burl-8k_20210826.htm
false 0001579298 0001579298 2021-08-26 2021-08-26

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): August 26, 2021

 

BURLINGTON STORES, INC.

(Exact Name of Registrant As Specified In Charter) 

 

 

 

 

 

Delaware

001-36107

80-0895227

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

2006 Route 130 North

Burlington, New Jersey 08016

(Address of Principal Executive Offices, including Zip Code)

(609) 387-7800

(Registrant’s telephone number, including area code)

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

BURL

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 


 

 

Item 2.02.Results of Operations and Financial Condition.

On August 26, 2021, Burlington Stores, Inc. issued a press release announcing its operating results for the second quarter ended July 31, 2021. A copy of the press release is furnished as Exhibit 99.1 to this Current Report.

The information contained in this Item 2.02, and Exhibit 99.1 attached hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of, or otherwise regarded as filed under, the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.Financial Statements and Exhibits.

(d) Exhibits

 

 

 

Exhibit

No.

Description

 

 

 

 

 

 

99.1

Press Release dated August 26, 2021.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)


 


 

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

BURLINGTON STORES, INC.

 

/s/ David Glick

 

David Glick

Senior Vice President of Investor Relations and Treasurer

Date: August 26, 2021

 

burl-ex991_6.htm

 

Exhibit 99.1

    

 

Burlington Stores, Inc. Reports Second Quarter 2021 Earnings

All Second Quarter 2021 comparisons are made versus the Second Quarter 2019

 

 

o

On a GAAP basis, total sales increased 34%, net income was $103 million, and diluted EPS increased 19% to $1.50

 

o

Comparable store sales increased 19%

 

o

On a non-GAAP basis, Adjusted EBIT was $183 million, an increase of 110 basis points as a percentage of sales

 

o

On a non-GAAP basis, Adjusted EPS increased 43% to $1.94

 

BURLINGTON, New Jersey; August 26, 2021Burlington 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 second quarter ended July 31, 2021.

Michael O’Sullivan, CEO, stated, “We are pleased with our second quarter results, which showed continued strong momentum in sales growth and margin expansion. Once again, we demonstrated our improved ability to chase the trend through our Burlington 2.0 strategies. We are getting stronger as a business and as a team.”

Mr. O’Sullivan continued, “The environment remains uncertain, and the trend is difficult to predict. We will continue to manage our business flexibly so we can chase the trend or pull back if necessary. In addition, we are seeing a huge imbalance between supply and demand in global logistics systems. This is driving up freight and supply chain expenses and it will put significant pressure on our margins for the balance of the year.”

 

Mr. O’Sullivan concluded, “Looking further out, we remain very excited by the market share opportunities ahead of us. Our 34% total sales growth year-to-date reinforces our confidence in this opportunity. Meanwhile, we believe that many of the prevailing expense headwinds are being driven by short-term market conditions. We continue to expect significant margin expansion, as these conditions normalize, over the next few years.”

 

1

 


 

Fiscal 2021 Second Quarter Operating Results (for the 13-week period ended July 31, 2021 compared with the 13-week period ended August 3, 2019)

 

 

Total sales increased 34% compared to the second quarter of Fiscal 2019 to $2,213 million, while comparable store sales increased 19% compared to the second quarter of Fiscal 2019.

 

Gross margin rate was 42.2% vs. 41.4% for the second quarter of Fiscal 2019, an increase of 80 basis points.

 

Product sourcing costs, which are included in selling, general and administrative expenses (SG&A), were $146 million vs. $82 million in the second quarter of Fiscal 2019. Product sourcing costs include the costs of processing goods through our supply chain and buying costs.

 

SG&A was 31.7% as a percentage of net sales vs. 32.1% in the second quarter of Fiscal 2019. Adjusted SG&A, as defined below, was 24.9% as a percentage of net sales vs. 26.6% in the second quarter of Fiscal 2019, an improvement of 170 basis points.

 

The effective tax rate was 17.1% vs. 11.6% in the second quarter of Fiscal 2019.  The Adjusted Effective Tax Rate was 19.6% vs. 12.8% in the second quarter of Fiscal 2019.

 

Net income increased 21% to $103 million, or $1.50 per share vs. $85 million, or $1.26 per share for the second quarter of Fiscal 2019, and Adjusted Net Income was $133 million, or $1.94 per share vs. $91 million, or $1.36 per share for the second quarter of Fiscal 2019.

 

Fully diluted shares outstanding amounted to 68.4 million at the end of the quarter compared with 67.3 million at the end of the second quarter of Fiscal 2019.

