BURLINGTON, N.J., Aug. 27, 2020 (GLOBE NEWSWIRE) -- 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 second quarter ended August 1, 2020.

Michael O’Sullivan, CEO, stated, “The second quarter had some highs and some lows. The pace of our re-opening sales significantly exceeded our expectations, and we turned our aged spring merchandise very rapidly. This enabled us to go back into the market and take advantage of great merchandise availability. But we were not able to get these fresh receipts to our stores as quickly as we needed them; our in-store inventories declined and our sales trend fell off dramatically in the back half of June. As we have re-built our store inventory levels over the last several weeks, we have seen significant improvement in our sales trend.”

Mr. O’Sullivan continued, “We expect our trend to strengthen as we continue to replenish our store inventory levels but we see a lot of risk in Q3. In this uncertain environment, we plan to manage our business conservatively. We have plenty of liquidity and we will use this to support opportunistic buys of fall merchandise and of pack and hold inventory that we will flow to stores next year.”

Fiscal 2020 Second Quarter Operating Results (for the 13 week period ended August 1, 2020 compared with the 13 week period ended August 3, 2019)

• Total sales decreased 39% to $1,010 million. Sales in Re-opened Stores (defined below) decreased 14% from the date of their re-opening to the end of the second quarter.
• Gross margin rate was 45.8% vs. last year’s rate of 41.4%. Low levels of clearance inventory in the second half of the quarter resulted in lower markdowns and the increase in gross margin for the quarter. Clearance markdowns during the second quarter were offset by the markdown reserve established in the first quarter. Product sourcing costs, which are included in selling, general and administrative expenses (SG&A), were $72 million in the second quarter vs. $82 million in last year’s second quarter. Product sourcing costs include the costs of processing goods through our supply chain and buying costs.
• SG&A decreased $40 million to $492 million for the second quarter of Fiscal 2020. Adjusted SG&A, as defined below, was $402 million vs. $441 million last year.
• The effective tax rate was 57.4% vs. 11.6% in last year’s second quarter. The Adjusted Effective Tax Rate was 55.6% vs. last year’s second quarter Adjusted Effective Tax Rate of 12.8%.
• Net income was a loss of $46.8 million, or ($0.71) per share vs. net income of $85 million, or $1.26 per share for the second quarter last year, and Adjusted Net Income represented a loss of $37 million, or ($0.56) per share vs. $91 million, or $1.36 per share last year. This decrease in Adjusted Net Income was due primarily to the significant decline in sales, which was driven by store closures and other disruptions related to the COVID-19 pandemic.
• Diluted shares outstanding amounted to 65.9 million at the end of the quarter compared with 67.3 million at the end of last year’s second quarter. The decrease was primarily the result of share repurchases under the Company’s share repurchase program, discussed in more detail below, as well as the Company’s stock-based compensation grants being anti-dilutive while in a net loss position. From the end of the second quarter of Fiscal 2019 through the suspension of our share repurchase program announced on March 19, 2020, the Company repurchased approximately 0.8 million shares of its common stock under its share repurchase program.
• Adjusted EBITDA decreased $179 million from last year’s second quarter to ($9) million. Adjusted EBIT decreased $181 million below the prior year period to ($63) million. The decrease in Adjusted EBIT was driven by the same factors described above that drove the decline in Adjusted Net Income.

First Six Months Fiscal 2020 Results

• Total sales decreased 45% compared to the first six months of Fiscal 2019. Net (loss) income decreased 334% compared to the prior year period to $(381) million, or $(5.79) per share vs. $2.40 last year. Adjusted EBIT decreased by 340%, or $801 million compared to last year, to $(565) million. Adjusted Net (loss) Income of $(352) million was down 299% vs. last year, while Adjusted EPS was $(5.36) vs. $2.62 in the prior year period.

Inventory

• Merchandise inventories were $608 million vs. $824 million last year, a 26% decrease. The decrease was driven by faster than expected clearance sell through during the first half of the quarter, delays in inventory replenishment, as well as conservative inventory plans due to uncertain consumer demand during the pandemic. Pack and hold inventory was 26% of total inventory at the end of the second quarter of Fiscal 2020 compared to 29% at the end of the second quarter of Fiscal 2019.

Liquidity

• The Company ended the second quarter with $1,197 million in liquidity, including $1,077 million in unrestricted cash and $120 million in availability on its ABL facility. During the second quarter, the Company repaid $150 million on its $600 million ABL facility, with $250 million remaining outstanding at the end of the second quarter.

Share Repurchase Activity

• The Company suspended its share repurchase program on March 19, 2020. As of the end of the second quarter, the Company’s share repurchase program, which remains suspended, had $348 million in remaining authorization.

Sales in Re-Opened Stores

Due to the temporary closing of all its stores as a result of the COVID-19 global pandemic, the Company’s definition of comparable store sales is not meaningful this quarter. In order to provide a performance indicator for its stores as they reopen, the Company is temporarily reporting a new sales measure: Sales in Re-Opened Stores. Sales in Re-Opened Stores includes all stores that were opened prior to the end of the second quarter of Fiscal 2019, and reports the sales increase or decrease of these stores for the days the stores were open in the current period against sales for the same days in the prior year.

Outlook

Given the uncertainty surrounding the pace of the recovery of consumer demand, the Company’s sales and earnings guidance for Fiscal 2020 (the 52-weeks ending January 30, 2021) remains suspended at this time.

The following Fiscal 2020 guidance items have been re-issued or updated:

• Capital expenditures, net of landlord allowances, are still expected to be approximately $260 million, which had been reduced at the end of the first quarter from the original outlook of $400 million;
• The Company now expects to open 62 new stores, while relocating or closing 26 stores, for a total of 36 net new stores in Fiscal 2020. Two additional stores that were originally planned for Fiscal 2020 were shifted out to Fiscal 2021, bringing the total number of stores shifted out to next Fiscal year to 18 stores;
• Depreciation & amortization, exclusive of favorable lease costs, is still expected to be approximately $230 million; and
• Interest expense, net of non-cash interest of $24 million on convertible notes, is still expected to be approximately $80 million.

About Burlington Stores, Inc.

Burlington Stores, Inc., headquartered in New Jersey, is a nationally recognized off-price retailer with Fiscal 2019 net sales of $7.3 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 739 stores (which included 11 temporarily closed stores) as of the end of the second quarter of Fiscal 2020, 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.