Burlington Stores, Inc. (NYSE: BURL) (the “Company”), 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
MeasuresThe 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.
Fourth Quarter 2023 Conference
CallThe Company will hold a conference call on March 7,
2024 at 8:30 a.m. ET to discuss the Company’s fourth quarter and
fiscal 2023 results. The U.S. toll free dial-in for the conference
call is 1-800-715-9871 (passcode: 9287827) 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 March 7, 2024
beginning at 11:30 a.m. ET through March 14, 2024 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 9287827.
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.
Investor Relations Contacts:David J.
GlickDaniel Delrosario855-973-8445
Info@BurlingtonInvestors.com
Allison MalkinICR, 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
potential performance in the next five years, the external
environment, 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; competitive factors, including the scale and
potential consolidation of some of our competitors, rise of
e-commerce spending, 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; our ability to meet our
environmental, social or governance (“ESG”) goals or otherwise
expectations of our stakeholders with respect to ESG matters;
extreme and/or unseasonable weather conditions caused by climate
change or otherwise adversely impacting demand; effects of public
health crises, epidemics or pandemics; our ability to sustain our
growth plans or successfully implement our long-range strategic
plans; our ability to execute our opportunistic buying and
inventory management process; our ability to optimize our existing
stores or maintain favorable lease terms; the availability,
selection and purchasing of attractive brand name merchandise on
favorable terms; our ability to attract, train and retain quality
employees and temporary personnel in sufficient 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; disruption in our
distribution network; our ability to protect our protect our
information systems against service interruption, misappropriation
of data, breaches of security, or other cyber-related attacks;
risks related to the methods of payment we accept; the success of
our advertising and marketing programs in generating sufficient
levels of customer traffic and awareness; damage to our corporate
reputation or brand; impact of potential loss of executives or
other key personnel; our ability to comply with existing and
changing laws, rules, regulations and local codes; lack of or
insufficient insurance coverage; issues with merchandise safety and
shrinkage; our ability to comply with increasingly rigorous privacy
and data security regulations; impact of legal and regulatory
proceedings relating to us; use of social media by us or by third
parties our direction in violation of applicable laws and
regulations; our ability to generate sufficient cash to fund our
operations and service our debt obligations; our ability to comply
with covenants in our debt agreements; the consequences of the
possible conversion of our convertible notes; our reliance on
dividends, distributions and other payments, advance and transfers
of funds from our subsidiaries to meet our obligations; the
volatility of our stock price; the impact of the anti-takeover
provisions in our governing documents; impact of potential
shareholder activism; and each of the factors that may be described
from time to time in our filings with the U.S. Securities and
Exchange Commission, including under the heading “Risk Factors” in
our most recent Annual Report on Form 10-K. 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 |
|
|
Fiscal Year Ended |
|
|
February 3, |
|
|
January 28, |
|
|
February 3, |
|
|
January 28, |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
(14 Weeks) |
|
|
|
|
|