 

Adjusted EBITDA increased 44% from the second quarter of Fiscal 2019 to $246 million, an increase of 80 basis points as a percentage of sales. Adjusted EBIT increased 55% from the second quarter of Fiscal 2019 to $183 million, an increase of 110 basis points as a percentage of sales.

 

First Six Months Fiscal 2021 Results

       Total sales increased 34% compared to the first six months of Fiscal 2019. Net income increased 69% compared to the same period in Fiscal 2019 to $274 million, or $4.01 per share vs. $2.40 per share in the prior period, an increase of 67%. Adjusted EBIT increased 79%, or $185 million compared to the first six months of Fiscal 2019, to $421 million, an increase of 240 basis points as a percentage of sales. Adjusted Net Income of $309 million was up 75% vs. the prior period, while Adjusted EPS was $4.53 vs. $2.62 in the prior year period, an increase of 73%.

 

Given the volatility in Fiscal 2020 results caused by COVID-19 and to assist with comparability, all second quarter and first six months Fiscal 2021 comparisons are made versus the second quarter and first six months of Fiscal 2019. For a discussion of results for the second quarter and first six months of Fiscal 2021 as compared

2

 


to the second quarter and first six months of Fiscal 2020, refer to our Quarterly Report on Form 10-Q for the quarter ended July 31, 2021, which will be filed with the Securities and Exchange Commission (the “SEC”).

 

Inventory

 

Merchandise inventories were $828 million vs. $824 million at the end of the second quarter of Fiscal 2019. Comparable store inventories decreased 7%, offset by inventory from the addition of 101 net new stores opened since the end of the second quarter of Fiscal 2019. Reserve inventory was 31% of total inventory at the end of the second quarter of Fiscal 2021 compared to 33% at the end of the second quarter of Fiscal 2019.

 

Liquidity

 

The Company ended the second quarter of Fiscal 2021 with $1,878 million in liquidity, comprised of $1,344 million in unrestricted cash and $534 million in availability on its ABL facility.

 

 

Term Loan Extension

 

On June 24, 2021, the Company completed the repricing and extension of its $961 million senior secured term loan facility, which extended the maturity from November 2024 to June 2028. The applicable interest rate margin for LIBOR loans was increased from 1.75% to 2.00%. In addition, in a related transaction, the Company completed a “Blend and Extend” interest rate swap transaction on $450 million in principal amount on the term loan facility, extending the swap’s maturity from December 2023 to June 2028. The new blended swap rate was reduced from 2.72% to 2.19%.

 

Share Repurchase

 

We repurchased no shares during the quarter under the Company’s previous share repurchase authorization which expired August 14, 2021. The Company’s Board of Directors recently authorized the repurchase of up to $400 million of common stock, which is authorized to be executed through August 2023.  

 

Outlook

Given the uncertainty surrounding the pace of the recovery of consumer demand and the ongoing COVID-19 pandemic, the Company is not providing sales or earnings guidance for Fiscal 2021 (the 52-weeks ending January 29, 2022) at this time.  

 

3

 


 

The Company is updating the following Fiscal 2021 guidance items:

 

Capital expenditures, net of landlord allowances, is now expected to be approximately $510 million;

 

The Company still expects to open 100 new stores, while relocating or closing 25 stores, for a total of 75 net new stores in Fiscal 2021;

 

Depreciation & amortization, exclusive of favorable lease costs, is now expected to be approximately $255 million;

 

Interest expense is now expected to be approximately $70 million; and

 

The effective tax rate is now expected to be approximately 22% to 23%.

 

Note Regarding Non-GAAP Financial 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 Operating Margin), and Adjusted Effective Tax Rate. The Company believes these supplemental measures are useful in evaluating the performance of our business and provide greater transparency into our results of operations. In particular, we believe that excluding certain items that may vary substantially in frequency and magnitude from what we consider to be our core operating results are useful supplemental measures that assist in evaluating our 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.

 

Second Quarter 2021 Conference Call

 

Investors can pre-register for the call here. 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 August 26, 2021 beginning at 11:30 a.m. ET through September 2, 2021 at 11:59 p.m. ET. The U.S. toll-free replay dial-in number is 1-855-859-2056 and the international replay dial-in number is 1-404-537-3406. The replay passcode is 1059544.

 

About Burlington Stores, Inc.

