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 fourth quarter ended January
28, 2023. 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.”
Mr. O’Sullivan continued, “Our merchandising and operating plans
for 2023 are based on 3% to 5% 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% to 5% comp sales growth, we are expecting 80 to 120
basis points of operating margin expansion.”
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.”
Fiscal 2022 Fourth Quarter Operating
Results (for the 13-week period ended January 28, 2023 compared
with the 13-week period ended January 29, 2022)
- Total sales increased
5% compared to the fourth quarter of Fiscal 2021 to $2,739 million,
while comparable store sales decreased 2% compared to the fourth
quarter of Fiscal 2021.
- Gross margin rate was
40.7% vs. 39.8% 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 vs. $159
million in the fourth quarter of Fiscal 2021. Product sourcing
costs include the costs of processing goods through the Company’s
supply chain and buying costs.
- SG&A was 28.6% as
a percentage of net sales vs. 28.5% in the fourth quarter of Fiscal
2021, higher by 10 basis points. Adjusted
SG&A, as defined below, was 21.7% as a percentage of
net sales vs. 22.2% in the fourth quarter of Fiscal 2021, an
improvement of 50 basis points.
- The effective tax rate
was 26.2% vs. 31.8% in the fourth quarter of Fiscal 2021.
The Adjusted Effective Tax Rate was 25.3% vs.
24.2% in the fourth quarter of Fiscal 2021.
- Net
income was $185 million, or $2.83 per share vs. $122
million, or $1.80 per share for the fourth quarter of Fiscal 2021.
Adjusted Net Income was $194 million, or $2.96 per
share vs. $171 million, or $2.53 per share for the fourth quarter
of Fiscal 2021.
- Diluted weighted average shares
outstanding amounted to 65.4 million during the quarter
compared with 67.6 million during the fourth quarter of Fiscal
2021.
- Adjusted
EBITDA was $342 million vs. $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 vs. $241 million for the fourth quarter of Fiscal 2021, an
increase of 80 basis points as a percentage of sales.
Full Year Fiscal 2022 Results
- Total sales decreased 7% compared to
Fiscal 2021. Net income decreased 44%, or $179 million, to $230
million, or $3.49 per share vs. $6.00 per share in Fiscal 2021, a
decrease of 42%. Adjusted EBIT decreased 46%, or $371 million, to
$430 million. Adjusted Net Income of $281 million was down 51% vs.
Fiscal 2021, while Adjusted EPS was $4.26 vs. $8.41 in Fiscal 2021,
a decrease of 49%.
Inventory
- Merchandise
inventories were $1,182 million vs. $1,021 million at the end of
Fiscal 2021. Comparable store inventories increased 32%. Reserve
inventory was 48% of total inventory at the end of Fiscal 2022
compared to 50% at the end of Fiscal 2021.
Liquidity and Debt
- The Company ended
the fourth quarter of Fiscal 2022 with $1,669 million in liquidity,
comprised of $873 million in unrestricted cash and $796 million in
availability on its ABL facility. The Company ended the fourth
quarter with $1,476 million in outstanding total debt, including
$942 million on its Term Loan facility, $508 million in Convertible
Notes, and no borrowings on the ABL facility.
Common Stock Repurchases
- During the fourth quarter the Company
repurchased 275,029 shares of its common stock for $51 million. As
of the end of the fourth quarter, the Company had $347 million
remaining on its share repurchase authorization.
Outlook For Fiscal 2023 (the
53-weeks ending February 3, 2024), the Company expects:
- Total sales to increase in the range of
12% to 14% including approximately 2% from the 53rd week, on top of
a 7% decrease in Fiscal 2022; this assumes comparable store sales
will increase in the range of 3% to 5%, on top of the 13% 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%; and
- Adjusted EPS in the range of $5.50 to
$6.00, 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 13-weeks ending April
29, 2023), the Company expects:
- Total sales to increase in the range of
12% to 14%; this assumes comparable store sales will increase in
the range of 5% to 7% 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%; 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.
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 and
Other 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 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 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.
From time to time when discussing its comparable stores sales
trends, the Company references its three-year 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 2022. It is calculated for each Fiscal 2022 quarter
and full year Fiscal 2022 as follows: (1 + QTD 2021 comparable
store sales growth) * (1 + QTD 2022 comparable store sales growth)
- 1, and (1 + FY 2021 comparable store sales growth) * (1 + FY 2022
comparable store sales growth) - 1. Comparisons for Fiscal 2021
periods are made versus the same periods in Fiscal 2019.
