BURL - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Burlington Stores Incorporated Third Quarter 2019 Earnings Webcast. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]

to Senior conference and Vice like today, your Treasurer. now Glick, David President, would hand to the speaker I Investor Relations Please sir. go ahead,

David Glick

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

Crimmins, today presenters John O'Sullivan, Officer. Executive Officer; our Our Financial Chief Michael and are Chief

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

Stores. remarks are Our that Q&A Burlington and the follows by copyrighted today

this objectives, call events, are expectations, results financial on trends projected to future certain and strategies, subject concerning made risks or uncertainties. Remarks

that XX-K materially statements. the that incorporated differ company's may are Such results the filings expressly XXXX SEC, all and herein with from are uncertainties risks forward-looking of Actual projected those which for in and include those reference. in other by such in fiscal described are

Reconciliations note discuss the release. financial that expectations basis. and discuss non-GAAP are in Please on measures operations continuing measures results today we are GAAP today a press to we included the of today's

here's Now, Michael.

Michael O'Sullivan

you, morning, everyone. David. Good Thank

extraordinary years. start by XX company this leadership, has Kingsbury's be to the achieved Tom last me Let things Under saying that great it here. remarkable over is

talk call, third I now have that be that our would about is but results. opportunity talking though exciting success this us. quarter back to have step I later we more the will in for opportunity and like tremendous Even about we had ahead of despite still more

challenging press the a XXXX. X.X%. sales of store in release, store gain comparison today's gain most the third top on solid in fiscal quarter of comparable of of year comparable achieved our described X.X% As This was sales we of

of sales comparable strong from by was stores. X.X% our the performance increase non-comp sales new store increased driven This X.X%. total and and Our in by

a Our basis costs us XX adjusted increased by of in EBIT expansion to basis margin adjusted that earnings XX points expanded basis and margin which by our drove our of costs share, had EBIT three related stores ahead freight one, XX per points, guidance. of This margin points, XX% enabled increase this number offset components: merchandise basis the had during temporarily be points quarter. inventory XX to closed well to

costs. SG&A on new our basis net and higher revenue XX Number income This including expense We benefit. Number three, was adjusted basis on XX basis points leverage two, product was by on the quarter. XX strong and a XX opened other sourcing base during points timing primarily stores points.

additional accelerate brings early planned We XX to total one stores. This into XX net of stores had expect close of the a were also XXXX. store able or to we year. for previously relocate XXXX a that for addition stores new in fiscal this quarter fourth still to XX us We

was our in terms Kids Southwest performing regional were: strongest Accessories. and Our Missy, the And top performance, in businesses performing region. of quarter the Home,

to good high opportunistic of the quarter. inventories to guidance very at versus comp This inventory us the we managing continue of down fourth end position end at store flexibility We the flat. as continue our inventory be and to the X% fourth single-digits our to quarter make comparable progress be affords levels very declined to expect in the third the quarter store mid of inventories

inventory end XX% our of represented of quarter Pack the total and inventory at last XX% third versus hold the year.

benchmarks. in was line with this last lower it year, more While than penetration historical was

approximately shareholders third as million common quarter and cash during stock return $XX to excess $XXX to the million continue our we year-to-date. We repurchased of

existing share the quarter, the of remaining we $XXX repurchase At end authorization. the had on million

our on repurchase executed earnings plan our August, call last to authorized million XXXX. $XXX an be past through share this discussed approved As board additional August

over call talk like some and third in more you the to observations of share my turn since with to I Burlington in initial to I about and John Before back detail, our would updated quarter outlook thoughts performance joining September.

last I the very fundamentals have to had my have the know to Over chance of XX on the given background, model. you would I the off-price really company as the weeks, been get expect focused

opportunity. our This supply strength all of of stores said, other thoughts. vendor the company. I great merchant That of our company, quality the too dimensions details, flexibility a or great but of a let the words, early up our many these I share high-level lot been our extremely see organization, is chain In specifics impressed. a relationships, a It on few is off-price team, me and offer to of have

