BURL - Earnings call transcript Q4 2017

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Operator

Greetings, and welcome to the Burlington Stores Fourth Quarter Fiscal 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. It is now my pleasure to turn the call over to David Glick. ahead. go Please

David Glick

and in operator, fourth everyone. appreciate We quarter Thank conference good call participation today’s results. XXXX to everyone’s operating you, morning, discuss fiscal Burlington’s

Executive Kingsbury, Our are Financial our Officer; Principal. and Chairman Officer presenters and Marc Tom and today Chief Katz, Chief

listeners March recorded replay turn inform until or by be XXXX. our permission. call A broadcast the no inaccuracies like the may call responsibility available call I third-parties. in that to Tom, without this Before would We take may not of will call I transcripts XX, over to that be transcribed, for this of expressed appear

remarks on statements. the that or by results described we a included from herein filings GAAP release. of in incorporated are expressly Company’s in today Our that expectations in basis. financial today on operations made are this copyrighted call and are subject which to the of concerning such projected projected discuss forward-looking we financial certain Reconciliations measures events, discuss are results SEC, today other are and are XXXX with the and that the and Please continuing all include Actual materially the in risks non-GAAP trends differ and risks measures note results future may follows reference. objectives, for those Remarks by those Burlington fiscal XX-K to press uncertainties. today’s are uncertainties Stores. expectations, Such that Q&A strategies,

XX-week deferred Moreover, rate adjusted Cuts adjusted reduction, enacted share quarter and GAAP including indicated, GAAP the Tax deductibility Act are fiscal changes the on we for Jobs today of and of was and should in impact the financial Finally, the reported well items, respectively. Tax earnings tax EPS on of of as the unless results our exclude liabilities noted Any by net estimated our and triggered non-GAAP XX-week as of both from enactment are also certain December impact XXXX and it any Act, results. Cuts results impact in income XXXX. year reflected Jobs per fourth otherwise estimated revaluation income which be that full the net and in a discuss the our basis

is here Now, Tom.

Thomas Kingsbury

Thank you, morning, David. everyone. Good

extremely points are in driven increase, our quarter report sales X.X% in adjusted a we which store of turnover expanded fiscal passed operating margin to milestones margin achieved We significant We as to XX us was a high We operating top EBIT model comparable record low by total inventory on levels. pleased increase store sales, strong basis in X.X% results, favorable fourth fiscal our comparable strong XXXX. continue fiscal XXXX billion to or record momentum our elevating on inventory our $X enable by off-price focused to XXXX. aged and expect several surpass remain X.X% in robust initiatives and and

overall our increase Regarding our merchandise with solid the operating sales earnings XX SG&A by XX-week drove margin increased a per by guidance. of in a a basis of points, increase XX% ahead and leverage, strong which basis, quarter, result adjusted share, expanded XX% margin fourth significantly on driven combined

XXth the consecutive was XX-week quarter, this on highlights comp basis, fourth sales of all Turning to of a our growth. quarter positive

margin traffic in XX XX% grew per was margin adjusted Inventory inventory share by end basis a year point both delivered point We earnings expansion drove EBITDA growth during and older aged quarter. XX increase turnover increase our and comp leveraging while days for margin, an in fourth basis XX points, which basis gross SG&A and XX in XX%. increase XX%, Our operating while XX the by adjusted driven a traffic, quarters. the primarily increased was quarterly comparable sales last down XXth store at

Our performance once highlight quarterly of our new again store is a results.

new fourth by closed remind negatively I in from to the stores sales and to in damage that in million in sales contributing the $XX outperform were quarter contribution approximately million to $XX anticipated. sales continued was stores everyone due want impacted to as that lost quarter. incremental we non-comp Our this incremental fourth storm

underscore store our contributed impact, we site $XXX store that in the and process format. an smaller as and net quarter. Excluding new million the These our increase during number non-comp fourth of last selection openings stores over incremental in underwriting year new confidence results the our

athletic and performing to made in highlights, business all further note It were Moving beauty, non-cold of fourth as ladies kids we average. the is weather areas and categories shoes. important category top to the comped strides quarter home, deweatherizing men’s sportswear businesses our that ahead sportswear, better chain our of men’s great

