8-K
0001579298false00015792982021-11-232021-11-23

 

 

 

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): November 23, 2021

 

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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 November 23, 2021, Burlington Stores, Inc. issued a press release announcing its operating results for the third quarter ended October 30, 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 November 23, 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

Group Senior Vice President of Investor Relations and Treasurer

Date: November 23, 2021

 


EX-99.1

 

 

Exhibit 99.1

 

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Burlington Stores, Inc. Reports Third Quarter 2021 Earnings

All Third Quarter 2021 comparisons are made vs. the Third Quarter 2019

 

o
On a GAAP basis, total sales increased 30%, net income was $14 million, and diluted EPS was $0.20, inclusive of an $86 million debt extinguishment charge, or $1.22 per share
o
Comparable store sales increased 16%
o
On a non-GAAP basis, Adjusted EBIT was $140 million
o
On a non-GAAP basis, Adjusted EPS was $1.36

 

BURLINGTON, New Jersey; November 23, 2021 — Burlington 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 third quarter ended October 30, 2021.
 

Michael O’Sullivan, CEO, stated, “We are very pleased with our third quarter results. We continued to demonstrate our ability to chase the business and deliver great value to our customers. With Total Sales up 30% in Q3, and up 32% YTD, clearly we are taking significant market share.”

 

Mr. O’Sullivan went on, “As predicted, freight and supply chain headwinds pressured margins in Q3. We fully expect these headwinds to moderate over time and, as they do, this should generate very attractive off-price buying opportunities as well as significantly lower expenses.”

 

Mr. O’Sullivan continued, “As the economy moves into a more inflationary environment, we think that shoppers will be even more attracted to our great values. Our value differentiation vs. most other retailers has grown this year, as they have raised realized prices. If these higher realized prices are sustained then we believe that in the coming quarters we will have the opportunity to drive additional sales, to raise retails, or to do both.”

 

Mr. O’Sullivan concluded, “This year we have been very excited about the performance of our new stores, especially our smaller prototype. Based on this performance and on the tremendous market share opportunity that we see ahead of us, we have decided to accelerate the pace of our new store opening program.”

 

1

 


 

Fiscal 2021 Third Quarter Operating Results (for the 13-week period ended October 30, 2021 compared with the 13-week period ended November 2, 2019)

 

Total sales increased 30% compared to the third quarter of Fiscal 2019 to $2,300 million, while comparable store sales increased 16% compared to the third quarter of Fiscal 2019.
Gross margin rate was 41.4% vs. 42.4% for the third quarter of Fiscal 2019, a decrease of 100 basis points. Merchandise margins increased 80 basis points, which was more than offset by a 180 basis point increase in freight expense.
Product sourcing costs, which are included in selling, general and administrative expenses (SG&A), were $173 million vs. $90 million in the third quarter of Fiscal 2019. Product sourcing costs include the costs of processing goods through our supply chain and buying costs.
SG&A was 33.0% as a percentage of net sales vs. 32.9% in the third quarter of Fiscal 2019. Adjusted SG&A, as defined below, was 25.3% as a percentage of net sales vs. 27.4% in the third quarter of Fiscal 2019, an improvement of 210 basis points.
Other Income and Other Revenue were $7 million in the aggregate vs. $16 million in the third quarter of Fiscal 2019. This decline was primarily due to a non-recurring insurance gain of $8 million recognized in the third quarter of Fiscal 2019. This decrease had a 60 basis point negative impact on Adjusted EBIT margin in the third quarter of Fiscal 2021.
The effective tax rate was 56.8% vs. 19.2% in the third quarter of Fiscal 2019. This increase was primarily due to an $86 million loss on debt extinguishment charge related to the partial repurchase of our Convertible Notes, most of which is not tax deductible. The Adjusted Effective Tax Rate was 25.5% vs. 19.6% in the third quarter of Fiscal 2019, primarily driven by a reduced benefit from stock-based compensation and an increase in disallowed executive compensation.
Net income was $14 million, or $0.20 per share vs. $96 million, or $1.44 per share for the third quarter of Fiscal 2019. This decrease was primarily due to the $86 million loss on debt extinguishment charge noted above, or $1.22 per share. Adjusted Net Income was $93 million, or $1.36 per share vs. $103 million, or $1.53 per share for the third quarter of Fiscal 2019.
Diluted weighted average shares outstanding amounted to 68.2 million during the quarter compared with 67.2 million during the third quarter of Fiscal 2019.
Adjusted EBITDA was $205 million vs. $192 million in the third quarter of Fiscal 2019, a decrease of 190 basis points as a percentage of sales. Adjusted EBIT was $140 million, flat vs. the third quarter of Fiscal 2019, a decrease of 180 basis points as a percentage of sales. Excluding the decline in Other Income and Other Revenue, as described above, Adjusted EBIT margin declined 120 basis points vs. the third quarter of Fiscal 2019.