First, an into terrific expanding categories categories, job we have team merchant a vendors. new merchandise they have our developing and existing done growing strong long-term with outstanding partnerships and

years, sales several the last I we growth this expansion continue us. margin strengthen store order on in expand comparable further strong capitalize over our to sales opportunities and driven margin can of have and ahead achievements but and to organization exciting believe These the still

a is value deliver strongest to as great the company having to possible merchant merchandise means capabilities. This mission our Our customers.

a a I through off-price of Secondly, core can that advantage terms manage leverage sales model. we This degree to guide, chase than will to this that would and to sales we somewhat greater in plan, we buying believe are I into of like well-positioned so more in business, a ability how opportunistic build advantage mean our chase to chase do. season. The is the we conservative the being already of more business.

fuel of our fastest build even meaning great we allowing the take advantage buys. classifications into and that more to more can liquidity us business trending will This opportunistic

the slightly we move In fact, quarter. to business into aggressive we've already shift mode begun chase as the more a fourth into

I turns and drive inventory efficiency operating Thirdly, significant improved expenses. potential to see in

For trimming levels. inventory some years now we've been

markdowns. opportunity drive to is even of do As Jennifer there to this considerable lower this, and turns we I that both and have discussed more think faster

made help areas. from whether I the years, in in or markdowns again, leverage, few areas at expense time, invest allow other further but capabilities. improvements and from progress same last should expenses, us to headwinds potential to savings, we a good strengthen lower the see and drive These to to On our number further in in productivity expense merchandising have of offset off-price

Let and me us. summarize a demonstrated great at the of a weeks XX is tremendous but amount there a huge last have opportunity we to by ahead saying that here have that is Burlington that talent this of off-price me company,

I'm upside path more earnings we business. to fiscal provide XXXX. our I XXXX very potential this expect growth call during guidance when QX margin earnings provide and specific March excited on in our and report about the forward sales for detail

financial quarter and like in our the I'd to outlook to updated hand Now, more over review our to detail. John call performance third

John Crimmins

and Michael everyone. good Thanks morning

me Let with start review a the of income statement.

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

stores of temporarily non-comp There to during negatively now and or million. specific contributed sales non-comp quarter. reopened. that closed $XXX $X stores These the these by were issues. the stores and quarter have building New million incremental impacted an due were in seven for Most new sales third fire other

primarily flattish, with last driven was XX.X%. transaction up Our performance gross with third conversion rate was traffic in margin down quarter year's at AUR and comparable flat an The units by slightly, sales store increase slightly. per rate

offsetting points basis freight write-offs in XX to points XX margins points XX from the and closed from damaged the negative related basis Merchandise impact inventory temporarily basis of inventory increased stores.

The by increase lower markup. merchandise was driven margin primarily higher markdowns and

the the points be freight continue approximately to expect freight for quarter fourth XXXX. from pressure the basis further fiscal up to in year, moderate XX of implies that We which will

XX.X%, sales cost was net on XX as points a as basis sales. Product sourcing expense. year which costs transition Adjusted than through and improvement percent corporate of processing as costs, chain of growth leverage buying costs our SG&A, was costs expense include This excluding goods by sales. lower and XX driven store-related a of points and were the strong basis lower well marketing management largely as percentage supply last

higher of $XX a last XX last and our income percentage last than higher Other prior earnings from quarter lower sales. fiscal were fiscal as points second million the of XXXX income other basis revenue the the year XX quarter as in of recorded was that gains revenue was year during and basis XXXX. insurance Recall $X than call than points million, year second and

annual did XX points this EBIT is modest on and fiscal add a EBIT the to third issue basis impact revenue only other in fiscal our income of for XXXX. margin our and timing has margin primarily While XXXX, quarter a