Regarding Southwest geographic performed above chain performance, the Southeast average. and the

trend. the but XX average. comparable of Moreover, flat posted below solid While a a Midwest store out sales regions sales comparable or positive result, chain the was had store XX

our inventory again with down on store team improved turnover a managed year’s receipt how comp management, as on decline of quarter inventories to inventory the top are X% merchandising a of year. inventory last improvement. and ended last pleased quarter once store fourth we we XX% with strong Moving flow X% XX% top comp our The

our ago, program levels a once on on our change million of on shares in continue inventory quarter for stock the a fourth XX the customers. million. at our for authorized great XX% with and year repurchase teams environment. XX% deliver $XXX to percent of XX, vibrancy pleased see on assortment XXX,XXX continue as the XX% no maintaining down aged continue customers. as thrilled approximately drove fourth and the am and We I total Our fresh to we buying of merchandising marketplace a a as of to our also teams and share declined capitalize assortment we the values had XXXX. to was inventory our with value buying the we favorable exciting amazing shareholders common our quarter, $XX that repurchased days the versus inventory that and At as planning remaining end we older Pack are for during focus August we we million again $XXX the aged as we bring hold

update our Now and focusing priorities, which let me fleet, sales operating modernizing be store store optimizing long-term continue growth, to expanding, driving on on and you strategic our comparable increasing margins. our

on of First, comparable and with new our customers. existing growth, particular regard are underlying businesses. driving our as and assortments remain, improving off-price with store our sales our for experience improve we to we marketing to model our the engage to initiatives store focus enhancing Building both continue customers ensure underpenetrated strategies to continuing execution the

business, quarter making growth building progress and long-term to significant underpenetrated opportunities foundation our are for growth demonstrate, us categories, particularly the As results allow increasing we deweather continue home will our to fourth beauty. Burlington. sustainable These our

growing regard strategies. our Before this two the our in XX.X% kids substantial update regarding growth traffic gifts of progress to quarter the men’s, represents entire home, gap XXXX remains these will versus who fourth continue our only we view believe in and still deweathering sales minutes see a drive beauty, gifts strong to peers opportunity across opportunity, contributor still increase the fourth women’s as north accessories. not conversion increase women’s, drive contributor strategy drive our our between the to a We basis category gift and a as an we growth XXXX, sales spans to in our increased growth as store on significant quarter key the the businesses, key opportunity home, a XX%. incremental our our but in substantial assortments XX.X% merchandising quarter. We annual our in few We fourth points. and penetrations strategic we in in beyond. of growth refine we a will categories, home a our into men’s, of in are was and XXXX, of assortments and made growth sales continue and category we gifts initiatives to category wanted XXX With I made progress Home to there the key largest home that spend as that kids, of across help increase and

of underdeveloped see and Specifically, we growth expand have for targeted highly have national opportunity in the key we still presence that home recognizable XXXX. more several categories in to brands

this had strong Our and very business a quarter another be to key years. expect category we beauty for many opportunity growth

the of in chase trends to number skincare. prestige existing designer categories assortment brands broaden and will expand accessories continue beauty and in the cosmetics fragrances, while We and in elevating

quarter Ladies’ XXXX apparel strong below strategy gift remains element growth underdeveloped beauty drive still opportunity group in sales approximately this of at category. our end XX.X% well helped was and at a peer addition, penetration as our the our a to In key XX%. significant fourth of remains key increases

in in points and basis XXX drop which of the get continue ladies did apparel ladies versus overall drive component in increase drop missy apparel better growth sportswear penetration ladies strong we our missy in is While intimates. XXXX, a growth sportswear. XXXX, such some Strength helped by largest XXXX apparel, dresses, XXXX active penetration in penetration suits, sportswear juniors versus a developed though in heritage in offset our was and categories of this more slight in as to

apparel in and and total. growth as well-positioned continued highly as ladies ladies we XXXX in in missy areas for these improvement We apparel in on sportswear of we focused are growth feel other stimulating well are

our We the quality vendor continue of to add to base.

basis penetration expect basis increased unit time. new of branded the vendors increased to as at carry year, prior number over While X,XXX year. mix vendors continue XXX versus added edit unit our as while a over that we XXXX the best our approximately XXXX, to over and meaningful receipt XXXX out number last better finished In and XXX receipt to points we approximately brands similar increase We brands. penetration less we points,

the availability, characterize availability attractive In terms strong. as of we remains would product very product environment very buying and

our customer store particular, and On featured in our built portraying our strategy values and in the success our in our as campaign stores, the drive on the destination of gifts help was own the great front, very across and holiday Burlington that finding testimonial focus marketing success on in advertising gift effective category. shopping

our get customers on We campaign feedback positive strong ad both our our and and recognition. continue very to recall indicates scores from research brand regarding

Our to an initiative be important store continues experience for us.

in our track our to to stores gross the five our stores next made years. are to standard. over XX addition modernizing new fleet, opening the brand in remodeling XXXX to significant brand stores of stores, We standard progress significant We XX XX adding our on get store majority

the store very have manifested base smaller including tracking increasingly Our our improvements customers which made XXXX. customer we have has in scores, began significantly This increased our our since we store footprint. have in service to responded positively to itself

store continually We plan portfolio stores capital XX to and in XXXX. are another to committed remodel improve investing our to

feet. square expanding growth net XX to The our new continues opened second stores We XX,XXX initiative fleet. XXXX, in be store averaging

national plus operates stores states a national, we than only at a retailers stores operated our that are in most retailer Rico. We XXX well more small operate footprint. current XX with year-end, XXXX Yet mature, Puerto all far over

we Given store continued have new XX relocations to the expect real experienced which in stores net to strong to feet, square us, gross and stores XXXX, stores our that XX performance along to be includes presented new XX,XXX opportunities in with XX XX and new XX open we estate closings. averaging the to

will have number stores of our number new This added our to another XX similar XXXX net XX This remodels. XXXX, in to the acceleration including we is years, brand the just added and new are and will two XX translate means XX store that standard. new combined, gross openings of XXXX XXX brand While stores stores to by we increasing stores standard stores. to