 

Burlington Stores, Inc., headquartered in New Jersey, is a nationally recognized off-price retailer with Fiscal 2020 net sales of $5.8 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 792 stores as of the end

4

 


of the second quarter of Fiscal 2021, in 45 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. Glick

Daniel Delrosario

855-973-8445
Info@BurlingtonInvestors.com

 

Allison Malkin

ICR, 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 expected sales trend, our liquidity position, inventory plans, and the economic environment, 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 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; pandemics, including the duration of the COVID-19 pandemic and actions taken to slow its spread and the related impact on consumer confidence and spending; our ability to successfully implement one or more of our strategic initiatives and growth plans; the availability of desirable store locations on suitable terms; changing consumer preferences and demand; industry trends, including changes in buying, inventory and other business practices; competitive factors, including pricing and promotional activities of major competitors and an increase in competition within the markets in which we compete; the availability, selection and purchasing of attractive merchandise on favorable terms; import risks, including  tax and trade policies, tariffs and government regulations; weather patterns, including, among other things, changes in year-over-year temperatures; our future profitability; our ability to control costs and expenses; unforeseen cyber-related problems or attacks; any unforeseen material loss or casualty; the effect of inflation; regulatory and tax changes; our relationships with employees; the impact of

5

 


current and future laws and the interpretation of such laws; terrorist attacks, particularly attacks on or within markets in which we operate; natural and man-made disasters, including fire, snow and ice storms, flood, hail, hurricanes and earthquakes; our substantial level of indebtedness and related debt-service obligations; restrictions imposed by covenants in our debt agreements; availability of adequate financing; our dependence on vendors for our merchandise; domestic events affecting the delivery of merchandise to our stores; existence of adverse litigation; and each of the factors that may be described from time to time in our filings with the SEC. 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.

 


6

 


BURLINGTON STORES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(unaudited)

(All amounts in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

July 31,

 

 

August 1,

 

 

August 3,

 

 

July 31,

 

 

August 1,

 

 

August 3,

 

 

 

2021

 

 

2020

 

 

2019

 

 

2021

 

 

2020

 

 

2019

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

2,212,812

 

 

$

1,009,882

 

 

$

1,656,363

 

 

$

4,403,479

 

 

$

1,807,877

 

 

$

3,284,910

 

Other revenue

 

 

3,099

 

 

 

2,446

 

 

 

5,659

 

 

 

5,728

 

 

 

5,974

 

 

 

11,306

 

Total revenue

 

 

2,215,911

 

 

 

1,012,328

 

 

 

1,662,022

 

 

 

4,409,207

 

 

 

1,813,851

 

 

 

3,296,216

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

1,279,685

 

 

 

547,550

 

 

 

970,421

 

 

 

2,521,873

 

 

 

1,329,734

 

 

 

1,931,739

 

Selling, general and administrative expenses

 

 

702,291

 

 

 

491,598

 

 

 

531,843

 

 

 

1,367,119

 

 

 

976,686

 

 

 

1,049,221

 

Costs related to debt issuances and amendments

 

 

3,331

 

 

 

 

 

 

7

 

 

 

3,331

 

 

 

4,352

 

 

 

(375

)

Depreciation and amortization

 

 

62,814

 

 

 

54,404

 

 

 

52,261

 

 

 

118,424

 

 

 

108,694

 

 

 

102,902

 

Impairment charges - long-lived assets

 

 

970

 

 

 

1,077

 

 

 

 

 

 

1,747

 

 

 

3,001

 

 

 

 

Other income - net

 

 

(5,841

)

 

 

(824

)

 

 

(1,663

)

 

 

(7,214

)

 

 

(2,946

)

 

 

(3,754

)

Loss on extinguishment of debt

 

 

31,395

 

 

 

 

 

 

 

 

 

31,395

 

 

 

202

 

 

 

 

Interest expense

 

 

17,502

 

 

 

28,359

 

 

 

13,435

 

 

 

37,101

 

 

 

43,052

 

 

 

26,805

 

Total costs and expenses

 

 

2,092,147

 

 

 

1,122,164

 

 

 

1,566,304

 

 

 

4,073,776

 

 

 

2,462,775

 

 

 

3,106,538

 

Income (loss) before income tax expense (benefit)

 

 

123,764

 

 

 

(109,836

)

 

 

95,718

 

 

 

335,431

 

 

 

(648,924

)

 

 

189,678

 

Income tax expense (benefit)

 

 

21,210

 

 

 

(63,055

)

 

 

11,151

 

 

 

61,847

 

 

 

(268,415

)

 

 

27,346

 

Net income (loss)

 

$

102,554

 

 