(53 Weeks) |
|
|
|
|
REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
3,121,061 |
|
|
$ |
2,739,085 |
|
|
$ |
9,708,973 |
|
|
$ |
8,684,545 |
|
Other revenue |
|
5,297 |
|
|
|
5,198 |
|
|
|
18,494 |
|
|
|
18,059 |
|
Total revenue |
|
3,126,358 |
|
|
|
2,744,283 |
|
|
|
9,727,467 |
|
|
|
8,702,604 |
|
COSTS AND
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
1,788,399 |
|
|
|
1,625,375 |
|
|
|
5,584,060 |
|
|
|
5,171,715 |
|
Selling, general and
administrative expenses |
|
930,579 |
|
|
|
784,599 |
|
|
|
3,288,315 |
|
|
|
2,877,356 |
|
Costs related to debt
amendments |
|
— |
|
|
|
— |
|
|
|
97 |
|
|
|
— |
|
Depreciation and
amortization |
|
87,315 |
|
|
|
68,491 |
|
|
|
307,064 |
|
|
|
270,398 |
|
Impairment charges -
long-lived assets |
|
— |
|
|
|
3,846 |
|
|
|
6,367 |
|
|
|
21,402 |
|
Other income - net |
|
(13,333 |
) |
|
|
(8,074 |
) |
|
|
(40,882 |
) |
|
|
(26,907 |
) |
Loss on extinguishment of
debt |
|
— |
|
|
|
— |
|
|
|
38,274 |
|
|
|
14,657 |
|
Interest expense |
|
19,829 |
|
|
|
19,020 |
|
|
|
78,399 |
|
|
|
66,474 |
|
Total costs and expenses |
|
2,812,789 |
|
|
|
2,493,257 |
|
|
|
9,261,694 |
|
|
|
8,395,095 |
|
Income before income
tax expense |
|
313,569 |
|
|
|
251,026 |
|
|
|
465,773 |
|
|
|
307,509 |
|
Income tax expense |
|
86,111 |
|
|
|
65,826 |
|
|
|
126,124 |
|
|
|
77,386 |
|
Net income |
$ |
227,458 |
|
|
$ |
185,200 |
|
|
$ |
339,649 |
|
|
$ |
230,123 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per common
share |
$ |
3.53 |
|
|
$ |
2.83 |
|
|
$ |
5.23 |
|
|
$ |
3.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
- diluted |
|
64,425 |
|
|
|
65,385 |
|
|
|
64,917 |
|
|
|
65,901 |
|
|
BURLINGTON STORES, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(unaudited) |
(All amounts in thousands) |
|
|
February 3, |
|
|
January 28, |
|
|
2024 |
|
|
2023 |
|
ASSETS |
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
925,359 |
|
|
$ |
872,623 |
|
Restricted cash and cash
equivalents |
|
— |
|
|
|
6,582 |
|
Accounts receivable—net |
|
74,361 |
|
|
|
71,091 |
|
Merchandise inventories |
|
1,087,841 |
|
|
|
1,181,982 |
|
Assets held for disposal |
|
23,299 |
|
|
|
19,823 |
|
Prepaid and other current
assets |
|
216,164 |
|
|
|
131,691 |
|
Total current assets |
|
2,327,024 |
|
|
|
2,283,792 |
|
Property and
equipment—net |
|
1,880,325 |
|
|
|
1,668,005 |
|
Operating lease assets |
|
3,132,768 |
|
|
|
2,945,932 |
|
Goodwill and intangible
assets—net |
|
285,064 |
|
|
|
285,064 |
|
Deferred tax assets |
|
2,436 |
|
|
|
3,205 |
|
Other assets |
|
79,223 |
|
|
|
83,599 |
|
Total
assets |
$ |
7,706,840 |
|
|
$ |
7,269,597 |
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts payable |
$ |
956,350 |
|
|
$ |
955,793 |
|
Current operating lease
liabilities |
|
411,395 |
|
|
|
401,111 |
|
Other current liabilities |
|
647,338 |
|
|
|
541,413 |
|
Current maturities of long
term debt |
|
13,703 |
|
|
|
13,634 |
|
Total current liabilities |
|
2,028,786 |
|
|
|
1,911,951 |
|
Long term debt |
|
1,394,942 |
|
|
|
1,462,072 |
|
Long term operating lease
liabilities |
|
2,984,794 |
|
|
|
2,825,292 |
|
Other liabilities |
|
73,793 |
|
|
|
69,386 |
|
Deferred tax liabilities |
|
227,593 |
|
|
|
205,991 |
|
Stockholders' equity |
|
996,932 |
|
|
|
794,905 |
|
Total liabilities and
stockholders' equity |
$ |
7,706,840 |
|
|
$ |
7,269,597 |
|
|
BURLINGTON STORES, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(unaudited) |
(All amounts in thousands) |
|
|
Fiscal Year Ended |
|
|
February 3, |
|
|
January 28, |
|
|
2024 |
|
|
2023 |
|
|
(53 Weeks) |
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
|
Net income |
$ |
339,649 |
|
|
$ |
230,123 |
|
Adjustments to reconcile net
income to net cash provided by operating activities |
|
|
|
|
|
Depreciation and amortization |
|
307,064 |
|
|
|
270,398 |
|
Deferred income taxes |
|
20,663 |
|
|
|
(25,431 |
) |
Loss on extinguishment of debt |