Fourth Quarter 2022 Conference CallThe Company
will hold a conference call on March 2, 2023 at 8:30 a.m. ET to
discuss the Company’s fourth quarter and fiscal 2022 results. The
U.S. toll free dial-in for the conference call is 1-800-715-9871
(passcode: 9923016) 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 2, 2023
beginning at 12:30 p.m. ET through March 9, 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 9923016.
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 927 stores as of the end
of Fiscal 2022, 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.
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
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
2.25% Convertible Notes due 2025; 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 |
|
|
Fiscal Year Ended |
|
|
January 28, |
|
|
January 29, |
|
|
January 28, |
|
|
January 29, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
2,739,085 |
|
|
$ |
2,603,461 |
|
|
$ |
8,684,545 |
|
|
$ |
9,306,549 |
|
Other revenue |
|
5,198 |
|
|
|
5,547 |
|
|
|
18,059 |
|
|
|
15,707 |
|
Total revenue |
|
2,744,283 |
|
|
|
2,609,008 |
|
|
|
8,702,604 |
|
|
|
9,322,256 |
|
COSTS AND
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
1,625,375 |
|
|
|
1,566,723 |
|
|
|
5,171,715 |
|
|
|
5,436,155 |
|
Selling, general and
administrative expenses |
|
784,599 |
|
|
|
741,622 |
|
|
|
2,877,356 |
|
|
|
2,868,527 |
|
Costs related to debt
issuances and amendments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,419 |
|
Depreciation and
amortization |
|
68,491 |
|
|
|
66,131 |
|
|
|
270,398 |
|
|
|
249,217 |
|
Impairment charges -
long-lived assets |
|
3,846 |
|
|
|
4,514 |
|
|
|
21,402 |
|
|
|
7,748 |
|
Other income - net |
|
(8,074 |
) |
|
|
(1,364 |
) |
|
|
(26,907 |
) |
|
|
(11,630 |
) |
Loss on extinguishment of
debt |
|
— |
|
|
|
38,264 |
|
|
|
14,657 |
|
|
|
156,020 |
|
Interest expense |
|
19,020 |
|
|
|
14,792 |
|
|
|
66,474 |
|
|
|
67,502 |
|
Total costs and expenses |
|
2,493,257 |
|
|
|
2,430,682 |
|
|
|
8,395,095 |
|
|
|
8,776,958 |
|
Income before income
tax expense |
|
251,026 |
|
|
|
178,326 |
|
|
|
307,509 |
|
|
|
545,298 |
|
Income tax expense |
|
65,826 |
|
|
|
56,690 |
|
|
|
77,386 |
|
|
|
136,459 |
|
Net income |
$ |
185,200 |
|
|
$ |
121,636 |
|
|
$ |
230,123 |
|
|
$ |
408,839 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per common
share |
$ |
2.83 |
|
|
$ |
1.80 |
|
|
$ |
3.49 |
|
|
$ |
6.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
- diluted |
|
65,385 |
|
|
|
67,626 |
|
|
|
65,901 |
|
|
|
68,126 |
|
BURLINGTON STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) (All amounts in
thousands)
|
January 28, |
|
|
January 29, |
|
|
2023 |
|
|
2022 |
|
ASSETS |
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
872,623 |
|
|
$ |
1,091,091 |
|
Restricted cash and cash
equivalents |
|
6,582 |
|
|
|
6,582 |
|
Accounts receivable—net |
|
71,091 |
|
|
|
54,089 |
|
Merchandise inventories |
|
1,181,982 |
|
|
|
1,021,009 |
|
Assets held for disposal |
|
19,823 |
|
|
|
4,358 |
|
Prepaid and other current
assets |
|
131,691 |
|
|
|
370,515 |
|
Total current assets |
|
2,283,792 |
|
|
|
2,547,644 |
|
Property and
equipment—net |
|
1,668,005 |
|
|
|
1,552,237 |
|
Operating lease assets |
|
2,945,932 |
|
|
|
2,638,473 |
|
Goodwill and intangible
assets—net |
|
285,064 |
|
|
|
285,064 |
|
Deferred tax assets |
|
3,205 |
|
|
|
3,959 |
|
Other assets |
|
83,599 |
