Burlington Stores, Inc. — Q1 Fiscal 2024 Form 10-Q
Reporting period: 13 weeks ended May 4, 2024, compared with the 13 weeks ended April 29, 2023. The request metadata says 2023 Q1, but the filing is for Q1 Fiscal 2024. Burlington operated 1,021 stores at quarter-end.
Financial performance and position
| Metric | Q1 FY2024 | Q1 FY2023 |
|---|---|---|
| Net sales | $2.357 billion | $2.133 billion |
| Net income | $78.5 million | $32.7 million |
| Diluted EPS | $1.22 | $0.50 |
| Gross margin | 43.5% | 42.3% |
| Comparable-store sales change | +2% | +4% |
| Operating cash flow | $49.4 million provided | $78.0 million used |
Sales increased 10.5%, driven by comparable-store growth and sales from 88 net new stores versus the prior-year period. Gross margin improved primarily from lower markdowns and freight costs. SG&A declined to 35.0% of sales from 35.4%, while depreciation and amortization rose to $82.0 million from $70.5 million. Management reported Adjusted Net Income of $86.8 million, Adjusted EBIT of $129.4 million, and Adjusted EBITDA of $211.4 million; these are non-GAAP measures.
Cash and cash equivalents were $742.3 million at May 4, 2024, down $183.0 million during the quarter. Investing used $165.5 million, including $164.8 million of property and equipment payments; financing used $66.9 million. Working capital was $140.8 million. Merchandise inventory was $1.141 billion, down from $1.231 billion a year earlier.
Reported total debt, net of deferred financing costs, was $1.405 billion, including $168.6 million classified as current, largely reflecting the 2025 Convertible Notes maturity. The term loan balance was $931.2 million and carried a 7.4% rate at quarter-end; convertible notes mature in 2025 and 2027. The ABL facility had no borrowings and $779.1 million available. Operating lease liabilities totaled approximately $3.412 billion.
Changes, outlook, and notable items
- Net income rose from $32.7 million to $78.5 million, reflecting higher sales and gross margin, as well as the absence of the prior-year $24.6 million debt-extinguishment charge.
- Operating cash flow improved year over year, while cash declined less than in the prior-year quarter. Capital expenditures, net of landlord allowances, were $146.8 million, including accrued expenditures.
- The company opened 36 stores, including 11 relocations, and permanently closed 11. It plans approximately 100 net new stores in Fiscal 2024 and targets about 500 net new stores over Fiscal 2024–2028.
- Fiscal 2024 capital expenditure guidance is approximately $750 million, net of about $40 million in landlord allowances, including roughly $340 million for stores and $210 million for supply-chain initiatives.
- Management says cash from operations, existing cash, and the ABL facility are expected to fund requirements and planned capital expenditures for at least the next 12 months. The company does not anticipate near-term cash dividends.
- Unusual expenses included an $8.2 million impairment related to an owned store sold below carrying value in a sale-leaseback transaction, and $6.0 million of SG&A costs related to acquired Bed Bath & Beyond leases. The filing also reports $1.685 billion of purchase commitments for goods not yet received.
- Management cites inflation and pressure on lower-income shoppers, competition and margin pressure, weather and seasonality, supply-chain and sourcing risks, and the ability to execute store-growth plans. The company is also exposed to variable interest rates, partly mitigated by a $450 million interest-rate swap. Ongoing legal matters are not expected by management to have a material adverse effect; outcomes remain uncertain.
Key facts for investors to verify
- Whether comparable-store sales and merchandise margins sustain momentum, and how performance compares with management’s conservative planning assumptions.
- Whether the planned store expansion and $750 million capital program deliver expected returns without pressuring liquidity or operating margins.
- Funding and repayment or refinancing plans for the $168.6 million current debt classification and the 2025 Convertible Notes maturity.
- Cash generation, inventory levels, and ABL availability as seasonal working-capital needs change.
- Potential effects of macroeconomic conditions, consumer spending, weather, competition, and additional store impairments.