|
38,274 |
|
|
|
14,657 |
|
Non-cash stock compensation expense |
|
83,948 |
|
|
|
67,480 |
|
Non-cash lease expense |
|
(7,724 |
) |
|
|
(523 |
) |
Cash received from landlord allowances |
|
14,585 |
|
|
|
23,137 |
|
Changes in assets and
liabilities: |
|
|
|
|
|
Accounts receivable |
|
(4,464 |
) |
|
|
(13,012 |
) |
Merchandise inventories |
|
94,141 |
|
|
|
(160,974 |
) |
Accounts payable |
|
(21,953 |
) |
|
|
(125,006 |
) |
Other current assets and liabilities |
|
(3,699 |
) |
|
|
289,682 |
|
Long term assets and liabilities |
|
3,651 |
|
|
|
(360 |
) |
Other operating
activities |
|
4,600 |
|
|
|
26,214 |
|
Net cash provided by
operating activities |
|
868,735 |
|
|
|
596,385 |
|
INVESTING
ACTIVITIES |
|
|
|
|
|
Cash paid for property and
equipment |
|
(492,644 |
) |
|
|
(447,393 |
) |
Lease acquisition costs |
|
(24,640 |
) |
|
|
(3,710 |
) |
Proceeds from sale of property
and equipment and assets held for sale |
|
13,539 |
|
|
|
27,961 |
|
Net cash used in
investing activities |
|
(503,745 |
) |
|
|
(423,142 |
) |
FINANCING
ACTIVITIES |
|
|
|
|
|
Principal payments on long
term debt—Term B-6 Loans |
|
(9,614 |
) |
|
|
(9,614 |
) |
Proceeds from long term debt—
2027 Convertible Note |
|
297,069 |
|
|
|
— |
|
Principal payment on long term
debt—2025 Convertible Notes |
|
(386,519 |
) |
|
|
(78,240 |
) |
Purchase of treasury
shares |
|
(243,188 |
) |
|
|
(316,896 |
) |
Other financing
activities |
|
23,416 |
|
|
|
13,039 |
|
Net cash used in
financing activities |
|
(318,836 |
) |
|
|
(391,711 |
) |
Increase (decrease) in cash,
cash equivalents, restricted cash and restricted cash
equivalents |
|
46,154 |
|
|
|
(218,468 |
) |
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 |
$ |
925,359 |
|
|
$ |
879,205 |
|
|
|
|
|
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 EBIT
Margin, 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 or non-recurring
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 or non-recurring expenses, losses, charges or
gains.
Adjusted EBIT (or Adjusted Operating Income) 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 or non-recurring expenses, losses, charges
or gains.
Adjusted EBIT Margin (or Adjusted Operating Margin) is defined
as Adjusted EBIT divided by net sales.
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 (e) in the table below).
The Company presents Adjusted Net Income, Adjusted EPS, Adjusted
EBITDA, Adjusted EBIT (or Adjusted Operating Income), Adjusted EBIT
Margin (or Adjusted Operating Margin), 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 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) |
|
|
(in thousands, except per share data) |
|
|
Three Months Ended |
|
|
Fiscal Year Ended |
|
|
February 3, |
|
|
January 28, |
|
|
February 3, |
|
|
January 28, |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
(14 Weeks) |
|
|
|
|
|
(53 Weeks) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net
income to Adjusted Net Income: |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
227,458 |
|
|
$ |
185,200 |
|
|
$ |
339,649 |
|
|
$ |
230,123 |
|
Net favorable lease costs (a) |
|
3,434 |
|
|
|
4,329 |
|
|
|
15,263 |
|
|
|
18,591 |
|
Loss on extinguishment of debt (b) |
|
— |
|
|
|
— |
|
|
|
38,274 |
|
|
|
14,657 |
|
Costs related to debt amendments (c) |
|
— |
|
|
|
— |
|
|
|
97 |
|
|
|
— |
|
Impairment charges - long-lived assets |
|
— |
|
|
|
3,846 |
|
|
|
6,367 |
|
|
|
21,402 |
|
Litigation matters (d) |
|
— |
|
|
|
— |
|
|
|
1,500 |
|
|
|
10,500 |
|
Tax effect (e) |
|
4,790 |
|
|
|
364 |
|
|
|
(7,770 |
) |
|
|
(14,503 |
) |
Adjusted Net Income |
$ |
235,682 |
|
|
$ |
193,739 |
|
|
$ |
393,380 |
|
|
$ |
280,770 |
|
Diluted weighted average shares outstanding (f) |
|
64,425 |
|
|
|
65,385 |
|
|
|
64,917 |
|
|
|
65,901 |
|
Adjusted Earnings per Share |
$ |
3.66 |
|
|
$ |
2.96 |
|
|
$ |
6.06 |
|
|
$ |
4.26 |
|