|
|
|
62,136 |
|
Total
assets |
$ |
7,269,597 |
|
|
$ |
7,089,513 |
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts payable |
$ |
955,793 |
|
|
$ |
1,080,802 |
|
Current operating lease
liabilities |
|
401,111 |
|
|
|
358,793 |
|
Other current liabilities |
|
541,413 |
|
|
|
493,695 |
|
Current maturities of long
term debt |
|
13,634 |
|
|
|
14,357 |
|
Total current liabilities |
|
1,911,951 |
|
|
|
1,947,647 |
|
Long term debt |
|
1,462,072 |
|
|
|
1,541,102 |
|
Long term operating lease
liabilities |
|
2,825,292 |
|
|
|
2,539,420 |
|
Other liabilities |
|
69,386 |
|
|
|
80,904 |
|
Deferred tax liabilities |
|
205,991 |
|
|
|
220,023 |
|
Stockholders' equity |
|
794,905 |
|
|
|
760,417 |
|
Total liabilities and
stockholders' equity |
$ |
7,269,597 |
|
|
$ |
7,089,513 |
|
BURLINGTON STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) (All amounts in
thousands)
|
Fiscal Year Ended |
|
|
January 28, |
|
|
January 29, |
|
|
2023 |
|
|
2022 |
|
OPERATING
ACTIVITIES |
|
|
|
|
|
Net income |
$ |
230,123 |
|
|
$ |
408,839 |
|
Adjustments to reconcile net
income to net cash provided by operating activities |
|
|
|
|
|
Depreciation and amortization |
|
270,398 |
|
|
|
249,217 |
|
Deferred income taxes |
|
(25,431 |
) |
|
|
51,952 |
|
Loss on extinguishment of debt |
|
14,657 |
|
|
|
156,020 |
|
Non-cash stock compensation expense |
|
67,480 |
|
|
|
58,546 |
|
Non-cash lease expense |
|
(523 |
) |
|
|
(10,294 |
) |
Cash received from landlord allowances |
|
23,137 |
|
|
|
34,051 |
|
Changes in assets and
liabilities: |
|
|
|
|
|
Accounts receivable |
|
(13,012 |
) |
|
|
10,186 |
|
Merchandise inventories |
|
(160,974 |
) |
|
|
(280,220 |
) |
Accounts payable |
|
(125,006 |
) |
|
|
214,792 |
|
Other current assets and liabilities |
|
289,682 |
|
|
|
(89,492 |
) |
Long term assets and liabilities |
|
(360 |
) |
|
|
(2,782 |
) |
Other operating
activities |
|
26,214 |
|
|
|
32,344 |
|
Net cash provided by
operating activities |
|
596,385 |
|
|
|
833,159 |
|
INVESTING
ACTIVITIES |
|
|
|
|
|
Cash paid for property and
equipment |
|
(447,393 |
) |
|
|
(352,467 |
) |
Lease acquisition costs |
|
(3,710 |
) |
|
|
(576 |
) |
Proceeds from sale of property
and equipment and assets held for sale |
|
27,961 |
|
|
|
8,654 |
|
Net cash (used in)
investing activities |
|
(423,142 |
) |
|
|
(344,389 |
) |
FINANCING
ACTIVITIES |
|
|
|
|
|
Proceeds from long term
debt—Term B-6 Loans |
|
— |
|
|
|
956,608 |
|
Principal payments on long
term debt—Term B-5 Loans |
|
— |
|
|
|
(961,415 |
) |
Principal payment on long term
debt—Convertible Notes |
|
(78,240 |
) |
|
|
(201,695 |
) |
Principal payments on long
term debt—Secured Notes |
|
— |
|
|
|
(323,905 |
) |
Purchase of treasury
shares |
|
(316,896 |
) |
|
|
(266,628 |
) |
Other financing
activities |
|
3,425 |
|
|
|
19,080 |
|
Net cash (used in)
provided by financing activities |
|
(391,711 |
) |
|
|
(777,955 |
) |
(Decrease) in cash, cash
equivalents, restricted cash and restricted cash equivalents |
|
(218,468 |
) |
|
|
(289,185 |
) |
Cash, cash equivalents,
restricted cash and restricted cash equivalents at beginning of
period |
|
1,097,673 |
|
|
|
1,386,858 |
|
Cash, cash
equivalents, restricted cash and restricted cash equivalents at end
of period |
$ |
879,205 |
|
|
$ |
1,097,673 |
|
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)
costs related to debt issuances and amendments; (iii) loss on