Looking Moreover, in significant we long-term. over the be expand expect our of openings current remodels, our our majority to to the stores standard. XXXX ability rate we’ve the new and store out at remained years, in confident would five brand of stores to

margin our growth to remain operating also continuing We focused priority third deliver on expansion.

we expanded per points, average by our approximately XXX basis XX Over margins years, of basis year. points the operating last five an

group. with this are While opportunity is there we progress, versus very peer pleased still our significant

to increases optimizing across will plan and that continue the to inventory maintaining active deployed fixed management Going execute markdowns, improvement game have years over same driving five total forward, last SG&A leverage we with sales all areas. cost, profit disciplined remaining the an we culture

take to planning. Before discuss I I approach our moment XXXX turn call the to want over to Marc, a

margin. our investments As continuing of business incremental we and work prior balance to operating with CapEx in expansion deliver at years, OpEx to hard

top another CapEx will As chain, and spend million associates. substantial generates our medical of corporate million and prior years complete renovations number $XX merchandising in three our increase new cash to and in increases. wages $XX stores, infrastructure, investments Number are incremental million, hourly investments in sales to annual flow. following our year. include XX our simultaneously over highest growth, our XX back for headcount operating Number margins. in which on flat $XXX growth three, announce our the we employer of while two, remodels, cost supply with Accordingly, one, to you improve employee of the similar contributions company’s of to taking million $XX.X and expanding know, our keep OpEx model CapEx in of believe we our headquarters. Overall, second costs spend approach four, increase we give to Number drive the business XX% pleased of balanced business an a incremental to are the XXXX straight team

more detail. call the to Marc turn our performance to in and financial review over to outlook Marc? like would I Now

Marc Katz

recording us today. sales. ended XXth quarter consecutive the by of morning, and positive joining quarter Tom, We Thanks, everyone. fourth comparable for you store our Thank good

achieved contribution new a expansion increase share delivered earnings we adjusted from a stores margin, and EBIT on basis. which strong addition, in In per combined adjusted XX% in XX-week

financial Next, will I to otherwise turn non-GAAP be that XX-week, a on review fourth discussion basis quarter statement. results indicated. Please the the unless note income of following of a will

of earnings reform. quarter on purposes results adjusted we impact discussion, fourth by tax from excluded share, estimated XXXX net adjusted and any this have the For triggered income our per

the and on XX%, total For store top increase. strong last fourth of year’s sales X.X% quarter, sales comparable X.X%, increased increased

basis bringing to added In sales our addition, this week XX-week on XXrd in increase to a million the total XX.X%. total QX $XX result sales

and conversion, approximately transaction for quarter, For by quarter comparable per performance an storm store as closed anticipated, unit traffic, our and sales entire was that primarily units is last noting the the year. up while stores by new worth increase driven that $XX sales average eight all in retail the reduced were million. were damaged versus non-comp It

these February, stores were of end eight still the of As closed.

lower as a good increase by quarter anticipate QX. inventory that driven basis fourth in fourth offset in approximately the inventories costs We Remember increased points in included of physical and through our more buying of in quarter. year. represented of news the QX, came cost goods XX was last and basis with than of XXX of margin XXXX. last flat slightly XXXX, which Therefore, we IMU include point versus last XX last net resulting year’s a of shortage basis were guided January Product of stores shortage in now, and the higher versus quarter basis the points markdown were XX margin versus we gross and chain impact shortage processing these sourcing rate. a excluding the points to in of shortage, as reopening stores the percentage year fourth cost year a in SG&A in took supply sales. rate, of As XX rate of Gross higher point our a which margin XX had impact results increase of a an balance one end the by negative end XX%, basis by gross

more Sales and income million XX% and in which increased a to of incentive rate basis EBITDA $X We basis gross margin $XXX the and by SG&A gains the and than Adjusted as marketing of additional prior in of points. by of to and our was are offset quarter with compensation reform expense, supply occupancy, favorable in These in $XX continued XX the XXXX an a fourth the as accounting share-based million was and driven XX compensation for was in quarter. the sourcing reduced from reform point in and points points. $XX for year. year leverage rate basis amortization $X rate quarter. business sales of share-based results led for product expansion deductions points once tax million, SG&A, focus reduced XXX expense. we’ll chain XX than exclusive very continue to pleased productivity increased growth, improvement or improvements stock amortization, by last rate costs tax change lower were on compensation Other for XXXX. interest million rate the to leverage insurance compensation sales. XX.X%, impact million. and effective tax quarter $XX accounting net million, The percentage versus The in a XXX increased productivity basis resulting the changes lower last percentage in revenue the again expense XX.X% to additional deleverage The to exclusive estimated basis and $X for fourth million. XXXX Depreciation change other lease

of a the the XX.X% that million triggered which estimated reform was deferred a created one-time benefit tax company’s fourth $XX during revaluation or XXXX recognized Finally, taxes, quarter.