2

 


 

Given the volatility in Fiscal 2020 results caused by COVID-19 and to assist with comparability, all third quarter and year-to-date Fiscal 2021 comparisons are made vs. the third quarter and year-to-date Fiscal 2019. For a discussion of results for the third quarter and year-to-date of Fiscal 2021 as compared to the third quarter and year-to-date Fiscal 2020, refer to our Quarterly Report on Form 10-Q for the quarter ended October 30, 2021, which will be filed with the Securities and Exchange Commission (the “SEC”).

 

First Nine Months Fiscal 2021 Results

Total sales increased 32% compared to the first nine months of Fiscal 2019. Net income increased 11% compared to the same period in Fiscal 2019 to $287 million, or $4.21 per share vs. $3.84 per share in the prior period, an increase of 10%. Adjusted EBIT increased 49%, or $186 million compared to the first nine months of Fiscal 2019, to $561 million, an increase of 100 basis points as a percentage of sales. Adjusted Net Income of $402 million was up 44% vs. the prior period, while Adjusted EPS was $5.89 vs. $4.15 in the prior year period, an increase of 42%.

 

Inventory

Merchandise inventories were $1,060 million vs. $1,004 million at the end of the third quarter of Fiscal 2019. Comparable store inventories decreased 24%, partially offset by inventory from the addition of 106 net new stores opened since the end of the third quarter of Fiscal 2019. Reserve inventory was 30% of total inventory at the end of the third quarter of Fiscal 2021 compared to 21% at the end of the third quarter of Fiscal 2019.

 

Liquidity and Debt

The Company ended the third quarter of Fiscal 2021 with $1,726 million in liquidity, comprised of $1,185 million in unrestricted cash and $541 million in availability on its ABL Facility. The Company ended the third quarter with $1,629 million in outstanding total debt, including $953 million on its Term Loan Facility, $645 million in Convertible Notes, and no borrowings on the ABL Facility.

 

Convertible Note and Common Stock Repurchases

During the third quarter, the Company entered into privately negotiated transactions to repurchase approximately $160 million principal amount of the Company’s outstanding 2.25% Convertible Notes. The total transaction value of approximately $242 million, included $91 million in cash and $151 million in stock, and resulted in the issuance of 513,991 shares of common stock. After the completion of this transaction, approximately $645 million of the Convertible Notes remained outstanding.

3

 


 

In addition, during the third quarter the Company repurchased 512,363 shares of common stock for $150 million under its share repurchase program. As of the end of the third quarter, the Company had $250 million remaining on its current share repurchase authorization.

 

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.

 

The Company is updating the following Fiscal 2021 guidance items:

Capital expenditures, net of landlord allowances, is now expected to be approximately $425 million;
The Company now expects to open 101 new stores, while relocating or closing 24 stores, for a total of 77 net new stores in Fiscal 2021;
Depreciation & amortization, exclusive of favorable lease costs, is now expected to be approximately $250 million;
Interest expense is now expected to be approximately $68 million; and
The effective tax rate is now expected to be approximately 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.

 

Third Quarter 2021 Conference Call

 

The Company will hold a conference call on November 23, 2021 at 8:30 a.m. ET to discuss the Company’s third quarter results and longer-term expectations for the business. The U.S. toll free dial-in for the conference call is 1-866-437-5084 (passcode: 1079197) and the international dial-in number is 1-409-220-9374.

 

4

 


 

A live webcast of the conference call will 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 November 23, 2021 beginning at 11:30 a.m. ET through November 30, 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 1079197.