$

(46,781

)

 

$

84,567

 

 

$

273,584

 

 

$

(380,509

)

 

$

162,332

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per common share

 

$

1.50

 

 

$

(0.71

)

 

$

1.26

 

 

$

4.01

 

 

$

(5.79

)

 

$

2.40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares - diluted

 

 

68,448

 

 

 

65,947

 

 

 

67,274

 

 

 

68,240

 

 

 

65,760

 

 

 

67,502

 


7

 


BURLINGTON STORES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(All amounts in thousands)

 

 

 

July 31,

 

 

January 30,

 

 

August 1,

 

 

August 3,

 

 

 

2021

 

 

2021

 

 

2020

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,344,318

 

 

$

1,380,276

 

 

$

1,077,146

 

 

$

97,207

 

Restricted cash and cash equivalents

 

 

6,582

 

 

 

6,582

 

 

 

6,582

 

 

 

21,882

 

Accounts receivable—net

 

 

78,761

 

 

 

62,161

 

 

 

50,255

 

 

 

98,201

 

Merchandise inventories

 

 

828,152

 

 

 

740,788

 

 

 

607,554

 

 

 

823,787

 

Assets held for disposal

 

 

2,500

 

 

 

6,655

 

 

 

 

 

 

 

Prepaid and other current assets

 

 

403,602

 

 

 

314,154

 

 

 

150,253

 

 

 

144,832

 

Total current assets

 

 

2,663,915

 

 

 

2,510,616

 

 

 

1,891,790

 

 

 

1,185,909

 

Property and equipment—net

 

 

1,467,399

 

 

 

1,438,863

 

 

 

1,431,476

 

 

 

1,317,562

 

Operating lease assets

 

 

2,506,985

 

 

 

2,469,366

 

 

 

2,457,553

 

 

 

2,161,657

 

Goodwill and intangible assets—net

 

 

285,064

 

 

 

285,064

 

 

 

285,064

 

 

 

285,064

 

Deferred tax assets

 

 

4,197

 

 

 

4,422

 

 

 

4,678

 

 

 

4,125

 

Other assets

 

 

64,941

 

 

 

72,761

 

 

 

299,373

 

 

 

92,120

 

Total assets

 

$

6,992,501

 

 

$

6,781,092

 

 

$

6,369,934

 

 

$

5,046,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

979,973

 

 

$

862,638

 

 

$

492,349

 

 

$

690,597

 

Current operating lease liabilities

 

 

326,282

 

 

 

304,629

 

 

 

277,211

 

 

 

277,411

 

Other current liabilities

 

 

483,134

 

 

 

512,830

 

 

 

451,877

 

 

 

344,584

 

Current maturities of long term debt

 

 

14,095

 

 

 

3,899

 

 

 

3,760

 

 

 

3,176

 

Total current liabilities

 

 

1,803,484

 

 

 

1,683,996

 

 

 

1,225,197

 

 

 

1,315,768

 

Long term debt

 

 

1,774,312

 

 

 

1,927,770

 

 

 

2,161,166

 

 

 

1,079,775

 

Long term operating lease liabilities

 

 

2,429,315

 

 

 

2,400,782

 

 

 

2,390,344

 

 

 

2,069,613

 

Other liabilities

 

 

105,737

 

 

 

103,940

 

 

 

113,580

 

 

 

94,601

 

Deferred tax liabilities

 

 

203,958

 

 

 

199,850

 

 

 

217,387

 

 

 

171,543

 

Stockholders' equity

 

 

675,695

 

 

 

464,754

 

 

 

262,260

 

 

 

315,137

 

Total liabilities and stockholders' equity

 

$

6,992,501

 

 

$

6,781,092

 

 

$

6,369,934

 

 

$

5,046,437

 

 


8

 


BURLINGTON STORES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(All amounts in thousands)

 

 

 

Six Months Ended

 

 

 

July 31,

 

 

August 1,

 

 

August 3,

 

 

 

2021

 

 

2020

 

 

2019

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

273,584

 

 

$

(380,509

)

 

$

162,332

 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

118,424

 

 

 

108,694

 

 

 

102,902

 

Deferred income taxes

 

 

42,434

 

 

 

(5,923

)

 

 

(1,817

)

Loss on extinguishment of debt

 

 

31,395

 

 

 

202

 

 

 

 

Non-cash stock compensation expense

 

 

36,059

 

 

 

30,045

 

 

 

20,974

 

Non-cash lease expense

 

 

(6,968

)

 

 

1,226

 