changes a a last tax Combined, benefit in year. and of this versus All in tax an resulted XX% adjusted benefit of resulted of net GAAP X.X%. adjusted these income of an X% million, increase $XXX

a net tax includes the As adjusted compensation, result the of reminder, change benefits in accounting share-based excludes but reform. this XXXX for income

value return repurchase We through our shareholders our continue to program. to share

we the this $XX of for that the repurchased quarter, had shares we of repurchase quarter, approved was end authorization fourth During on million $XXX share million. stock August. our approximately At past $XXX million the XXX,XXX remaining

the $X.XX split outperformance guidance. XXXX of share to due versus The $X.XX $X.XX of the per operating last earnings was that Note in includes $X.XX reform $X.XX top-end versus This resulted this a result share-based adoption true last XX-week per earnings the XX-week was represents $X.XX share per beat compensation year. per between this and of tax our basis versus $X.XX share excluding $X.XX accounting. $X.XX estimated new impact beat of a result basis XXrd a earnings in year. on week. of share on for the Adjusted XX-week All

new to share-based for guided the we in the adoption accounting. reminder, benefit compensation no a of QX As

$XXX period end, $X.X had in loan billion billion debt on $X.X extension credit X.X XX, our XXXX, approximately EBITDA at we Turning cash, of borrowings we balance and $XXX closed our and ABL our of had the on unused We the sheet, to million. of no million term leverage debt-to-adjusted with a availability ended ratio and total of repricing November B. On times. quarter

rate XXX extended LIBOR new basis points out November the is XXXX. with Our to plus maturity

as $X.X was loan years. seven basis next the This August term our per well term with points interest over LIBOR for the savings as XXXX, maturing to Our providing previous years XXXX. pricing in plus transaction cash out November moved three date loan year maturity million in XXX

As result the company on debt transaction, incurred of million, which quarter a of this reflected the a extinguishment fourth of fees of recognized and in loss non-cash GAAP $X the $X million results. were

of pack through XX $X.X As opened million XXXX. hold which inventory in million inventory increase improved versus fourth XXXX inventory May at fourth $XXX $XXX of of fiscal rate inventories of turnover X.XX% quarter Comparable capped XX% increase year. of and driven related term by compared X% Merchandise and our a is net at an quarter and primarily was the the million to XX% total last LIBOR new XXXX loan $XXX XXXX. billion the fourth to were at of end the the quarter. an end interest reminder, with hedge was inventory, fiscal XX% during fiscal inventory store of This of during stores decreased of comparable store

increase expenditures and rent operating $XXX Cash XX by primarily was deferred quarter and operations XX% the related were flow XXXX. end Improved results days to million. decreased prior million provided changes inventory $XXX capital the other working pleased million earlier, liabilities. were that in of the indicated $X aged to offset at fiscal capital current Net down As were older fourth by inventories very year. in we and for versus incentives an

ending period During opened store stores We store six with net the closed including the XX quarter, gross for relocations five new closures. three one and XXX stores. the stores year stores, and opened new XX we new new

closed weather-related eight entire fourth the call, earlier for As stores remain damages, to quarter XXXX. in we indicated of the due

Total But XXXX XX discussion year we Please will unless Next discussion earnings impact impacted our approximately rose following on adjusted results related adjusted sales as be a reform. included of of fiscal in gain results, tax share sales in basis fourth XXXX to year. a week results X.X% stores per store quarter performance. negatively again, and estimated I sales that strong non-GAAP of by comparable sales fiscal million will have the of from financial note Total XXXX review impacted following store X.X% fiscal increase were weather indicated. during excluded otherwise net the $XX X.X% the the income comparable and XXXX.