 

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 832 stores as of the end of the third 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

5

 


 

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; increased freight and labor costs associated with industry-wide supply chain issues; 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 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

 

 

Nine Months Ended

 

 

 

October 30,

 

 

October 31,

 

 

November 2,

 

 

October 30,

 

 

October 31,

 

 

November 2,

 

 

 

2021

 

 

2020

 

 

2019

 

 

2021

 

 

2020

 

 

2019

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

2,299,610

 

 

$

1,664,728

 

 

$

1,774,949

 

 

$

6,703,089

 

 

$

3,472,606

 

 

$

5,059,860

 

Other revenue

 

 

4,431

 

 

 

2,507

 

 

 

6,634

 

 

 

10,159

 

 

 

8,480

 

 

 

17,939

 

Total revenue

 

 

2,304,041

 

 

 

1,667,235

 

 

 

1,781,583

 

 

 

6,713,248

 

 

 

3,481,086

 

 

 

5,077,799

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

1,347,559

 

 

 

915,847

 

 

 

1,022,912

 

 

 

3,869,432

 

 

 

2,245,581

 

 

 

2,954,651

 

Selling, general and administrative expenses

 

 

759,785

 

 

 

645,278

 

 

 

583,641

 

 

 

2,126,904

 

 

 

1,621,964

 

 

 

1,632,862

 

Costs related to debt issuances and amendments

 

 

89

 

 

 

(719

)

 

 

 

 

 

3,419

 

 

 

3,633

 

 

 

(375

)

Depreciation and amortization

 

 

64,663

 

 

 

54,984

 

 

 

52,729

 

 

 

183,087

 

 

 

163,679

 

 

 

155,631

 

Impairment charges - long-lived assets

 

 

1,488

 

 

 

2,575

 

 

 

 

 

 

3,235

 

 

 

5,575

 

 

 

 

Other income - net

 

 

(3,055

)

 

 

(1,290

)

 

 

(9,264

)

 

 

(10,267

)

 

 

(4,236

)

 

 

(13,017

)

Loss on extinguishment of debt

 

 

86,362

 

 

 

 

 

 

 

 

 

117,756

 

 

 

202

 

 

 

 

Interest expense

 

 

15,609

 

 

 

27,456

 

 

 

12,149

 

 

 

52,710

 

 

 

70,508

 

 

 

38,954

 

Total costs and expenses

 

 

2,272,500

 

 

 

1,644,131

 

 

 

1,662,167

 

 

 

6,346,276

 

 

 

4,106,906

 

 

 

4,768,706

 

Income (loss) before income tax expense (benefit)

 

 

31,541

 

 

 

23,104

 

 

 

119,416

 

 

 

366,972

 

 

 

(625,820

)

 

 

309,093

 

Income tax expense (benefit)

 

 

17,922

 

 

 

15,088

 

 

 

22,957

 

 

 

79,769

 

 

 

(253,327

)

 

 

50,302

 

Net income (loss)

 

$

13,619

 

 

$

8,016

 

 

$

96,459

 

 

$

287,203

 

 

$

(372,493

)

 

$

258,791

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per common share

 

$

0.20

 

 

$

0.12

 

 

$

1.44

 

 

$

4.21

 

 

$

(5.66

)

 

$

3.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares - diluted

 

 

68,205

 

 

 

66,720

 

 

 

67,159

 

 

 

68,228

 

 

 

65,867

 

 

 

67,387

 

 

7

 


 

BURLINGTON STORES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(All amounts in thousands)

 

 

 

October 30,

 

 

January 30,

 

 

October 31,

 

 

November 2,

 

 

 

2021

 

 

2021

 

 

2020

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,185,383

 

 

$

1,380,276

 

 

$

1,348,691

 

 

$

140,514

 

Restricted cash and cash equivalents

 

 

6,582

 

 

 

6,582

 

 

 

6,582

 

 

 

6,582

 

Accounts receivable—net

 

 

90,705

 

 

 

62,161

 

 

 

72,728

 

 

 

117,493

 

Merchandise inventories

 

 

1,059,749

 

 

 

740,788

 

 

 

866,986

 

 

 

1,004,386

 

Assets held for disposal

 

 

4,358

 

 

 

6,655

 

 

 

 

 

 

 

Prepaid and other current assets

 

 

425,288

 

 

 

314,154

 

 

 

339,874

 

 

 

146,170

 

Total current assets

 

 

2,772,065

 

 

 

2,510,616

 

 

 

2,634,861

 

 

 

1,415,145

 

Property and equipment—net

 

 

1,499,780

 

 

 

1,438,863

 

 

 

1,442,358

 

 

 

1,375,484

 

Operating lease assets

 

 

2,653,776

 

 

 

2,469,366

 

 

 

2,465,972

 

 

 

2,338,179

 

Goodwill and intangible assets—net

 

 

285,064

 

 

 

285,064

 

 

 

285,064

 

 

 

285,844

 

Deferred tax assets

 

 

4,119

 

 

 

4,422

 

 

 

4,596

 

 

 

4,066

 

Other assets

 

 

63,023

 

