OREANDA-NEWS. 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 first quarter ended April 30, 2016.

Tom Kingsbury, Chief Executive Officer stated, “We are very pleased to report first quarter results that exceeded our top and bottom line guidance. Our performance was highlighted by an 8.4% increase in net sales, a 4.3% increase in comparable store sales and an 80 basis point expansion in adjusted EBITDA margin driven by the ongoing traction and successful execution of our off-price operating model. I would like to thank our store and corporate teams for these results.”

Fiscal 2016 First Quarter Operating Results (for the 13 week period ended April 30, 2016 compared with the 13 week period ended May 2, 2015):

  • Net sales increased 8.4%, or $99.6 million, to $1,282.7 million. This increase includes the 4.3% increase in comparable store sales, as well as an increase of $52.6 million from new and non-comparable stores.
  • Gross margin improved approximately 35 basis points to 40.1% during the Fiscal 2016 first quarter. This more than offset an approximate 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 26.7%, which represented an approximate 60 basis points of improvement compared with the Fiscal 2015 first quarter. Approximately 20 basis points of this improvement represented timing of certain expenses related to activities that were moved to the second quarter of the year.
  • The effective tax rate was 37.6% compared with 37.8% last year.
  • Net income increased 46.0% to $37.5 million, or $0.52 per diluted share.
  • Adjusted Net Income increased 32.5% to $41.6 million, or $0.57 per share vs. $0.41 per share last year.
  • Fully diluted shares outstanding were 72.4 million at the end of the quarter compared with 76.5 million outstanding at the end of last year’s first quarter, primarily driven by the repurchase of 4.9 million shares since the 2015 first quarter.
  • Adjusted EBITDA increased 19.3%, or $19.5 million, to $121.0 million. Sales growth, SG&A leverage and gross margin expansion led to an 80 basis point expansion in Adjusted EBITDA as a percentage of net sales.

Inventory

  • Merchandise inventories were $804.7 million vs. $822.3 million last year, primarily driven by a comparable store inventory decrease of 9%. Pack and hold inventory represented 28% of inventory at quarter end versus 26% last year.

Share Repurchase Activity

  • During the first quarter, the Company invested $50 million of cash to repurchase 924,953 shares of its common stock ending the period with approximately $150 million remaining on its share repurchase authorization.

Full Year Fiscal 2016 and Second Quarter 2016 Outlook

The Company is raising its Full Year Fiscal 2016 outlook based on its very strong first quarter results. The Company notes that given changes in share count, simple addition of its quarterly adjusted net income per share will not round to the full fiscal year.

For the full Fiscal Year 2016 (the 52-weeks ending January 28, 2017), the Company expects:

  • Net sales now to increase in the range of 7.1% to 7.6%;
  • Comparable store sales now to increase between 3.0% to 3.5%, inclusive of a 0.5% increase related to the transfer of our fragrance business from a leased to an owned category;
  • Interest expense of approximately $62 million;
  • Tax rate to approximate 37.8%;
  • Adjusted Net Income per Share in the range of $2.68 to $2.78, compared to our prior guidance of $2.62 to $2.72, utilizing a fully diluted share count of approximately 72.4 million shares, as compared with $2.31 in Fiscal 2015;
  • Adjusted EBITDA margin expansion now to increase 30 to 40 basis points;
  • To open 25 net new stores.

For the second quarter of Fiscal 2016 (the 13 weeks ending July 30, 2016), the Company expects:

  • Net sales to increase in the range of 6.3% to 7.3%;
  • Comparable store sales to increase in the range of 2.5% to 3.5%;
  • Adjusted Net Income per Share in the range of $0.20 to $0.23, utilizing a fully diluted share count of approximately 72.3 million shares, as compared to $0.19 last year. The guidance range for the quarter includes a shift of approximately $0.02 per diluted share in expenses from the first quarter.

The Company has provided non-GAAP guidance as set out above. This does not reflect the impact of potential future non-GAAP adjustments on GAAP net income or GAAP diluted net income per share because the need for some of these adjustments, and their impact, cannot be predicted with reasonable certainty. The adjustments that cannot be predicted with reasonable certainty include, but are not limited to, costs related to debt amendments, secondary offerings, loss on extinguishment of debt, and impairment charges as well as the tax effect of such items.