sales points was an resulted basis an $XX our and in on rate taking costs due rate. In XX markdown X.X% versus flat basis increase last XX.X% Product a million years’ sourcing week a lower addition, fiscal margin increase XXXX. additional XX XXXX to in XXrd for representing of the fiscal higher week IMU. Gross sales were primarily to versus

by XX% to wages product business improved triggered As estimated by rules accounting interest basis rate and effective estimated in to XXXX. XX for rate tax an or The by $XXX by XXXX net activity spend, the estimated benefit reform million the compensation. the XXXX $XX million deduction a for occupancy; point revaluation to driving by deferred basis point resulted increased the million Expense to a XX.X% million, exclusive represents and partially rate prior in sales, fiscal The of $XX XX%. Adjusted change of impact This fiscal of reform XXXX cost of to to share-based increased in mainly percentage for leverage tax net million. increases expense, rate SG&A, $XXX to reductions favorable as a XX lease amortization XX% sourcing EBITDA basis expense amortization, compensation and percentage exclusive stock-based compensation to driven XXXX share-based increase sales insurance was effective and by of XX.X%. points was and $X $XXX offset in tax Depreciation million. triggered The XXXX. one-time tax resulted reform increased increase versus an benefit resulting change on before increase a Combined, our GAAP the net of in tax of a was impact bringing tax of for and net an reform. an benefit XX XX%. million, tax tax $XXX XX.X% XX% XX% rate creating of liabilities, an approximately in tax rate point this net $XXX also bringing Adjusted net $XXX of $XX of year, company’s of a tax XX%. basis. our adjusted provided approximately adjusted XXXX XX-week income fiscal rate a million XXX million million a tax of income basis effective rate income January last advertising

per As change XXXX $X.XX, per share last the versus Adjusted share share a to $X.XX inclusive was tax this accounting XXXX. change $X.XX XX-week Earnings week income of compensation XXXX on net but compensation reminder, year. per benefits adjusted for share-based per year. added was in basis of estimated XX-week for last reforms. a accounting versus The impact the earnings earnings a $X.XX share-based additional includes in $X.XX XXrd for result excluding fiscal the reform excludes tax basis, on $X.XX related of benefit the share a

Excluding last to year. XXrd the change related XX.X earnings benefit shares XX.X accounting per adjusted XX%. were share million Fully for compensation, versus well as the million the shares week, as outstanding share-based $X.XX diluted grew

I outlook. will our to Now turn

X% allowances lease fiscal For top XXXX on XX%, store as the to be of total the million. expenditures sales $X.XX. X% increased per are we X% sales tax impact growth to comparable to the share XX% earnings range to tax Comparable over $X.XX. the XXXX XXrd million representing XX EBIT the net compared of increase to capital adjusted week. results XX% $X.XX approximately $XXX the expense expect and in approximately of to in year, the favorable to company range compensation last excluding depreciation Adjusted This to XX% fiscal and of in effective of $X.XX approximate The of range of to of XXXX in million. points, of of to be increase. EPS amortization the exclusive expected XX XX of of the $X.XX XX-week XX to accounting in basis and amortization expects margin landlord EBITDA points, rate share-based for $XX excluding range X.X% an of Adjusted year’s EPS approximately adjusted expansion XXXX XX% adjusted be expansion margin reform to interest basis to $XXX guidance

we to For expect earnings sales the $X.XX of X.X% XX.X%, to compared to the be per increase in first share range XXXX, to adjusted quarter range X%, to of between year. of per total comparable X% in sales share growth $X.XX the $X.XX store and last

Excluding estimated EPS in change XX% reform of turn for the we to expect the be XXXX I With of it that, and XX%. for remarks. impact the to tax will to accounting share-based range growth adjusted compensation, over Tom closing

Thomas Kingsbury

enable Marc. positive summary, operating us beyond. XXXX store initiatives the expansion demonstrate plans In this drove our business growth agility our performance to quarter foundation our strong and we We our results Thanks, of to continue expectation, results believe our the above model. increasingly of and and in expect continued and implementation

the in model to store, our positions the in and value to shareholders. for more their for and begin brands, to I’d outlook like chain, customers rapidly We contributions believe changing to thank capitalize styles our With great of are the Again, our evolving well the our fiscal This call. strong the value supply portion and operator to our bring increased to our on and our to that, off-price teams confident call XXXX and question-and-answer ability landscape. on corporate turn Operator? over I’d the focus results. retail us to like

Operator

coming Wells is Boruchow Fargo. from Ike today question first Our Instructions] from [Operator

live. now is line Your

Ike Boruchow

all the Great thanks Hey, good color for and call. holiday on morning everyone. the

Thomas Kingsbury

Thanks.