 

 

72,761

 

 

 

75,945

 

 

 

88,869

 

Total assets

 

$

7,277,827

 

 

$

6,781,092

 

 

$

6,908,796

 

 

$

5,507,587

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,174,252

 

 

$

862,638

 

 

$

920,944

 

 

$

888,434

 

Current operating lease liabilities

 

 

346,167

 

 

 

304,629

 

 

 

293,765

 

 

 

293,756

 

Other current liabilities

 

 

544,852

 

 

 

512,830

 

 

 

522,122

 

 

 

422,154

 

Current maturities of long term debt

 

 

14,224

 

 

 

3,899

 

 

 

3,815

 

 

 

3,302

 

Total current liabilities

 

 

2,079,495

 

 

 

1,683,996

 

 

 

1,740,646

 

 

 

1,607,646

 

Long term debt

 

 

1,614,645

 

 

 

1,927,770

 

 

 

2,169,495

 

 

 

982,348

 

Long term operating lease liabilities

 

 

2,560,663

 

 

 

2,400,782

 

 

 

2,396,315

 

 

 

2,258,130

 

Other liabilities

 

 

94,507

 

 

 

103,940

 

 

 

111,019

 

 

 

96,249

 

Deferred tax liabilities

 

 

211,710

 

 

 

199,850

 

 

 

204,745

 

 

 

171,626

 

Stockholders' equity

 

 

716,807

 

 

 

464,754

 

 

 

286,576

 

 

 

391,588

 

Total liabilities and stockholders' equity

 

$

7,277,827

 

 

$

6,781,092

 

 

$

6,908,796

 

 

$

5,507,587

 

 

 

8

 


 

BURLINGTON STORES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(All amounts in thousands)

 

 

 

Nine Months Ended

 

 

 

October 30,

 

 

October 31,

 

 

November 2,

 

 

 

2021

 

 

2020

 

 

2019

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

287,203

 

 

$

(372,493

)

 

$

258,791

 

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

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

183,087

 

 

 

163,679

 

 

 

155,631

 

Deferred income taxes

 

 

46,725

 

 

 

(19,503

)

 

 

(1,484

)

Loss on extinguishment of debt

 

 

117,756

 

 

 

202

 

 

 

 

Non-cash stock compensation expense

 

 

53,356

 

 

 

43,451

 

 

 

30,542

 

Non-cash lease expense

 

 

(6,997

)

 

 

1,617

 

 

 

10,905

 

Cash received from landlord allowances

 

 

24,552

 

 

 

26,043

 

 

 

36,006

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(27,223

)

 

 

44,551

 

 

 

(27,441

)

Merchandise inventories

 

 

(318,961

)

 

 

(89,739

)

 

 

(50,709

)

Accounts payable

 

 

307,684

 

 

 

161,317

 

 

 

36,014

 

Other current assets and liabilities

 

 

(79,855

)

 

 

(118,079

)

 

 

29,345

 

Long term assets and liabilities

 

 

1,332

 

 

 

5,479

 

 

 

3,362

 

Other operating activities

 

 

19,708

 

 

 

36,538

 

 

 

(4,089

)

Net cash provided by (used in) operating activities

 

 

608,367

 

 

 

(116,937

)

 

 

476,873

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

Cash paid for property and equipment

 

 

(238,468

)

 

 

(214,437

)

 

 

(259,699

)

Lease acquisition costs

 

 

(559

)

 

 

 

 

 

(959

)

Proceeds from insurance recoveries related to property and equipment

 

 

5,746

 

 

 

 

 

 

5,131

 

Other investing activities

 

 

 

 

 

(897

)

 

 

(521

)

Net cash (used in) investing activities

 

 

(233,281

)

 

 

(215,334

)

 

 

(256,048

)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

Proceeds from long term debt—ABL Line of Credit

 

 

 

 

 

400,000

 

 

 

1,294,400

 

Principal payments on long term debt—ABL Line of Credit

 

 

 

 

 

(150,000

)

 

 

(1,294,400

)

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

 

 

 

 

Principal payment on long term debt—Convertible Note

 

 

(92,289

)

 

 

 

 

 

 

Proceeds from long term debt—Secured Note

 

 

 

 

 

300,000

 

 

 

 

Principal payments on long term debt—Secured Note

 

 

(323,905

)

 

 

 

 

 

 

Purchase of treasury shares

 

 

(166,473

)

 

 

(62,802

)

 

 

(236,023

)

Other financing activities

 

 

17,495

 

 

 