 

 

7,318

 

Cash received from landlord allowances

 

 

19,995

 

 

 

12,825

 

 

 

23,427

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(15,631

)

 

 

59,304

 

 

 

(22,754

)

Merchandise inventories

 

 

(87,364

)

 

 

169,694

 

 

 

129,890

 

Accounts payable

 

 

116,346

 

 

 

(269,750

)

 

 

(158,675

)

Other current assets and liabilities

 

 

(115,324

)

 

 

(3,422

)

 

 

(37,918

)

Long term assets and liabilities

 

 

1,087

 

 

 

(216,888

)

 

 

1,829

 

Other operating activities

 

 

12,833

 

 

 

21,472

 

 

 

1,915

 

Net cash provided by (used in) operating activities

 

 

426,870

 

 

 

(473,030

)

 

 

229,423

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for property and equipment

 

 

(147,187

)

 

 

(133,722

)

 

 

(163,480

)

Lease acquisition costs

 

 

(436

)

 

 

 

 

 

(459

)

Proceeds from insurance recoveries related to property and equipment

 

 

5,988

 

 

 

 

 

 

 

Other investing activities

 

 

 

 

 

(395

)

 

 

(44

)

Net cash (used in) investing activities

 

 

(141,635

)

 

 

(134,117

)

 

 

(163,983

)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from long term debt—ABL Line of Credit

 

 

 

 

 

400,000

 

 

 

1,053,500

 

Principal payments on long term debt—ABL Line of Credit

 

 

 

 

 

(150,000

)

 

 

(956,600

)

Proceeds from long term debt—Term B-6 Loans

 

 

956,608

 

 

 

 

 

 

 

Principal payments on long term debt—Term B-5 Loans

 

 

(961,415

)

 

 

 

 

 

 

Proceeds from long term debt—Convertible Note

 

 

 

 

 

805,000

 

 

 

 

Proceeds from long term debt—Secured Note

 

 

 

 

 

300,000

 

 

 

 

Principal payments on long term debt—Secured Note

 

 

(323,866

)

 

 

 

 

 

 

Purchase of treasury shares

 

 

(13,261

)

 

 

(59,891

)

 

 

(193,165

)

Other financing activities

 

 

20,741

 

 

 

(13,890

)

 

 

15,758

 

Net cash (used in) provided by financing activities

 

 

(321,193

)

 

 

1,281,219

 

 

 

(80,507

)

(Decrease) increase in cash, cash equivalents, restricted cash and restricted cash equivalents

 

 

(35,958

)

 

 

674,072

 

 

 

(15,067

)

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period

 

 

1,386,858

 

 

 

409,656

 

 

 

134,156

 

Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period

 

$

1,350,900

 

 

$

1,083,728

 

 

$

119,089

 


9

 


 

 

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

(Amounts in thousands, except per share data)

The following tables calculate the Company’s Adjusted Net Income (Loss), 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 (Loss) is defined as net income (loss), 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; (vi) non-cash interest expense on convertible notes; (vii) costs related to closing the e-commerce store; and (viii) other unusual, non-recurring or extraordinary expenses, losses, charges or gains, all of which are tax effected to arrive at Adjusted Net Income (Loss).

Adjusted EPS is defined as Adjusted Net Income (Loss) divided by the diluted weighted average shares outstanding, as defined in the table below.

Adjusted EBITDA is defined as net income (loss), exclusive of the following items, if applicable: (i) interest expense; (ii) interest income; (iii) loss on extinguishment of debt; (iv) income tax expense (benefit); (v) depreciation and amortization; (vi) impairment charges; (vii) costs related to debt issuances and amendments; (viii) amounts related to certain litigation matters; (ix) costs related to closing the e-commerce store; and (x) other unusual, non-recurring or extraordinary expenses, losses, charges or gains.

Adjusted EBIT (or Adjusted Operating Margin) is defined as net income (loss), exclusive of the following items, if applicable: (i) interest expense; (ii) interest income; (iii) loss on extinguishment of debt; (iv) income tax expense (benefit); (v) impairment charges; (vi) net favorable lease costs; (vii) costs related to debt issuances and amendments; (viii) amounts related to certain litigation matters; (ix) costs related to closing the e-commerce store; and (x) 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, amounts related to certain litigation matters and costs related to closing the e-commerce store.

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 (f) in the table below).

The Company presents Adjusted Net Income (Loss), 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.