The following table shows the Company’s reconciliation of net
income to Adjusted EBIT and Adjusted EBITDA for the periods
indicated:
|
(unaudited) |
|
|
(in thousands) |
|
|
Three Months Ended |
|
|
Fiscal Year Ended |
|
|
February 3, |
|
|
January 28, |
|
|
February 3, |
|
|
January 28, |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
(14 Weeks) |
|
|
|
|
|
(53 Weeks) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net
income to Adjusted EBIT and Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
227,458 |
|
|
$ |
185,200 |
|
|
$ |
339,649 |
|
|
$ |
230,123 |
|
Interest expense |
|
19,829 |
|
|
|
19,020 |
|
|
|
78,399 |
|
|
|
66,474 |
|
Interest income |
|
(9,733 |
) |
|
|
(4,557 |
) |
|
|
(24,633 |
) |
|
|
(8,799 |
) |
Net favorable lease costs (a) |
|
3,434 |
|
|
|
4,329 |
|
|
|
15,263 |
|
|
|
18,591 |
|
Loss on extinguishment of debt (b) |
|
— |
|
|
|
— |
|
|
|
38,274 |
|
|
|
14,657 |
|
Costs related to debt amendments (c) |
|
— |
|
|
|
— |
|
|
|
97 |
|
|
|
— |
|
Impairment charges - long-lived assets |
|
— |
|
|
|
3,846 |
|
|
|
6,367 |
|
|
|
21,402 |
|
Litigation matters (d) |
|
— |
|
|
|
— |
|
|
|
1,500 |
|
|
|
10,500 |
|
Income tax expense |
|
86,111 |
|
|
|
65,826 |
|
|
|
126,124 |
|
|
|
77,386 |
|
Adjusted EBIT |
|
327,099 |
|
|
|
273,664 |
|
|
|
581,040 |
|
|
|
430,334 |
|
Depreciation and amortization |
|
87,315 |
|
|
|
68,491 |
|
|
|
307,064 |
|
|
|
270,398 |
|
Adjusted EBITDA |
$ |
414,414 |
|
|
$ |
342,155 |
|
|
$ |
888,104 |
|
|
$ |
700,732 |
|
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 |
|
|
Fiscal Year Ended |
|
|
February 3, |
|
|
January 28, |
|
|
February 3, |
|
|
January 28, |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
(14 Weeks) |
|
|
|
|
|
(53 Weeks) |
|
|
|
|
Reconciliation of
SG&A to Adjusted SG&A: |
|
|
|
|
|
|
|
|
|
|
|
SG&A |
$ |
930,579 |
|
|
$ |
784,599 |
|
|
$ |
3,288,315 |
|
|
$ |
2,877,356 |
|
Net favorable lease costs (a) |
|
(3,434 |
) |
|
|
(4,329 |
) |
|
|
(15,263 |
) |
|
|
(18,591 |
) |
Product sourcing costs |
|
(210,251 |
) |
|
|
(187,026 |
) |
|
|
(780,286 |
) |
|
|
(677,817 |
) |
Litigation matters (d) |
|
— |
|
|
|
— |
|
|
|
(1,500 |
) |
|
|
(10,500 |
) |
Adjusted SG&A |
$ |
716,894 |
|
|
$ |
593,244 |
|
|
$ |
2,491,266 |
|
|
$ |
2,170,448 |
|
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 |
|
|
Fiscal Year Ended |
|
|
February 3, |
|
|
January 28, |
|
|
February 3, |
|
|
January 28, |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Effective tax rate on a GAAP basis |
|
27.5 |
% |
|
|
26.2 |
% |
|
|
27.1 |
% |
|
|
25.2 |
% |
Adjustments to arrive at Adjusted Effective Tax Rate (g) |
|
(1.8 |
) |
|
|
(0.9 |
) |
|
|
(1.7 |
) |
|
|
(0.5 |
) |
Adjusted Effective Tax Rate |
|
25.7 |
% |
|
|
25.3 |
% |
|
|
25.4 |
% |
|
|
24.7 |
% |
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 |
|
|
April 29, 2023 |
|
Reconciliation of net
income to Adjusted Net Income: |
|
|
Net income |
$ |
32,748 |
|
Net favorable lease costs (a) |
|
4,064 |
|
Loss on extinguishment of debt (b) |
|
24,644 |
|
Impairment charges |
|
844 |
|
Tax effect (e) |
|
(7,302 |
) |
Adjusted Net Income |
$ |
54,998 |
|
Diluted weighted average shares outstanding (f) |
|
65,291 |
|
Adjusted Earnings per Share |
$ |
0.84 |
|
(a) Net favorable lease costs represent 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 Consolidated Statements
of Income. (b) Amounts relate to the partial repurchases of the
2.25% Convertible Senior Notes due 2025 (2025 Convertible Notes) in
Fiscal 2023 and Fiscal 2022 and the exchange of a portion of the
2025 Convertible Notes in Fiscal 2023. (c) Fiscal 2023 amount
relates to the Term Loan Credit Agreement amendment in the second
quarter of Fiscal 2023 changing one of the reference rates under
the Term Loan Credit Agreement from the 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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