We expect for all sales as flat fiscal other be to a percentage income of of XXXX. revenue and

point Adjusted management a $XXX to or rate strong for quarter. the XX% excluding transition million costs million. to translated This basis increased $XX in increase XX EBIT

last $X million. lease favorable amortization expense net expense to to third year's amortization million. $XX quarter by $X and exclusive versus Interest decreased $XX Depreciation of increased million million

third quarter income, management last versus The XX% adjusted last adjusted increase effective year's this rate transition tax tax net rate was versus for year. the quarter of adjusted in costs third XX.X%. million excluding a resulted of Combined $XXX effective XX.X%

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

During XXX,XXX of approximately the for shares quarter, we repurchased stock million. $XX

million share $XXX authorization. remaining have repurchase on We our

diluted $X.XX in $X.XX of last All per versus share of resulted earnings this year.

represented operating guidance. last This in outperformance split compensation. between diluted transition $X.XX management beat $X.XX a due than high impact The to of $X.XX per our excludes which reflected the our beat expected earnings Adjusted and year, accounting was guidance. versus versus which from $X.XX result true end greater $X.XX not was share share were of for costs, share-based the of $X.XX $X.XX per

no and our with $XXX to ABL, ended of at quarter times. the billion cash, X.X unused Turning We balance debt a approximately of total we of million to sheet, availability on had period and borrowings debt million. EBITDA $X adjusted ratio in $XXX our had end, leverage approximately credit

in compared third decrease store levels, were and inventory This of which billion XX% inventories year. versus last a comparable was total to $X.X due $X.XX year. a XX% the well as X% the decrease hold in as Merchandise primarily billion inventory end at pack quarter last decrease to of was inventory

with and freshness. inventory we was the our the content at levels, versus record older Comparable X% quarter the down third XX and while inventory turnover our improved the freshness store end was year aged up low for were year. days Inventory the at quarter. inventory prior of prior third Moreover, versus pleased

store XXXX fourth two stores. opened one XX open XXX and our for new and in stores. eight the to with store closures, the store new We including expect new net store ending expected relocation, XX XX new closures fiscal quarter, we relocations to four bringing count now with During stores three quarter period the stores openings, net net

included sales store last gain a comparable In sales in performance, of increase rose X.X% first year. terms sales following months comparable a store and the year-to-date of total of X.X% our nine X.X%

versus closed points first related of last a basis margin was point basis XX inventory nine basis XX inventory XX the XX.X%, a in Gross due representing in stores. as damaged to the freight, decrease temporarily of increase points year write-offs primarily months well as to from

Merchandise nine a as Product percentage margin sales of for the was XX improved points first XX up versus points basis year. sourcing the last costs prior basis year. of versus XXXX months

a expense and leverage on adjusted points XX of mainly improved was leverage SG&A sales As driven net store-related XX.X%. basis expenses expense. percentage and by sales strong marketing to Expense growth

XX.X% EBIT Adjusted point expense adjusted million months representing for adjusted declined or of effective amortization and The X lease favorable million. tax basis Interest of Depreciation compared increased to to as rate $X $XXX increase $XXX a $XX by million XX% last was by year's amortization rate effective million, million. XX.X%. of the expense increased XXXX. net to million tax XX rate exclusive first $XX to in $XX

deferred changes excludes fiscal tax impact tax Last of Jersey revaluation rate New liabilities law. from State to the of second tax XXXX resulting year's adjusted the quarter

Combined, versus versus costs this management of income $XXX resulted of net an last of in and net increase million, adjusted of million an income $XXX adjusted income year $XXX last million exclusive of net XX% year. transition

fiscal adjusted impact This XXXX. $X.XX Diluted $X.XX of incurred $X.XX year. year. transition $X.XX quarter earnings excludes third earnings $X.XX net per during management share the were per last versus last versus of costs a were Diluted share

million diluted versus last shares shares were outstanding year. fully XX.X Our XX.X million

working operations months $XXX fiscal to capital the in million million the higher fiscal Cash $XXX Net first months nine $XXX net XXXX. capital. by increased for for by changes nine were first income of XXXX, of expenditures provided driven flow million and

