Burlington Stores, Inc. reported total sales for the fiscal fourth quarter increased 5 percent to $2.74 billion and comparable store sales decreased 2 percent for the period ended January 28, 2023, compared to the fourth quarter of Fiscal 2021.

Michael O’Sullivan, CEO, stated, “I am pleased with the improvement in our sales trend during the fourth quarter. We saw monthly comps accelerate as we moved through the quarter, and this stronger trend has continued through February. The acceleration in our trend was partly driven by improved conversion and basket size, which we attribute to more compelling value in our assortment, but was also driven by improved traffic, which we interpret as a sign that the headwinds that we saw through most of 2022 are beginning to moderate.”

Fourth quarter gross margin rate was 40.7 percent of sales, compared to 39.8 percent for the fourth quarter of Fiscal 2021, an increase of 90 basis points. Freight improved by 130 basis points and merchandise margins decreased 40 basis points.

Product sourcing costs, which are included in selling, general and administrative expenses (SG&A), were $187 million in Q4, compared to $159 million in the prior-year fourth quarter. Product sourcing costs include the costs of processing goods through the company’s supply chain and buying costs.

SG&A was 28.6 percent as a percentage of net sales versus 28.5 percent in the prior-year fourth quarter, higher by 10 basis points. Adjusted SG&A was 21.7 percent of net sales versus 22.2 percent in the prior-year fourth quarter, an improvement of 50 basis points.

The effective tax rate was 26.2 percent vs. 31.8 percent in the fourth quarter of Fiscal 2021. The Adjusted Effective Tax Rate was 25.3 percent vs. 24.2 percent in the fourth quarter of Fiscal 2021.

Net income was $185 million, or $2.83 per share, in the fourth quarter, compared to $122 million, or $1.80 per share, for the prior-year fourth quarter. Adjusted net income was $194 million, or $2.96 per share, for Q4, versus $171 million, or $2.53 per share, for the fourth quarter of Fiscal 2021.

Adjusted EBITDA was $342 million versus $307 million in the fourth quarter of Fiscal 2021, an increase of 70 basis points as a percentage of sales. Adjusted EBIT was $274 million versus $241 million for the fourth quarter of Fiscal 2021, an increase of 80 basis points as a percentage of sales.

Full year fiscal 2022 total sales decreased 7 percent compared to Fiscal 2021. Net income decreased 44 percent, or $179 million, to $230 million, or $3.49 per share versus $6.00 per share in Fiscal 2021, a decrease of 42 percent. Adjusted EBIT decreased 46 percent, or $371 million, to $430 million. Adjusted net income of $281 million was down 51 percent versus Fiscal 2021, while Adjusted EPS was $4.26 versus $8.41 in Fiscal 2021, a decrease of 49 percent.

Merchandise inventories were $1.18 billion at year-end, compared to $1.02 billion at the end of Fiscal 2021. Comparable store inventories increased 32 percent. Reserve inventory was 48 percent of total inventory at the end of Fiscal 2022 compared to 50 percent at the end of Fiscal 2021.

Mr. O’Sullivan continued, “Our merchandising and operating plans for 2023 are based on 3 percent to 5 percent comp sales growth. The underlying strategy behind these plans is to drive sales by taking advantage of the terrific off-price buying environment for branded merchandise and passing along these compelling values to our shoppers. On 3 percent to 5 percent comp sales growth, we are expecting 80 to 120 basis points of operating margin expansion.”

For the 53-week Fiscal Year 2023, Burlington expects:

  • Total sales to increase in the range of 12 percent to 14 percent including approximately 2 percent from the 53rd week, on top of a 7 percent decrease in Fiscal 2022; this assumes comparable store sales will increase in the range of 3 percent to 5 percent, on top of the 13 percent decrease during Fiscal 2022;
  • Capital expenditures, net of landlord allowances, to be approximately $560 million;
  • To open 70 to 80 net new stores;
  • Depreciation & amortization, exclusive of favorable lease costs, to be approximately $320 million;
  • Adjusted EBIT margin rate to increase approximately 80 to 120 basis points versus Fiscal 2022;
  • Net interest expense to be approximately $66 million;
  • The effective tax rate to be approximately 26 percent; and
  • Adjusted EPS in the range of $5.50 to $6.00 a share, utilizing 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. This includes an expected benefit from the 53rd week of approximately $0.05 per share.

For the first quarter of Fiscal 2023, the company expects:

  • Total sales to increase in the range of 12 percent to 14 percent; this assumes comparable store sales will increase in the range of 5 percent to 7 percent versus the first quarter of Fiscal 2022;
  • Adjusted EBIT margin to increase 120 to 150 basis points versus the first quarter of Fiscal 2022;
  • An effective tax rate of approximately 26 percent; and
  • Adjusted EPS in the range of $0.85 to $0.95, as compared to $0.24 in diluted EPS and $0.54 in Adjusted EPS last year.

Mr. O’Sullivan concluded, “Beyond 2023, we are excited about our longer-term prospects. We believe that the next few years could present significant opportunities to drive improved results. We are pushing ahead with the transformation of Burlington into a stronger off-price retailer, so we can take advantage of these opportunities.”