10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 29, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 001-36107

 

https://cdn.kscope.io/0d18fef248955d070747640c04ea7fbd-img209956516_0.jpg 

BURLINGTON STORES, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

80-0895227

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

2006 Route 130 North

Burlington, New Jersey

 

08016

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (609) 387-7800

 

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

 

BURL

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-Accelerated filer

Smaller reporting company

 

 

Emerging growth company

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

The registrant had 65,191,267 shares of common stock outstanding as of October 29, 2022.

 


 

BURLINGTON STORES, INC.

INDEX

 

 

 

Page

Part I—Financial Information

 

3

 

 

 

Item 1. Financial Statements (unaudited)

 

3

 

 

 

Condensed Consolidated Statements of Income - Three and Nine Months Ended October 29, 2022 and October 30, 2021

 

3

 

 

 

Condensed Consolidated Statements of Comprehensive Income – Three and Nine Months Ended October 29, 2022 and October 30, 2021

 

4

 

 

 

Condensed Consolidated Balance Sheets – October 29, 2022, January 29, 2022 and October 30, 2021

 

5

 

 

 

Condensed Consolidated Statements of Cash Flows – Nine Months Ended October 29, 2022 and October 30, 2021

 

6

 

 

 

Notes to Condensed Consolidated Financial Statements

 

7

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

37

 

 

 

Item 4. Controls and Procedures

 

37

 

 

 

Part II—Other Information

 

38

 

 

 

Item 1. Legal Proceedings

 

38

 

 

 

Item 1A. Risk Factors

 

38

 

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

38

 

 

 

Item 3. Defaults Upon Senior Securities

 

38

 

 

 

Item 4. Mine Safety Disclosures

 

38

 

 

 

Item 5. Other Information

 

39

 

 

 

Item 6. Exhibits

 

40

 

 

 

SIGNATURES

 

41

 

 

 

 

2


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BURLINGTON STORES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(All amounts in thousands, except per share data)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 29,

 

 

October 30,

 

 

October 29,

 

 

October 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

2,035,927

 

 

$

2,299,610

 

 

$

5,945,459

 

 

$

6,703,089

 

Other revenue

 

 

4,760

 

 

 

4,431

 

 

 

12,862

 

 

 

10,159

 

Total revenue

 

 

2,040,687

 

 

 

2,304,041

 

 

 

5,958,321

 

 

 

6,713,248

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

1,198,126

 

 

 

1,347,559

 

 

 

3,546,340

 

 

 

3,869,432

 

Selling, general and administrative expenses

 

 

726,926

 

 

 

759,785

 

 

 

2,092,756

 

 

 

2,126,904

 

Costs related to debt issuances and amendments

 

 

 

 

 

89

 

 

 

 

 

 

3,419

 

Depreciation and amortization

 

 

67,634

 

 

 

64,663

 

 

 

201,908

 

 

 

183,087

 

Impairment charges - long-lived assets

 

 

10,599

 

 

 

1,488

 

 

 

17,556

 

 

 

3,235

 

Other income - net

 

 

(2,828

)

 

 

(3,055

)

 

 

(18,833

)

 

 

(10,267

)

Loss on extinguishment of debt

 

 

 

 

 

86,362

 

 

 

14,657

 

 

 

117,756

 

Interest expense

 

 

17,412

 

 

 

15,609

 

 

 

47,454

 

 

 

52,710

 

Total costs and expenses

 

 

2,017,869

 

 

 

2,272,500

 

 

 

5,901,838

 

 

 

6,346,276

 

Income before income tax expense

 

 

22,818

 

 

 

31,541

 

 

 

56,483

 

 

 

366,972

 

Income tax expense

 

 

6,035

 

 

 

17,922

 

 

 

11,560

 

 

 

79,769

 

Net income

 

$

16,783

 

 

$

13,619

 

 

$

44,923

 

 

$

287,203

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Common stock - basic

 

$

0.26

 

 

$

0.20

 

 

$

0.68

 

 

$

4.31

 

Common stock - diluted

 

$

0.26

 

 

$

0.20

 

 

$

0.68

 

 

$

4.21

 

Weighted average number of common shares:

 

 

 

 

 

 

 

 

 

 

 

 

Common stock - basic

 

 

65,362

 

 

 

66,740

 

 

 

65,815

 

 

 

66,591

 

Common stock - diluted

 

 

65,504

 

 

 

68,205

 

 

 

66,058

 

 

 

68,228

 

 

See Notes to Condensed Consolidated Financial Statements.

