Burlington Stores Inc. reported earnings more than doubled in the first quarter versus the first quarter of 2019 as same-store sales grew 20 percent.

Michael O’Sullivan, CEO, stated, “We are pleased with our first-quarter results. There were numerous factors that contributed to improved traffic and consumer spending in the quarter including the latest stimulus checks, the pace of the vaccine roll-out and pent-up consumer demand. We were able to chase the very strong trend and maximize our share of this sales opportunity through strong execution of our Burlington 2.0 strategies.”

O’Sullivan continued, “The second quarter is off to a good start, but the go-forward sales trend remains very difficult to predict. Meanwhile, expense headwinds in supply chain and freight have continued to deteriorate, and these are likely to weigh on our operating margin throughout the balance of the year.”

Fiscal 2021 First Quarter Operating Results
(for the 13-week period ended May 1, 2021, compared with the 13-week period ended May 4, 2019)

Given the volatility in Fiscal 2020 results caused by COVID-19 and to assist with comparability, all first quarter Fiscal 2021 comparisons are made versus the first quarter of Fiscal 2019.

  • Total sales increased 35 percent compared to the first quarter of Fiscal 2019 to $2,191 million, while comparable-store sales increased 20 percent compared to the first quarter of Fiscal 2019.
  • Gross margin rate was 43.3 percent versus 41.0 percent for the first quarter of Fiscal 2019, an increase of 230 basis points.
  • Product sourcing costs, which are included in selling, general and administrative expenses (SG&A), were $141 million versus $79 million in the first quarter of Fiscal 2019. Product sourcing costs include the costs of processing goods through its supply chain and buying costs.
  • SG&A was 30.3 percent, as a percentage of net sales, versus 31.8 percent in the first quarter of Fiscal 2019. Adjusted SG&A, as defined below, was 23.7 percent as a percentage of net sales versus 26.3 percent in the first quarter of Fiscal 2019, an improvement of 260 basis points.
  • The effective tax rate was 19.2 percent versus 17.2 percent in the first quarter of Fiscal 2019. The Adjusted Effective Tax Rate was 19.4 percent versus 18.0 percent in the first quarter of Fiscal 2019.
  • Net income increased 120 percent to $171 million, or $2.51 per share versus $78 million, or $1.15 per share for the first quarter of Fiscal 2019, and Adjusted Net Income was $176 million, or $2.59 per share versus $85 million, or $1.26 per share for the first quarter of Fiscal 2019.
  • Fully diluted shares outstanding amounted to 68.0 million at the end of the quarter compared with 67.7 million at the end of the first quarter of Fiscal 2019.
  • Adjusted EBITDA increased 75 percent from the first quarter of Fiscal 2019 to $293 million, an increase of 310 basis points as a percentage of sales. Adjusted EBIT increased 103 percent from the first quarter of Fiscal 2019 to $238 million, an increase of 360 basis points as a percentage of sales.

Inventory
Merchandise inventories were $768 million vs. $896 million at the end of the first quarter of Fiscal 2019, a 14 percent decrease, while comparable store inventories decreased 19 percent. Reserve inventory was 35 percent of total inventory at the end of the first quarter of Fiscal 2021 compared to 34 percent at the end of the first quarter of Fiscal 2019.

Liquidity
The company ended the first quarter of Fiscal 2021 with $2,080 million in liquidity, comprised of $1,531 million in unrestricted cash and $549 million in availability on its ABL facility.

Outlook
Given the uncertainty surrounding the pace of the recovery of consumer demand and the ongoing COVID-19 pandemic, the company is not providing sales or earnings guidance for Fiscal 2021, the 52-weeks ending January 29, 2022, at this time.

The company is updating the following Fiscal 2021 guidance items:

  • Capital expenditures, net of landlord allowances, is expected to be approximately $470 million;
  • The company expects to open 100 new stores, while relocating or closing 25 stores, for a total of 75 net new stores in Fiscal 2021;
  • Depreciation & amortization, exclusive of favorable lease costs, is expected to be approximately $260 million;
  • Interest expense is now expected to be approximately $68 million, subject to the successful redemption described above of the $300 million outstanding of our Senior Secured Notes; and
  • The effective tax rate is now expected to be approximately 23 percent to 24 percent.

Photo courtesy Burlington Stores