Burlington Stores(US:BURL)2025-05-29 21:37Financial Performance - Net income for the three-month period ended May 3, 2025, was $100.8 million, an increase from $78.5 million in the same period last year, driven by higher sales and increased gross margin rate [108]. - Adjusted Net Income rose by $15.8 million to $102.6 million compared to the prior year, primarily due to higher sales and improved gross margin rate [115]. - Adjusted EBIT increased by $16.9 million to $146.3 million for the three months ended May 3, 2025, compared to the same period in the prior year [121]. - Adjusted EBITDA rose by $26.7 million to $238.1 million for the three months ended May 3, 2025, driven by higher sales and increased gross margin rate [121]. - Net sales improved by approximately $142.8 million, or 6.1%, to $2,500.1 million during the first quarter of Fiscal 2025, primarily due to net sales from 94 new stores opened since the end of the first quarter of Fiscal 2024 [136]. - Comparable store sales were flat at 0% for the three months ended May 3, 2025, compared to a 2% increase for the same period in the prior year [126]. - Gross margin as a percentage of net sales increased to 43.8% during the three months ended May 3, 2025, compared to 43.5% for the same period in the prior year [128]. - Income tax expense was $32.0 million for the first quarter of Fiscal 2025, with an effective tax rate of 24.1%, down from 28.4% in the prior year [147]. Store Operations and Expansion - The company opened 14 new stores during the three-month period, bringing the total store count to 1,115 as of May 3, 2025 [95]. - The company plans to average about 100 net new stores per year, targeting a total of 500 net new stores over the five-year period from Fiscal 2024 through Fiscal 2028 [100]. - The company aims to operate 2,000 stores in the long term, identifying numerous market opportunities for expansion [100]. - The company opened 14 new stores and closed three stores during the three-month period ended May 3, 2025, bringing the total store count to 1,115, with plans to open approximately 100 net new stores in Fiscal 2025 [167]. Inventory and Cash Flow - Inventory increased to $1,315.3 million as of May 3, 2025, compared to $1,140.8 million at May 4, 2024, primarily due to an increase in reserve inventory and new store openings [130]. - Cash and cash equivalents decreased by $623.6 million during the three months ended May 3, 2025, compared to a decrease of $183.0 million during the same period in the prior year [133]. - Cash used during the three-month period ended May 3, 2025, was $623.6 million, compared to $183.0 million for the same period in 2024, indicating a significant increase in cash outflow [154]. - Net cash used in operating activities was $28.9 million for the three-month period ended May 3, 2025, down from a net cash provided of $49.4 million in the same period in 2024, primarily due to changes in working capital [155]. - Net cash used in investing activities increased to $412.7 million for the three-month period ended May 3, 2025, compared to $165.5 million in the same period in 2024, driven by higher capital expenditures related to supply chain costs and store openings [156]. - Net cash used in financing activities was $182.0 million during the three-month period ended May 3, 2025, up from $66.9 million in the same period in 2024, mainly due to the settlement of the 2025 Convertible Notes and increased treasury stock repurchases [157]. - Capital expenditures for the three-month period ended May 3, 2025, amounted to $412.2 million, with an estimated total of approximately $950 million planned for Fiscal 2025 [159][160]. Economic and Market Conditions - General economic conditions, including inflation and consumer spending habits, remain a challenge, particularly affecting low-income shoppers, the company's core customer base [99]. - The company anticipates increased competition in the retail sector, necessitating continued differentiation from competitors through brand-name merchandise at discounted prices [104]. - The company acknowledges risks related to general economic conditions, including inflation and political situations, which may impact consumer confidence and spending [186]. - The company highlights the importance of adapting to changing consumer preferences and demand as a key factor for future growth [186]. Operational Challenges and Strategies - The company is focusing on driving comparable store sales growth by effectively chasing sales trends and operating with leaner inventories [96]. - The company expects to carry less inventory compared to historical levels, which should lead to faster inventory turns and lower markdowns [96]. - The company is investing in merchandising capabilities, including training, improved tools, and incremental headcount to strengthen vendor relationships and better forecast sales trends [97]. - The company is focused on optimizing existing stores and maintaining favorable lease terms to enhance operational efficiency [186]. - The company faces challenges related to labor costs and the ability to attract and retain quality employees, which are critical for sustaining growth [186]. - The company is subject to risks from disruptions in its distribution network and the need to protect its information systems against cyber-related attacks [186]. - The company notes that its advertising and marketing programs are essential for generating customer traffic and brand awareness [186]. Debt and Financial Commitments - As of May 3, 2025, total debt obligations included $1,236.1 million under the Term Loan Facility and $297.1 million of 2027 Convertible Notes [168]. - The company has $1,980.1 million in purchase commitments related to goods not received as of May 3, 2025, and $4,703.8 million in future minimum lease payments under operating leases [182]. - The 2027 Convertible Notes bear interest at a rate of 1.25% per year and may be converted into common stock, with an initial conversion price of approximately $205.93 per share [178][179]. - The company has authorized a share repurchase program of up to $1 billion, with $157.9 million remaining under the current authorization as of May 3, 2025 [161][162]. Forward-Looking Statements and Risks - The company emphasizes that past financial performance should not be relied upon as an indication of future performance due to various unpredictable factors [187]. - The company will not publicly update or revise forward-looking statements unless required by law, indicating a cautious approach to future projections [187]. - The company has no material changes in its quantitative and qualitative disclosures about market risk from those included in the Fiscal 2024 10-K [189]. - The company is committed to complying with increasingly rigorous privacy and data security regulations, which are vital for maintaining customer trust [186].