BURLINGTON STORES, INC. Highlights:
* All First Quarter 2022 comparisons are made versus the First Quarter 2021
* On a GAAP basis, total sales decreased 12%, net income was
* Comparable store sales decreased 18%
* On a non-GAAP basis, Adjusted EBIT was
* On a non-GAAP basis, Adjusted EPS was
He continued, 'Despite the monthly sequential improvement during Q1, our sales trend remains weak, with comp trends in May similar to April. We had anticipated that 2022 would be a difficult year in retail but the economic environment, especially the impact of inflation on lower income shoppers, is having a greater impact than we had expected. We have lowered our outlook for sales.'
He concluded, 'Historically, economic slowdowns have strengthened off-price retail at the expense of other channels. We are already seeing a significantly increased supply of off-price merchandise, and we feel that our conservative sales plan and strong liquidity position us well to take advantage of this opportunity. We also believe that if inflation persists and this economic slowdown spreads, then it may cause shoppers to trade down to off-price, looking for value. Lastly, we think that we may see longer term strategic benefits if this situation accelerates the restructuring of bricks and mortar retail stores over the next few years.'
*Three year geometric stack is defined as a stacked comparable sales growth rate that accounts for the compounding of comparable store sales from the same period from Fiscal 2019 to Fiscal 2022. It is calculated for each Fiscal 2022 quarter and full year Fiscal 2022, respectively, as follows: (1 + QTD 2021 comparable store sales growth) * (1 + QTD 2022 comparable store sales growth) - 1, and (1 + YTD 2021 comparable store sales growth) * (1 + YTD 2022 comparable store sales growth) - 1. Comparisons for Fiscal 2021 periods are made versus the same periods in Fiscal 2019.
Fiscal 2022 First Quarter Operating Results (for the 13-week period ended
Total sales decreased 12% compared to the first quarter of Fiscal 2021 to
Gross margin rate as a percentage of net sales was 41.0% vs. 43.3% for the first quarter of Fiscal 2021, a decrease of 230 basis points. Freight expense increased 150 basis points as a percentage of net sales and merchandise margins decreased 80 basis points.
Product sourcing costs, which are included in selling, general and administrative expenses (SG&A), were
SG&A was 35.3% as a percentage of net sales vs. 30.3% in the first quarter of Fiscal 2021. Adjusted SG&A, as defined below, was 26.7% as a percentage of net sales vs. 23.7% in the first quarter of Fiscal 2021, an increase of 300 basis points.
The effective tax rate was 8.7% vs. 19.2% in the first quarter of Fiscal 2021. The Adjusted Effective Tax Rate was 19.2% vs. 19.4% in the first quarter of Fiscal 2021.
Net income was
Diluted weighted average shares outstanding amounted to 66.6 million during the quarter compared with 68.0 million during the first quarter of Fiscal 2021.
Adjusted EBITDA was
Inventory
Merchandise inventories were
Liquidity and Debt
The Company ended the first quarter of Fiscal 2022 with
Convertible Note and Common Stock Repurchases
During the first quarter of Fiscal 2022, the Company entered into privately negotiated transactions to repurchase approximately
In addition, during the first quarter of Fiscal 2022 the Company repurchased 512,905 shares of its common stock under its share repurchase program for
Outlook
For the full Fiscal Year 2022 (the 52-weeks ending
Comparable store sales to decrease in the range of -9% to -6% for Fiscal 2022, on top of the 15% increase during Fiscal 2021; this translates to a 3-year geometric comparable store sales stack of 5% to 8% versus Fiscal 2019.
Capital expenditures, net of landlord allowances, is expected to be approximately
The Company still expects to open 120 new stores, while relocating or closing 30 stores, for a total of 90 net new stores in Fiscal 2022;
Depreciation and amortization, exclusive of favorable lease costs, to be approximately
Adjusted EBIT margin to be down 200 to 130 basis points to last year;
Interest expense is expected to be approximately
An effective tax rate of approximately 25% to 26%; and
Adjusted EPS to be in the range of
For the second quarter of Fiscal 2022 (the 13 weeks ending
Comparable store sales to decrease -15% to -13%; this translates to a 3-year geometric comparable store sales stack of 1% to 3%;
Adjusted EBIT margin to be down 670 to 610 basis points to last year;
An effective tax rate of approximately 26% to 27%; and
Adjusted EPS in the range of
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 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.
First Quarter 2022 Conference Call
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
About
For more information about the Company, visit www.burlington.com.
Investor Relations Contacts:
855-973-8445
Info@BurlingtonInvestors.com
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 expected sales trend, our liquidity position, inventory plans, and the economic 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 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; general economic conditions, including inflation, and the related impact on consumer confidence and spending; competitive factors, including pricing and promotional activities of major competitors and an increase in competition within the markets in which we compete; weather patterns, including changes in year-over-year temperatures; the reduction in traffic to, or the closing of, the other destination retailers in the shopping areas where our stores are located; changing consumer preferences and demand; industry trends, including changes in buying, inventory and other business practices; 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; the availability, selection and purchasing of attractive merchandise on favorable terms; the availability of desirable store locations on suitable terms; industry trends, including changes in buying, inventory and other business practices; terrorist attacks, particularly attacks on or within markets in which we operate; our ability to attract, train and retain quality employees and temporary personnel in appropriate numbers; our ability to control costs and expenses; 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; our dependence on vendors for our merchandise; domestic and international events affecting the delivery of merchandise to our stores; unforeseen cyber-related problems or attacks; regulatory and tax changes; issues with merchandise safety and shrinkage; any unforeseen material loss or casualty or the existence of adverse litigation; the impact of current and future laws and the interpretation of such laws; our substantial level of indebtedness and related debt-service obligations; consequences of the failure to comply with covenants in our debt agreements; the availability of adequate financing; and each of the factors that may be described from time to time in our filings with the
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
See full results at: https://www.burlingtoninvestors.com/news-releases/news-release-details/burlington-stores-inc-reports-first-quarter-2022-earnings
(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
(b) Amounts relate to the partial repurchases of the Convertible Notes.
Represents amounts charged for certain litigation matters.
(d) 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 (c).
(e) Diluted weighted average shares outstanding starts with basic shares outstanding and adds back any potentially dilutive securities outstanding during the period.
(f) Includes favorable lease costs included in the line item 'Selling, general and administrative expenses' in our Condensed Consolidated Statements of Income. During the three months ended
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