Burlington Stores, Inc. Announces Third Quarter And First Nine Months Fiscal 2016 Results

Burlington Stores, Inc. (NYSE:BURL), a nationally recognized off-price retailer of high-quality, branded apparel at everyday low prices, today announced its results for the third quarter and nine months ended October 29, 2016.

Tom Kingsbury, Chief Executive Officer stated, "We are very pleased with our third quarter results, which exceeded our sales and earnings guidance, continuing our strong momentum from the first half of the year. Our ability to execute our off-price model by delivering fresh product, compelling value, and sought after brands continues to serve us well. In the quarter, we delivered our 15 th consecutive quarter of positive comparable store sales. I would like to thank all of our associates for their contributions to our third quarter and year to date results."

Fiscal 2016 Third Quarter Operating Results (for the 13 week period ended October 29, 2016 compared with the 13 week period ended October 31, 2015):
  • Net sales increased 9.1%, or $111.7 million, to $1,342.6 million. This growth was driven by a 3.7% increase in comparable store sales and $69.8 million in sales from new and non-comparable stores. The Company's 3.7% comparable store sales increase follows a 2.8% increase in the third quarter of Fiscal 2015.
  • Gross margin expanded by 140 basis points to 41.2% driven by strong merchandise margins. This more than offset a 20 basis point increase in product sourcing costs, which are included in selling, general and administrative expenses (SG&A).
  • SG&A, less product sourcing costs, as a percentage of net sales was 28.5%, representing approximately 40 basis points of improvement compared with last year. This improvement was driven by greater leverage in advertising, store occupancy and store payroll expense, partially offset by an increase in incentive compensation.
  • The effective tax rate was 35.0% compared with 37.7% last year, primarily related to a decrease in state tax rate and an increase in federal hiring credits.
  • Net income increased 114.4% to $32.4 million, or $0.45 per diluted share.
  • Adjusted Net Income increased 90.5% to $36.3 million, or $0.51 per diluted share vs. $0.25 per diluted share last year.
  • Fully diluted shares outstanding were 71.6 million compared with 75.4 million last year, primarily driven by the repurchase of 3.8 million shares since the end of the Fiscal 2015 third quarter.
  • Adjusted EBITDA increased 32.7%, or $27.0 million, to $109.6 million. Sales growth, SG&A leverage and gross margin expansion led to a 150 basis point expansion in Adjusted EBITDA as a percentage of net sales.

Fiscal 2016 First Nine Months Operating Results (for the 39 week period ended October 29, 2016 compared with the 39 week period ended October 31, 2015):
  • Net sales increased 9.1%, or $322.2 million, to $3,880.3 million. This growth was driven by a 4.5% increase in comparable store sales and $174.2 million in sales from new and non-comparable stores. The Company's 4.5% comparable store sales increase follows a 3.0% increase in the first nine months of Fiscal 2015.
  • Gross margin expanded by 70 basis points to 40.3% driven by strong merchandise margins. This more than offset a 20 basis point increase in product sourcing costs, which are included in SG&A.
  • SG&A, less product sourcing costs, as a percentage of net sales was 27.5% representing approximately 70 basis points of improvement compared with last year. This improvement was driven by increased leverage in store occupancy, store payroll and advertising expense, partially offset by an increase in incentive compensation.
  • The effective tax rate was 36.7% compared with 38.6% last year, primarily related to a decrease in state tax rate and an increase in federal hiring credits.
  • Net income increased 74.7% to $90.3 million, or $1.25 per diluted share.
  • Adjusted Net Income increased 62.6% to $106.1 million vs. $65.3 million, or $1.47 per diluted share vs. $0.86 per diluted share last year.
  • Fully diluted shares outstanding were 72.0 million compared with 76.1 million last year, primarily driven by the repurchase of 3.8 million shares since the end of the Fiscal 2015 third quarter.
  • Adjusted EBITDA increased 27.1%, or $70.3 million, to $329.6 million. Sales growth, SG&A leverage and gross margin expansion led to a 120 basis point expansion in Adjusted EBITDA as a percent of net sales.

Inventory
  • Merchandise inventories were $822.5 million vs. $934.0 million last year, primarily driven by a comparable store inventory decrease of 8%. Pack and hold inventory represented 12% of inventory at quarter end vs. 14% last year.

Share Repurchase Activity
  • During the third quarter, the Company invested $75 million of cash to repurchase 919,122 shares of its common stock. As of the end of the third quarter, the Company has returned $350 million to shareholders through share repurchases since the inception of its share repurchase program in the second quarter of Fiscal 2015.
  • On November 15, 2016, the Company's Board of Directors authorized the repurchase of up to an additional $200 million of common stock, which is expected to be executed over the next 24 months. This brings total availability under the Company's share repurchase programs to $250 million. Share repurchases will be funded using the Company's available cash.Commenting on the share repurchase announcement, Tom Kingsbury, Chief Executive Officer stated, "The decision by our Board of Directors to authorize a new $200 million share repurchase program reflects their confidence in the strength of our cash flows and in the continued upside value creation that lies ahead for our company."

Full Year Fiscal 2016 and Fourth Quarter 2016 Outlook

The Company is raising its full year Fiscal 2016 outlook based on its strong year to date performance and positive outlook for the fourth quarter. The Company notes that given changes in share count, simple addition of its quarterly adjusted net income per share may not round to the full fiscal year.

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