I our Now, updated turn outlook. to will

on top sales the range X.X% as to year's For total of XX.X%. total to expect growth now fiscal compared in year, XXXX last XXXX of increase X.X% the fiscal we of sales

X.X% comparable million. for fiscal store Depreciation of X.X% to year's on XXXX in amortization resulting range Comparable top of favorable store be X.X% increase of to to year full amortization quarter lease fiscal sales the approximately in of $XXX X% a increase. the of X% to increase XXXX and exclusive fourth last

EBIT points. our margin Based performance, adjusted be is now approximately third expected quarter up basis to on expansion XX XX to

be an capital interest expenditures XX%, to rate approximately We net and be to effective also allowances expect $XXX expense million. landlord approximately of million, tax $XX approximately of

performance, XXXX expected transition $X.XX. year-to-date adjusted earnings per in of an our management costs. on $X.XX $X.XX results this the an Based from impact in share range excludes This outlook negative to guidance updated

comparable share the $X.XX per last an of sales $X.XX in For top total an increase, adjusted the X.X% sales $X.XX year's X% range range on year. fourth transition share between This last costs. of XX%, to of outlook sales excludes X% increase from year's expect per quarter and increase to $X.XX. and comp store we rate to the growth negative of XXXX, effective earnings XX% of total of X.X%, impact expected in of X% management to compares tax last top on This approximately

it I remarks. closing to With that, Michael will turn over for

Michael O'Sullivan

Thanks we our summary, per John. results, share. solid a a adjusted are store In sales and in X.X% gain pleased increase earnings third XX% comparable quarter with

ready as we move the If quarter be X%. fourth store with comparable to We are there, we trend sales the down inventories is chase. well-positioned into will

into thank weeks. Before for organization to and his last I Tom like over would would the Burlington results. the to Kingsbury that thank achieving hard I support went work wrap-up, entire these counsel also the I like for XX specifically

up to operator to open turn to the call to With back it that, I questions. like would the

Operator

[Operator Instructions] you. Thank

question first Matthew Boss from at JPMorgan. comes Our

Your is now open. line

Matthew Boss

Michael Great. congrats quarter and And nice Thanks. aboard. a welcome on

guess Michael when changes the material we consider forward, CEO joins we to So, organization as an major should other many new times, see or I look Burlington? picture to any expect or larger a changes at we direction. strategy strategic

Michael O'Sullivan

be you natural thank understand for and your concern Matt a morning Certainly, good would question. why investors. I Well, for that

think I to is explain. way best perhaps the question me for the to answer

spoke attracted that So, was one in when the later share us that, I and the of Jennifer on it very perspective Kingsbury I Vecchio, and clear to to all of the off-price then success Burlington things talked first off-price. me a became that when drivers to similar model, Tom quickly three on of

was success believe all else one, I I drive merchandise cares If in off-price to like that, are number the say we collectively value. the if that that summarize, great off-price that would above customer you principles about

role to that the value. possible best that that capabilities, play that, value merchant deliver number in the two, three we areas need and Number all of to company have delivering a

the are guide used principles those several Now, that over Tom has years. company to the same last the

And in do. change. me not to find even than can to is already my these principles more we going are effectively Burlington, of as I And those pursue where goal CEO fact to with principles ways

Matthew Boss

negative That's merchant you're reset I but guess, steps a strengthen maybe Are great. will taking meaningful so what any And level early said have major on just impact a investments then far. I EBIT? that differently to know you've require seen the Michael, follow-up, you the group to it's of to make any based expecting will on EBIT?