 

 

3


 

BURLINGTON STORES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(All amounts in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 29,

 

 

October 30,

 

 

October 29,

 

 

October 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

16,783

 

 

$

13,619

 

 

$

44,923

 

 

$

287,203

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate derivative contracts:

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gain arising during the period

 

 

22,402

 

 

 

6,509

 

 

 

35,693

 

 

 

2,251

 

Net reclassification into earnings during the period

 

 

851

 

 

 

2,984

 

 

 

5,772

 

 

 

7,662

 

Other comprehensive income, net of tax

 

 

23,253

 

 

 

9,493

 

 

 

41,465

 

 

 

9,913

 

Total comprehensive income

 

$

40,036

 

 

$

23,112

 

 

$

86,388

 

 

$

297,116

 

 

See Notes to Condensed Consolidated Financial Statements.

 

4


 

BURLINGTON STORES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(All amounts in thousands, except share and per share data)

 

 

 

 

October 29,

 

 

January 29,

 

 

October 30,

 

 

 

2022

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

428,583

 

 

$

1,091,091

 

 

$

1,185,383

 

Restricted cash and cash equivalents

 

 

6,582

 

 

 

6,582

 

 

 

6,582

 

Accounts receivablenet

 

 

80,641

 

 

 

54,089

 

 

 

90,705

 

Merchandise inventories

 

 

1,445,087

 

 

 

1,021,009

 

 

 

1,059,749

 

Assets held for disposal

 

 

7,054

 

 

 

4,358

 

 

 

4,358

 

Prepaid and other current assets

 

 

131,834

 

 

 

370,515

 

 

 

425,288

 

Total current assets

 

 

2,099,781

 

 

 

2,547,644

 

 

 

2,772,065

 

Property and equipment—net

 

 

1,666,523

 

 

 

1,552,237

 

 

 

1,499,780

 

Operating lease assets

 

 

2,951,614

 

 

 

2,638,473

 

 

 

2,653,776

 

Tradenames

 

 

238,000

 

 

 

238,000

 

 

 

238,000

 

Goodwill

 

 

47,064

 

 

 

47,064

 

 

 

47,064

 

Deferred tax assets

 

 

3,643

 

 

 

3,959

 

 

 

4,119

 

Other assets

 

 

94,885

 

 

 

62,136

 

 

 

63,023

 

Total assets

 

$

7,101,510

 

 

$

7,089,513

 

 

$

7,277,827

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

953,680

 

 

$

1,080,802

 

 

$

1,174,252

 

Current operating lease liabilities

 

 

391,056

 

 

 

358,793

 

 

 

346,167

 

Other current liabilities

 

 

520,145

 

 

 

493,695

 

 

 

544,852

 

Current maturities of long term debt

 

 

13,528

 

 

 

14,357

 

 

 

14,224

 

Total current liabilities

 

 

1,878,409

 

 

 

1,947,647

 

 

 

2,079,495

 

Long term debt

 

 

1,464,563

 

 

 

1,541,102

 

 

 

1,614,645

 

Long term operating lease liabilities

 

 

2,828,574

 

 

 

2,539,420

 

 

 

2,560,663

 

Other liabilities

 

 

68,687

 

 

 

80,904

 

 

 

94,507

 

Deferred tax liabilities

 

 

222,549

 

 

 

220,023

 

 

 

211,710

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value: authorized: 50,000,000 
   shares;
no shares issued and outstanding

 

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value:

 

 

 

 

 

 

 

 

 

Authorized: 500,000,000 shares;

 

 

 

 

 

 

 

 

 

Issued: 81,933,895 shares, 81,677,315 shares and 81,605,876 shares, respectively;

 

 

 

 

 

 

 

 

 

Outstanding: 65,191,267 shares, 66,491,555 shares and 66,765,122 shares, respectively

 

 

7

 

 

 

7

 

 

 

7

 

Additional paid-in-capital

 

 

1,984,821

 

 

 

1,927,554

 

 

 

1,914,086

 

Accumulated earnings

 

 

459,215

 

 

 

414,292

 

 

 

292,656

 

Accumulated other comprehensive income (loss)

 

 

37,024

 

 

 

(4,441

)

 

 

(13,102

)

Treasury stock, at cost

 

 

(1,842,339

)

 

 

(1,576,995

)

 

 

(1,476,840

)

Total stockholders' equity

 

 

638,728

 

 

 

760,417

 

 

 

716,807

 

Total liabilities and stockholders' equity

 

$

7,101,510

 

 

$

7,089,513

 

 

$

7,277,827

 

 

See Notes to Condensed Consolidated Financial Statements.