extinguishment of debt; (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) income tax
expense; (v) depreciation and amortization; (vi) impairment
charges; (vii) costs related to debt issuances and amendments;
(viii) amounts related to certain litigation matters; and (ix)
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) income tax expense; (v) impairment
charges; (vi) net favorable lease costs; (vii) costs related to
debt issuances and amendments; (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 (e) 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 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 |
|
|
January 28, |
|
|
January 29, |
|
|
January 28, |
|
|
January 29, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Reconciliation of net
income to Adjusted Net Income: |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
185,200 |
|
|
$ |
121,636 |
|
|
$ |
230,123 |
|
|
$ |
408,839 |
|
Net favorable lease costs (a) |
|
4,329 |
|
|
|
4,726 |
|
|
|
18,591 |
|
|
|
21,914 |
|
Costs related to debt issuances and amendments (b) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,419 |
|
Loss on extinguishment of debt (c) |
|
— |
|
|
|
38,264 |
|
|
|
14,657 |
|
|
|
156,020 |
|
Impairment charges - long-lived assets |
|
3,846 |
|
|
|
4,514 |
|
|
|
21,402 |
|
|
|
7,748 |
|
Litigation matters (d) |
|
— |
|
|
|
— |
|
|
|
10,500 |
|
|
|
— |
|
Tax effect (e) |
|
364 |
|
|
|
2,093 |
|
|
|
(14,503 |
) |
|
|
(24,741 |
) |
Adjusted Net Income |
$ |
193,739 |
|
|
$ |
171,233 |
|
|
$ |
280,770 |
|
|
$ |
573,199 |
|
Diluted weighted average shares outstanding (f) |
|
65,385 |
|
|
|
67,626 |
|
|
|
65,901 |
|
|
|
68,126 |
|
Adjusted Earnings per Share |
$ |
2.96 |
|
|
$ |
2.53 |
|
|
$ |
4.26 |
|
|
$ |
8.41 |
|
The following table shows the Company’s reconciliation of net
income to Adjusted EBITDA for the periods indicated:
|
(unaudited) |
|
|
(in thousands) |
|
|
Three Months Ended |
|
|
Fiscal Year Ended |
|
|
January 28, |
|
|
January 29, |
|
|
January 28, |
|
|
January 29, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Reconciliation of net
income to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
185,200 |
|
|
$ |
121,636 |
|
|
$ |
230,123 |
|
|
$ |
408,839 |
|
Interest expense |
|
19,020 |
|
|
|
14,792 |
|
|
|
66,474 |
|
|
|
67,502 |
|
Interest income |
|
(4,557 |
) |
|
|
(34 |
) |
|
|
(8,799 |
) |
|
|
(189 |
) |
Loss on extinguishment of debt (c) |
|
— |
|
|
|
38,264 |
|
|
|
14,657 |
|
|
|
156,020 |
|
Costs related to debt issuances and amendments (b) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,419 |
|
Litigation matters (d) |
|
— |
|
|
|
— |
|
|
|
10,500 |
|
|
|
— |
|
Depreciation and amortization (g) |
|
72,820 |
|
|
|
70,857 |
|
|
|
288,990 |
|
|
|
271,132 |
|
Impairment charges - long-lived assets |
|
3,846 |
|
|
|
4,514 |
|
|
|
21,402 |
|
|
|
7,748 |
|
Income tax expense |
|
65,826 |
|
|
|
56,690 |
|
|
|
77,386 |
|
|
|
136,459 |
|
Adjusted EBITDA |
$ |
342,155 |
|
|
$ |
306,719 |
|
|
$ |
700,733 |
|
|
$ |
1,050,930 |
|
The following table shows the Company’s reconciliation of net
income to Adjusted EBIT for the periods indicated:
|
(unaudited) |
|
|
(in thousands) |
|
|
Three Months Ended |
|
|
Fiscal Year Ended |
|
|
January 28, |
|
|
January 29, |
|
|
January 28, |
|
|
January 29, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Reconciliation of net
income to Adjusted EBIT: |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