Michael O'Sullivan

parts. So couple Matt, into I'll I break question think a that down of

First whether of let remedial any are about concern all, or there investments address required. underlying me catch-up any

But and the In for a shape. that is focus answer business the broken. The shape for of have very, forward. is great do is other company we the move is growth. the we senior words simple the good focus in And anything very platform good no. now how team me The rest

what it, need at do. is is go off-price profitability. much of upside sales, We have I do Well, off-price we've an to and way better go we get we after get think got retailer, better We're that? winning, terms after to in the we huge at How off-price. to productivity

And that requires having capabilities. the strongest possible merchant

are very team them them more today, further more and a there provide it's good to effective. strengthen have even merchant where and can this make but We that, clear with team resources we areas support

inventory which that detailed see to might how of it's on other today than EBIT, have other that of lead question don't the for side should I your saying the faster markdowns. I on turns lower Now opportunities worth answer ledger, affect a

And should or expenses. I expense while potential same at savings I've where the both leverage expense from those of help headwinds, investments leverage to further savings also that us supporting time to described. the The areas the see offset markdown merchant

There's not we any rush final going one point going things. merchant forward would We're on The I'm I things strengthening We're team, these business, on of make. chase productivity improvements. talking building the and these more about after things. deliberate the how to move going be thoughtful to into

a rather So, it's an than revolution. evolution definitely

Matthew Boss

best and That's Congrats again great luck, of color. Michael.

Michael O'Sullivan

Thank you.

Operator

you. Thank

comes from Our question with next Fargo. Wells Boruchow Ike

now is line open. Your

Irwin Boruchow

morning good Good everyone. as to and hear and Welcome well. Hi, John David. you Michael from

Michael. first So I guess question

So But to ultimate that in you little you terms more bit of cost your remarks, the think help at And support there the you've interpret I planning savings areas possibility investment potential is outlook conservatively, and offset the way a a planning I think. business your of headwinds XXXX conservative commented point? prepared to mentioned this also of and in directionally identified investments.

Michael O'Sullivan

Well, Ike. to morning from good Nice hear you.

First, sales mean elaborate more what I planning. let me conservative by on

versus the the that's One business of off-price. retail advantage that, formats buys that take is ability the liquidity to and of key opportunistic has advantages use to off-price preserve other

to into we're and how inventories in plan that the plan One more additional means ways we comp once most of trend. the can liquidity forces effective season, do conservatively. sales And we liquidity, chase and to manage That growth expenses. is that relatively then the discipline

know me you've know this me off-price is have before. this heard say other before; people say this on playbook. I call heard the I This

think I chase but into degree, we we already some to this do already more than we can much Burlington, at the do. course lean Of

but to where business earlier, explained to are also of areas areas the find should be productivity we are savings. Now, where I there invest, and expense as able there I want

puts different provide next the and a And of detail for gave sales we year. give the few But little those lower this we you specifics, we'll takes coming Over guidance the will is we months, pieces. directionally, the through growth more March. guidance work timing and the into be than all earnings if surprised shouldn't and in bit the

in signal attempt growth it this rather somewhat the outlook, aggressive not strengthen to and move business be our that change in by a mode towards clear, I'm the more to be but by more an more years. confident a And does chase in off-price, profitable growth driving aggressive very successful next direction, this few a off-price moving long-term in becoming even we'll mode. more

Irwin Boruchow

Got then it. That's earnings helpful could for this as updated maybe increase for the just beat how like provided? I John your looks And how Thanks. one QX SG&A you're And QX you, back. well and walk drivers, outlook the Michael. us as the through year? that that cents a maybe margin and impacted you to guidance in it embedded want few about in that thinking that's understand you just gross held Thanks. the you