Ike Boruchow

underperformed the has average I the guess, guess, implies I categories performed little weather guess above that’s first so, cold the non-cold weather chain question, a which that bit. Tom; I I mentioned the business you drove help just guess help goods? the given and heard in from just that – categories the weather surprising us cold the bit of we’ve underperformance what weather cold in other some Any understand strength retailers. weather the favorable a some

Thomas Kingsbury

that you business with less be Yes, These businesses, non-colder made long stick Ike, categories just tremendous to businesses our in previously, very the There we outperformed, you volatility. our home, and we progress with pleased of the more just as performance to reinforce that the and gift business. among are of the – weathering our of were has that athletic know, strong. what has become that footwear I it businesses other and fourth weather Among foundation company typically have to part non-cold couldn’t important are thrilled strong many weather apparel beauty, an really tend our said quarter. objective for been we wasn’t

we nicely, about inventories turn, volatility trade-off we businesses. objective may the say good and be about our earlier that aging the business the our more added achieved and Ike, perspective. opportunity was and penetration less just cold talk clean sensitive develop in can’t we businesses weather the business. down, and is could to conservative, the our though the fourth two, feel to category one, in grow with significant such Maybe we take will very because decision an what strategic to similar, are continue and business businesses a we the our number number performance, our meeting planned to we’ve year, have but, sustainable non-cold quarter is done did Now our objectives the in plan such reduce count if in we’ll in it’s we weather to on very, cold to weather weather upfront all from non-weather day down. of probably you long to more weather next bought plan we did we That weather build to exceed But fair a have have the non-cold season. the

Ike Boruchow

walk you think just a outlook just and guidance so should Can et pieces, of comp tax in the wages. gross one the P&L, help basically understand apples-to-apples in you. including SG&A, share-based the Thanks and moving Tom. is the think much, rate Got us – the it. headwinds for us There an how through the entire margin, I terms basis on the like of and Marc, cetera? we the then, guidance about lot And

Marc Katz

good Hey, morning, Irwin.

I me to and parts unpack ahead hear. question XX that one with Let go

will an start we think EPS I with basis. apples-to-apples on

to the operating component that wages give margin about You’ve so the increase. got will talk headwinds, we’ll and you

is I press reform saw the the XXXX $X.XX, starting And our tax last that table in our base that XX-week benefit was think week. the So, release. that point a excludes XXrd of you of of EPS

that is, for what include compensation. $X.XX So, the for share-based change does accounting

it out guess, back we you EPS of that that second, get more a out back a we I’ll that going base and are but we if get I into So, to to $X.XX benefit, as $X.XX. refer what

on top So, of before that before tax and consistent the that growth and with one we guidance to talked change that’s $X.XX growth provided XX% $X.XX, a we to reform the mid-teens the call. represents of that’s on which of our rate reasons XX% $X.XX accounting of QX about

assuming same share-based as are really thing. mean, of level far Right, underlying accounting we complex a it’s for I As the the this compensation, change activity year.

options are have year. vest exercised We with that. year clearly that and one throughout history We’ve of got the good

of from worth the view. level due was it’s it activity. tax to worth of assuming what prior the XX% guess, I activity an point are change, it’s But EPS that We less in year. of same is technically the rate

into tax going share-based will change old with our baked that because it to complicated just the for rate be too So it’s accounting undo compensation one. forward,

So, to we wages, headwinds far incremental that’s as headwinds accounting back total, reform change, the the all-in our and so, okay. have in it tax and really as add of to if when our million guidance wages. of – in benefit XXXX $X.XX, $XX get you you With $X.XX

the $XX incremental we which gross of and in higher have which expense, stock-based obviously course, CapEx million what our by the We depreciation, driven XXXX that now for biggest spends is XXXX. expense of is $X in million are projecting side then compensation one, and in

to years, also performed $X their wages, and resulted our That teams last million of million store market-by-market for wages. HR that’s $X million our $X our hourly of in year review of terms prior versus similar $X and stores, wages annual apps for versus year. incremental last In an DCs million

very competitive confident this We are in to approach wages.

year find our hourly monitor our in continue of few ending workforce. DCs. that much we have be to right our focus if our but up was With efficient of teams who not in we us just our said, I two be headwinds frankly, able that today. as margin Turnover, to all relates by end improvement the we with I improvement to We the become to a we your will profit leverage some jobs possible. business offset our at were as we also we you continue percent sales that metrics I’ll we’ll Quite part stores overcome open question. that to and Irwin, point to to pleased that metrics I have of on continue believe, expansion, as pleased which to remain about, adjust, that both we the and of impressed in not we requires achieve guess, culture those just culture, allow EBIT we would think profit will can and didn’t dynamic to you, of course, year. speaking to as the point a people support part we’ve guide it to only results about wages tell our throughout the If ways are years, so that reach talked for last have, I the final then time and us at we more done it we of

headwind ten us a points story loaded to up and EBIT margin XX points, X% XX as similar flat SG&A of SG&A way. cost plus we of margin basis and of XX planned pick kind we be of what kind points. when then ten basis of points basis expect XX less to of A as this SG&A at headwind depreciation down basis XX comp as prior number that earlier So, freight spoke expansion merch basis of headwind to points, break the far gets XX to basis X% product sourcing point also at we is basis we expect a the years. to it points, refer our That of to a I to there, leverage.

Ike Boruchow

so helpful. much. Super, Thanks

Marc Katz

Take care. got You it.

Thomas Kingsbury

Operator?