 

5


 

BURLINGTON STORES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(All amounts in thousands)

 

 

Nine Months Ended

 

 

 

October 29,

 

 

October 30,

 

 

 

2022

 

 

2021

 

OPERATING ACTIVITIES

 

 

 

 

 

 

Net income

 

$

44,923

 

 

$

287,203

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

 

 

Depreciation and amortization

 

 

201,908

 

 

 

183,087

 

Impairment chargeslong-lived assets

 

 

17,556

 

 

 

3,235

 

Amortization of deferred financing costs

 

 

2,731

 

 

 

4,293

 

Accretion of long term debt instruments

 

 

713

 

 

 

650

 

Deferred income taxes

 

 

(12,339

)

 

 

46,725

 

Loss on extinguishment of debt

 

 

14,657

 

 

 

117,756

 

Non-cash stock compensation expense

 

 

51,195

 

 

 

53,356

 

Non-cash lease expense

 

 

674

 

 

 

(6,997

)

Cash received from landlord allowances

 

 

9,799

 

 

 

24,552

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(26,801

)

 

 

(27,223

)

Merchandise inventories

 

 

(424,078

)

 

 

(318,961

)

Prepaid and other current assets

 

 

238,680

 

 

 

(111,135

)

Accounts payable

 

 

(133,305

)

 

 

307,684

 

Other current liabilities

 

 

20,163

 

 

 

31,280

 

Other long term assets and long term liabilities

 

 

(1,135

)

 

 

1,332

 

Other operating activities

 

 

4,236

 

 

 

11,530

 

Net cash provided by operating activities

 

 

9,577

 

 

 

608,367

 

INVESTING ACTIVITIES

 

 

 

 

 

 

Cash paid for property and equipment

 

 

(338,979

)

 

 

(238,468

)

Lease acquisition costs

 

 

(3,515

)

 

 

(559

)

Proceeds from sale of property and equipment and assets held for sale

 

 

23,383

 

 

 

5,746

 

Net cash (used in) investing activities

 

 

(319,111

)

 

 

(233,281

)

FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from long term debt—Term B-6 Loans

 

 

 

 

 

956,608

 

Principal payments on long term debt—Term B-6 Loans

 

 

(7,211

)

 

 

(2,404

)

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

 

 

 

 

 

(961,415

)

Principal payment on long term debt—Convertible Notes

 

 

(78,236

)

 

 

(92,289

)

Principal payments on long term debt—Secured Notes

 

 

 

 

 

(323,905

)

Purchase of treasury shares

 

 

(265,344

)

 

 

(166,473

)

Proceeds from stock option exercises

 

 

6,073

 

 

 

31,610

 

Deferred financing costs

 

 

 

 

 

(601

)

Other financing activities

 

 

(8,256

)

 

 

(11,110

)

Net cash (used in) financing activities

 

 

(352,974

)

 

 

(569,979

)

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

 

 

(662,508

)

 

 

(194,893

)

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

 

 

1,097,673

 

 

 

1,386,858

 

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

 

$

435,165

 

 

$

1,191,965

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Interest paid

 

$

36,944

 

 

$

47,373

 

Income tax (refund) payments - net

 

$

(228,107

)

 

$

129,624

 

Non-cash investing and financing activities:

 

 

 

 

 

 

Shares issued to repurchase Convertible Notes

 

$

-

 

 

$

151,206

 

Finance lease modification

 

$

(6,042

)

 

$

-

 

Accrued purchases of property and equipment

 

$

75,746

 

 

$

50,696

 

See Notes to Condensed Consolidated Financial Statements.

 

6


 

BURLINGTON STORES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 29, 2022

(Unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation

As of October 29, 2022, Burlington Stores, Inc., a Delaware corporation (collectively with its subsidiaries, the Company), through its indirect subsidiary Burlington Coat Factory Warehouse Corporation (BCFWC), operated 893 retail stores.

These unaudited Condensed Consolidated Financial Statements include the accounts of Burlington Stores, Inc. and its subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. The Condensed Consolidated Financial Statements are unaudited, but in the opinion of management reflect all adjustments (which are of a normal and recurring nature) necessary for the fair presentation of the results of operations for the interim periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2022 (Fiscal 2021 10-K). The balance sheet at January 29, 2022 presented herein has been derived from the audited Consolidated Financial Statements contained in the Fiscal 2021 10-K. Because the Company’s business is seasonal in nature, the operating results for the three and nine month periods ended October 29, 2022 are not necessarily indicative of results for the fiscal year.

Accounting policies followed by the Company are described in Note 1, “Summary of Significant Accounting Policies,” included in Part II, Item 8 of the Fiscal 2021 10-K.

Fiscal Year

The Company defines its fiscal year as the 52- or 53-week period ending on the Saturday closest to January 31. The current fiscal year ending January 28, 2023 (Fiscal 2022) and the prior fiscal year ended January 29, 2022 (Fiscal 2021) both consist of 52 weeks.

Recently Adopted Accounting Standards

There were no new accounting standards that had a material impact on the Company’s Condensed Consolidated Financial Statements and notes thereto during the three and nine month periods ended October 29, 2022, and there were no new accounting

 

7


 

standards or pronouncements that were issued but not yet effective as of October 29, 2022 that the Company expects to have a material impact on its financial position or results of operations upon becoming effective.

2. Stockholders’ Equity

Activity for the three and nine month periods ended October 29, 2022 and October 30, 2021 in the Company’s stockholders’ equity is summarized below:

 

 

(in thousands, except share data)

 

 

 

Common Stock