185,200 |
|
|
$ |
121,636 |
|
|
$ |
230,123 |
|
|
$ |
408,839 |
|
Interest expense |
|
19,020 |
|
|
|
14,792 |
|
|
|
66,474 |
|
|
|
67,502 |
|
Interest income |
|
(4,557 |
) |
|
|
(34 |
) |
|
|
(8,799 |
) |
|
|
(189 |
) |
Loss on extinguishment of debt (c) |
|
— |
|
|
|
38,264 |
|
|
|
14,657 |
|
|
|
156,020 |
|
Costs related to debt issuances and amendments (b) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,419 |
|
Net favorable lease costs (a) |
|
4,329 |
|
|
|
4,726 |
|
|
|
18,591 |
|
|
|
21,914 |
|
Impairment charges - long-lived assets |
|
3,846 |
|
|
|
4,514 |
|
|
|
21,402 |
|
|
|
7,748 |
|
Litigation matters (d) |
|
— |
|
|
|
— |
|
|
|
10,500 |
|
|
|
— |
|
Income tax expense |
|
65,826 |
|
|
|
56,690 |
|
|
|
77,386 |
|
|
|
136,459 |
|
Adjusted EBIT |
$ |
273,664 |
|
|
$ |
240,588 |
|
|
$ |
430,334 |
|
|
$ |
801,712 |
|
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 |
|
|
January 28, |
|
|
January 29, |
|
|
January 28, |
|
|
January 29, |
|
Reconciliation of
SG&A to Adjusted SG&A: |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
SG&A |
$ |
784,599 |
|
|
|
741,622 |
|
|
$ |
2,877,356 |
|
|
$ |
2,868,527 |
|
Net favorable lease costs (a) |
|
(4,329 |
) |
|
|
(4,726 |
) |
|
|
(18,591 |
) |
|
|
(21,914 |
) |
Product sourcing costs |
|
(186,790 |
) |
|
|
(159,179 |
) |
|
|
(677,580 |
) |
|
|
(618,319 |
) |
Litigation matters (d) |
|
— |
|
|
|
— |
|
|
|
(10,500 |
) |
|
|
— |
|
Adjusted SG&A |
$ |
593,480 |
|
|
$ |
577,717 |
|
|
$ |
2,170,685 |
|
|
$ |
2,228,294 |
|
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 |
|
|
January 28, |
|
|
January 29, |
|
|
January 28, |
|
|
January 29, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Effective tax rate on a GAAP basis |
|
26.2 |
% |
|
|
31.8 |
% |
|
|
25.2 |
% |
|
|
25.0 |
% |
Adjustments to arrive at Adjusted Effective Tax Rate |
|
(0.9 |
) |
|
|
(7.6 |
) |
|
|
(0.5 |
) |
|
|
(3.0 |
) |
Adjusted Effective Tax Rate |
|
25.3 |
% |
|
|
24.2 |
% |
|
|
24.7 |
% |
|
|
22.0 |
% |
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 30, 2022 |
|
Reconciliation of net
income to Adjusted Net Income: |
|
|
Net income |
$ |
16,174 |
|
Net favorable lease costs (a) |
|
4,702 |
|
Loss on extinguishment of debt (c) |
|
14,657 |
|
Impairment charges |
|
2,543 |
|
Litigation matters |
|
5,000 |
|
Tax effect (e) |
|
(7,017 |
) |
Adjusted Net Income |
$ |
36,059 |
|
Diluted weighted average shares outstanding (f) |
|
66,645 |
|
Adjusted Earnings per Share |
$ |
0.54 |
|
(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 Condensed Consolidated
Statements of Income.(b) Represents costs incurred in connection
with the review and execution of refinancing opportunities.(c)
Fiscal 2022 amounts relate to the partial repurchases of the
Convertible Notes in the first quarter. Fiscal 2021 amounts relate
to the partial repurchase of the Convertible Notes, the redemption
of the Secured Notes, as well as the refinancing of the Term Loan
Facility.(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 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) 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 January 28, 2023 and January 29, 2022, favorable lease
costs were $4.3 million and $4.7 million, respectively. During the
twelve months ended January 28, 2023 and January 29, 2022,
favorable lease costs were $18.6 million and $21.9 million,
respectively.
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