Marc Katz

the think for next ready question. we we Operator, are

Operator

from coming Boss question from Matthew is Yes, our next JP Morgan Chase & Company.

live. Your line now is

Matthew Boss

a Thanks. on Congrats quarter. nice

Thomas Kingsbury

Thanks, Matt.

Matthew Boss

the big quarter. That you apparel? it to provide like strategy underperformance helpful. performance the in gifting a fourth Tom, guests was on ladies in win So, be would color speak Could sounds strong any and your this

Thomas Kingsbury

happy be Matt. to I’d Yes,

stated gifts, with made start let’s deweathering before. were a our which key part progress well, business in of Okay, as I our

We and weather-sensitive really, really performance build pleased foundation less a are for it with the very this helps category’s us company.

in and for gifts of job drive the stores terms say of to our big XXXX. presentation We are home, forward. extremely still home hundreds success pleased the as with product certainly execution, as the teams in home across a our women’s kids of that store contributors merchants both We within gifts our see did an compelling strong have accessories, I growth of that overall penetration add I Christmas, team assortments categories, and Thanksgiving I’d did help Between outstanding stated to stores lot visited gift overall business, our men’s great our our to it our of in really previously. and job product selection a well really growth and significant going and the are in the was were as and XX% stores customers. performances assortments there category but a home great gift I

includes talking ladies not sportswear moving ladies to So, largest is let’s from also missy we juniors business only suits are important the apparel, apparel. apparel. most ladies dresses, about Missy apparel apparel, ladies sportswear, further to and move and

driven that We not before. in versus But as mentioned increase sportswear as are did penetration have ladies strong. last been better really the modestly in pleased with of by year apparel the other and some businesses active the growth I business, which of

as be XXXX. businesses strategies areas these Some like a intimates have in and place Would improve were heritage to suits, of will would our you liked. not as we for businesses dresses, have juniors, strong those and focus

areas versus to more year at in a have peers strategies did we points that we we team and in we penetration XX%. of we feel penetration But believe market XX% our XX%. from are our in XX% by growth to approximately confident apparel totally XXX a we share that dropped in optimistic reignite successful have that is have the talented ladies these right Matt, place So around given experience. overall, old one place We But are our with can basis capture apparel XXXX.

Matthew Boss

your Great. And was versus then, terms hoping in EBIT? and I new stores us can last you maybe for I statistics performing, and just follow-up, us are on you chain maybe provided a Marc, update? update think the just of sales year how an

Marc Katz

Matt. Sure,

profitability a our models. underwriting perspective. with pleased be in to stores, our both of They to continue very performance continue the than better We new line from and perform a sales or

the under feet we average. how the more cohorts the you were then the a our stat XXXX, XX,XXX first than performed the on one. of end the they at stats the think Matt And other last That’s are terms I XXXX typically referring versus one stores we is, In at of XXXX XX% year to, ended chain. XXXX productive square end in the gave terms and being in that year, our that gross of give chain of up

ahead you we’ll there. So go and update

in comp higher was the cohorts chain, exceeded So chain our XXX points chain. the increased cohorts EBIT for in the terms and year, sales XXXX points the average this XXX two basis than their basis our our versus how – XXXX of expansion XXXX and those they operated by margin

Matthew Boss

that’s great. Wow, Excellent.

Marc Katz

Matt. three inside years, Paybacks still remains of

Matthew Boss

you. Thank great. Okay,

Marc Katz

You bet.

Operator

Thank you.

Our next from Kimberly question Stanley. from Morgan coming today Greenberger is

is now line Your live.

Kimberly Greenberger

Thank quarter. much so I’ll on fine question and you my my Marc, congratulations well is revenue add as XXXX for the very guidance.

any revenue of a there in so And to openings you and We through acceleration the XX would gross trying total a openings? some could those this X% about go new just XX year Are to change thinking changes drivers there are you week understand to in that of store timing year. last Thank XX% is the drive closures store then, acceleration. maybe of secondarily, much. on other any basis. that the assumptions in growth, and Maybe

Marc Katz

sure, Yes, Kimberly.

head. hit You nail on the the

openings, now, – little in XX just out in to and our in store XX XX spring, terms we’ve in fall, April, spring, but in of new got guidance Kimberly, and five gross bit what’s XX So, right five of in XX openings, in March May. that

our small that just – remember are mentioned of the to, the closures stores. typically closures terms So I’d only to that’s you the key volume driver on in and thing the very

Those So in less really they are than the are drivers. that volume much we much, up. stores new are annual the opening

Kimberly Greenberger

last in And super tailwind maybe so on I for benefit? But Marc. in would that that change benefit similar to the XXXX year. a compensation This factors would Thanks is and or can differential the there about a drive what year that would is to understand. talk would is Thanks us complex those factors follow-up versus much, were would cause be headwind just obviously that you set a my that stock-based if things a the cause much. Great. XXXX, EPS so just this think

Marc Katz

that price that in lot moving of there. the a decision-making shares the executives lot terms price go is. when they has vest, course of restricted you their pieces process terms Yes, and and people, from number vest, would stock number is, options of think a which with through exercise the in our to just where of Everything factors, how all where do what’s how of the stock

overall but when moving in and population guesses is. that terms last vesting to some we year, stock obviously made do, could data going of think terms and of of in the price the in a is just that are something that again anything think it be it’s get what to what underlying So, will we not we there happen. the exactly of - fact, activity shares all know lots But pieces and to can you the similar

Kimberly Greenberger

Great. Thanks, Marc.

