effect is
calculated based on the effective tax rates (before discrete items)
for the respective periods, adjusted for the tax effect for the
impact of items (a) through (d). (f) Diluted weighted average
shares outstanding starts with basic shares outstanding and adds
back any potentially dilutive securities outstanding during the
period. (g) Adjustments for items excluded from Adjusted Net
Income. These items have been described in the table above
reconciling GAAP net income to Adjusted Net Income.
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