(14,310

)

 

 

28,138

 

Net cash (used in) provided by financing activities

 

 

(569,979

)

 

 

1,277,888

 

 

 

(207,885

)

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

 

 

(194,893

)

 

 

945,617

 

 

 

12,940

 

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

 

$

1,191,965

 

 

$

1,355,273

 

 

$

147,096

 

 

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 (g) 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

 

 

Nine Months Ended

 

 

 

October 30,

 

 

October 31,

 

 

November 2,

 

 

October 30,

 

 

October 31,

 

 

November 2,

 

 

 

2021

 

 

2020

 

 

2019

 

 

2021

 

 

2020

 

 

2019

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

13,619

 

 

$

8,016

 

 

$

96,459

 

 

$

287,203

 

 

$

(372,493

)

 

$

258,791

 

Net favorable lease costs (a)

 

 

5,275

 

 

 

5,776

 

 

 

8,355

 

 

 

17,188

 

 

 

18,402

 

 

 

28,262

 

Non-cash interest expense on convertible notes (b)

 

 

 

 

 

7,542

 

 

 

 

 

 

 

 

 

16,295

 

 

 

 

Costs related to debt issuances and amendments (c)

 

 

89

 

 

 

(719

)

 

 

 

 

 

3,419

 

 

 

3,633

 

 

 

(375

)

Loss on extinguishment of debt (d)

 

 

86,362

 

 

 

 

 

 

 

 

 

117,756

 

 

 

202

 

 

 

 

Impairment charges

 

 

1,488

 

 

 

2,575

 

 

 

 

 

 

3,235

 

 

 

5,575

 

 

 

 

Litigation matters (e)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,788

 

 

 

 

E-commerce closure (f)

 

 

 

 

 

556

 

 

 

 

 

 

 

 

 

1,526

 

 

 

 

Tax effect (g)

 

 

(13,891

)

 

 

(4,209

)

 

 

(2,140

)

 

 

(26,835

)

 

 

(26,634

)

 

 

(7,070

)

Adjusted Net Income (Loss)

 

$

92,942

 

 

$

19,537

 

 

$

102,674

 

 

$

401,966

 

 

$

(332,706

)

 

$

279,608

 

Diluted weighted average shares outstanding (h)

 

 

68,205

 

 

 

66,720

 

 

 

67,159

 

 

 

68,228

 

 

 

65,867

 

 

 

67,387

 

Adjusted Earnings per Share

 

$

1.36

 

 

$

0.29

 

 

$

1.53

 

 

$

5.89

 

 

$

(5.05

)

 

$

4.15

 

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

 

 

Nine Months Ended

 

 

 

October 30,

 

 

October 31,

 

 

November 2,

 

 

October 30,

 

 

October 31,

 

 

November 2,

 

 

 

2021

 

 

2020

 

 

2019

 

 

2021

 

 

2020

 

 

2019

 

Reconciliation of net income (loss) to Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

13,619

 

 

$

8,016

 

 

$

96,459

 

 

$

287,203

 

 

$

(372,493

)

 

$

258,791

 

Interest expense

 

 

15,609

 

 

 

27,456

 

 

 

12,149

 

 

 

52,710

 

 

 

70,508

 

 

 

38,954

 

Interest income

 

 

(38

)

 

 

(163

)

 

 

(103

)

 

 

(156

)

 

 

(1,178

)

 

 

(496

)

Loss on extinguishment of debt (d)

 

 

86,362

 

 

 

 

 

 

 

 

 

117,756

 

 

 

202

 

 

 

 

Costs related to debt issuances and amendments (c)

 

 

89

 

 

 

(719

)

 

 

 

 

 

3,419

 

 

 

3,633

 

 

 

(375

)

Litigation matters (e)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,788

 

 

 

 

E-commerce closure (f)

 

 

 

 

 

556

 

 

 

 

 

 

 

 

 

1,526

 

 

 

 

Depreciation and amortization (i)

 

 

69,938

 

 

 

60,712

 

 

 

61,035

 

 

 

200,275

 

 

 

181,934

 

 

 

183,570

 

Impairment charges

 

 

1,488

 

 

 

2,575

 

 

 

 

 

 

3,235

 

 

 

5,575

 

 

 

 

Income tax expense (benefit)

 

 

17,922

 

 

 

15,088

 

 

 

22,957

 

 

 

79,769

 

 

 

(253,327

)

 

 

50,302

 

Adjusted EBITDA

 

$

204,989

 

 

$

113,521

 

 

$

192,497