Marc Katz

bet. You

Operator

Thank you.

Lorraine from from next question coming America. is Our today Hutchinson Bank of

is live. now line Your

Lorraine Hutchinson

Thank you. Good morning.

Marc Katz

Good morning, Lorraine.

Thomas Kingsbury

morning. Good

Lorraine Hutchinson

a you up that to if you in talk said, the you what Can comp drove AUR was XXXX? as and think driver fourth in I expect continue quarter. that about

Marc Katz

Lorraine. Yes,

QX, little we in in – bit QX. AUR little in bit up a So, had also

those are did move terms called of a the of as months – very know, of I’d don’t best x markdown but we percent look probably best were. And higher from you, last strong have in sales. And have kids, being the a those y. forward, tell to versus higher tell is probably you not price Tom some about out I’d sales, typically AUR. to penetration. I’d going what higher, AUR better, you that indicator, shoes, I think full look athletic guess to probably all as sportswear, to So those I men’s, better to are few areas areas, strategy you had drivers a

of have But, a that byproduct lots merchandizing to is AUR to grow strategies comps. really grow and traffic We – that. to drove

Thomas Kingsbury

Yes, we we roadmap really then the because, want delivering to on great a really just AUR want you to to have have don��t if you it, values. And roadmap grow focus a and plan our to goal it of we happens. performance sales values kind the has one and to been is customers and delivering number that But our that we been delivering. has feel great really that contributed

Marc Katz

for have more please. time we question, Operator, one

Operator

Certainly.

coming question from the and today Our from line Cowen of Company. Kernan is final John

Your line is now live.

John Kernan

Thanks taking on everyone. morning for strong my Good questions. Congrats a really holiday.

Marc Katz

Thank you.

Thomas Kingsbury

Thanks, John.

John Kernan

obviously that’s up we branded was higher about the talk AUR penetration can comp obviously, We driver? much think best much branded penetration of on better stores. Can an mix theme of and AUR, go up into mentioned basis expansion better I of of further points. terms go XXX the unit can receipt the vendor the points as better how unit Just XXX Tom, in basis best see base the was in go how – you can just how and the terms and or much mix you receipt that

Thomas Kingsbury

single every add how goes, branded hundred have year. Well, as a expands, on to points even as still couple more see a we are brands. far Right. we pretty of opportunities track steady that basis We’ll

all that will on better five the number what every focus day. over we as it We haven’t okay, customers, again, the percent over because x we value do we want be will one of that time. what be years, things to single And the happen next to grow. said, but continue anticipate values can that I deliver really depends goes, we again of to wanted our kind far As

look And have our the higher we again One of of we significant in better base. today. in that a we is a of are year who are we’ve progress some I stated, the a the all in we’ve lot that with, different made XXXX than looking help to level a things we XXXX our generate do growing fact improve very that, has the $XX,XXX store, of our the at much customers A, think delivering product been proud as and more our also, makeover that stores will The customers stores, our and way we the customer.

John Kernan

follow-up. Got it. and Thanks one just

You’ve or had QX of the you a the conservatism there just public moderated running history stack am reporting fourth assume trend guidance? two company. some a was gift bit quarter year of the to in is you’ve I the upside and as were point fourth been does the wondering, giving well. so comp in trends robust a long in as is in am that I little a wondering, Thanks. quarter guidance have QX type is here your just terms guidance deceleration decelerating of

Marc Katz

we you we comp base to think we extent and I to over the merchandizing And had to our it’s is that think guidance and there. it of guide in and business the be if we’ve X% beat have a plan typically there know is, John, reason proven and accordingly. that X% feel we certainly to are lot base more how work a able all confidence and that expense for our team be receipt our certainly that to time over will

Operator

comments. answer session. closing over the turn for our Kingsbury Thank back floor you. to of further like Mr. We or reached the question I’d any to and end

Thomas Kingsbury

with Have in day. us when We Thanks a May. we joining quarter speaking late everybody. to for today report forward you. Thanks good look first you results

Operator

That you. Thank teleconference. conclude does today’s

your You may time We you line have and your participation for this at day. today. wonderful thank a disconnect

Burlington Stores (BURL) 8 Mar 182017 Q4 Earnings call transcript