10

 


The following table shows the Company’s reconciliation of net income (loss) to Adjusted Net Income (Loss) and Adjusted EPS for the periods indicated:  

 

 

(unaudited)

 

 

 

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

July 31,

 

 

August 1,

 

 

August 3,

 

 

July 31,

 

 

August 1,

 

 

August 3,

 

 

 

2021

 

 

2020

 

 

2019

 

 

2021

 

 

2020

 

 

2019

 

Reconciliation of net income (loss) to Adjusted Net Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

102,554

 

 

$

(46,781

)

 

$

84,567

 

 

$

273,584

 

 

$

(380,509

)

 

$

162,332

 

Net favorable lease costs (a)

 

 

6,002

 

 

 

6,183

 

 

 

9,205

 

 

 

11,913

 

 

 

12,626

 

 

 

19,907

 

Non-cash interest expense on convertible notes (b)

 

 

 

 

 

7,387

 

 

 

 

 

 

 

 

 

8,753

 

 

 

 

Costs related to debt issuances and amendments (c)

 

 

3,331

 

 

 

 

 

 

7

 

 

 

3,331

 

 

 

4,352

 

 

 

(375

)

Loss on extinguishment of debt (d)

 

 

31,395

 

 

 

 

 

 

 

 

 

31,395

 

 

 

202

 

 

 

 

Impairment charges

 

 

970

 

 

 

1,077

 

 

 

 

 

 

1,747

 

 

 

3,001

 

 

 

 

Litigation matters (e)

 

 

 

 

 

10,388

 

 

 

 

 

 

 

 

 

20,788

 

 

 

 

E-commerce closure (f)

 

 

 

 

 

970

 

 

 

 

 

 

 

 

 

970

 

 

 

 

Tax effect (g)

 

 

(11,175

)

 

 

(16,421

)

 

 

(2,333

)

 

 

(12,946

)

 

 

(22,427

)

 

 

(4,931

)

Adjusted Net Income (Loss)

 

$

133,077

 

 

$

(37,197

)

 

$

91,446

 

 

$

309,024

 

 

$

(352,244

)

 

$

176,933

 

Diluted weighted average shares outstanding (h)

 

 

68,448

 

 

 

65,947

 

 

 

67,274

 

 

 

68,240

 

 

 

65,760

 

 

 

67,502

 

Adjusted Earnings per Share

 

$

1.94

 

 

$

(0.56

)

 

$

1.36

 

 

$

4.53

 

 

$

(5.36

)

 

$

2.62

 

The following table shows the Company’s reconciliation of net income (loss) to Adjusted EBITDA for the periods indicated:

 

 

(unaudited)

 

 

 

(in thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

July 31,

 

 

August 1,

 

 

August 3,

 

 

July 31,

 

 

August 1,

 

 

August 3,

 

 

 

2021

 

 

2020

 

 

2019

 

 

2021

 

 

2020

 

 

2019

 

Reconciliation of net income (loss) to Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

102,554

 

 

$

(46,781

)

 

$

84,567

 

 

$

273,584

 

 

$

(380,509

)

 

$

162,332

 

Interest expense

 

 

17,502

 

 

 

28,359

 

 

 

13,435

 

 

 

37,101

 

 

 

43,052

 

 

 

26,805

 

Interest income

 

 

(46

)

 

 

(301

)

 

 

(189

)

 

 

(120

)

 

 

(1,016

)

 

 

(393

)

Loss on extinguishment of debt (d)

 

 

31,395

 

 

 

 

 

 

 

 

 

31,395

 

 

 

202

 

 

 

 

Costs related to debt issuances and amendments (c)

 

 

3,331

 

 

 

 

 

 

7

 

 

 

3,331

 

 

 

4,352

 

 

 

(375

)

Litigation matters (e)

 

 

 

 

 

10,388

 

 

 

 

 

 

 

 

 

20,788

 

 

 

 

E-commerce closure (f)

 

 

 

 

 

970

 

 

 

 

 

 

 

 

 

970

 

 

 

 

Depreciation and amortization (i)

 

 

68,816

 

 

 

60,537

 

 

 

61,355

 

 

 

130,337

 

 

 

121,222

 

 

 

122,535

 

Impairment charges

 

 

970

 

 

 

1,077

 

 

 

 

 

 

1,747

 

 

 

3,001

 

 

 

 

Income tax expense (benefit)

 

 

21,210

 

 

 

(63,055

)

 

 

11,151

 

 

 

61,847

 

 

 

(268,415

)

 

 

27,346

 

Adjusted EBITDA

 

$

245,732

 

 

$

(8,806

)

 

$

170,326