John Crimmins

Sure and lot were pieces moving in question. of a thanks Ike the there quarter. for Yes your

be and puts kind the takes. through So, of I'll walk you to happy

talk first. Let's sales about

at sales end we were lower X.X% expected. our than comp close were non-comp our While guide, to sales our the high of

stores We've already stores but quarter. third the periods for the All of mentioned extended these seven closed during we had now reopened. are two

very one to expect soon store open is going to and be closed the other indefinitely. We

unexpected the and was versus but stores outperformed about plans store the nicely. closures, million that of our slightly gave of lower The these of beginning quarter, thinking unexpected EPS guide the of comp in cost our from our directly to the closures us we about actually new $X half about closures. our when sales the combination at notably, lost $X.XX related We

write-off and $X.XX to damaged we cost from about closures, inventory us related Also stores that EPS. new of to the had

versus news by offset our in product our of assumptions $X.XX. guide costs was that this in Now, sourcing were embedded good

receipts That processed fewer efficiency save our was some gains in chain. driven by and supply

bad product within good offset expected, that of sourcing So, news about by some news as we kind margin had line. our less gross but a was costs

our real for SG&A responsible expense biggest occupancy the SG&A area SG&A, leases of for $X.XX. the true-ups estate tax of some and utilities the beat of drove about leverage particularly maintenance was save. and costs driver $X.XX about common Within

came all expense driven came our Another primarily $X.XX costs $X.XX G&A save of result solid The medical this the from final from management. was across of benefits good SG&A a from and functions claims. just by

to were on And did we other we news hurricane related the losses claims We Puerto income incurred which beat. to that settled our in Rico. the unexpected have good $X.XX insurance actually line XXXX added

we The included had offset will in we credit significantly didn't tax happen $X.X and settlement as in year. this planned don't it that million quarter was guide. expect by sale we our came expected in that million and happen a than what that for the $X that But would higher now

impact net or So, EPS. income $X.XX the other and of $X.X of EBIT these about items more was million on

We to benefit also tax than had stock-based related the had we comp $X.XX planned. more more

in price. know to you are Those difficult share so the As shares line option our control, vest when company by it's activity really plan driven that's and exercise item. that doesn't really forecast factors that all

kind of of a just pieces So, moving a quick lot recap.

lost impact. store we and $X.XX we SBC comp we income, $X.XX gained leverage, related to of on $X.XX gained $X.XX sales gained we other on tax So, and SG&A closures, the

news kind margin in pretty Gross $X.XX we offset costs. expected, good product within of that remember write-offs but with sourcing much covered of inventory was as

it, which don't the beat, consider really of result. $X.XX think say it be about SBC we we when an a So, that we $X.XX to had operating we was

So, as we an of think it beat. operating $X.XX

guide. to impact on year So, let move me our full the

the $X.XX in SBC We year's planned $X.XX quarter SBC that's but reduce we'll -- benefit of you add of $XXX million, $X.XX the had the year-to-date, activity. if assumptions. based you $XXX tax take So, activity. from last six for third our million, -- we're the benefit guidance think originally ahead impact our impact to quarter get and on to going beat that to fourth of see high-end that previous the the We

$X.XX. activity we've to year of We seen the so now around likely that this think be that's because more all far

that that $X.XX pass-through reduction by fourth assuming line see SBC in the -- the quarter. beat now the on that we're So, $X.XX benefit we reducing we're

So, $X.XX that to beat. from high-end guidance means flowing of $X.XX% $X.XX the to through moves $X.XX our

On guidance. to the elements of our updated

it's guide, you kind low at quarter a the -- our high X.X% X% of of X.X% took and and the X.X% and high X.X% our at same year-to-date relatively fourth We end. simple For done X%, we've guide and algebra gives comp comp our before. that it's

Our strength EBIT flat third to quarter versus up for margins That's are up now of XX points the year previous our of full – the our driven XX guidance up on to basis XX%. EBIT margin expansion.

our be As it guidance EBIT QX to driver our biggest far margin. as gross margin, the should with up annual similar being

As inventories and nice freight fourth pressures isn't difficult. year to compared quarter clean. merch ease, really our are that And our last margin

Irwin Boruchow

Thanks John. everyone. Thanks

John Crimmins

Ike. Thanks

Michael O'Sullivan

Thank you.

Operator

Thank you.

John Cowen. Kernan Our next from comes question with

Your line open. is now

John Kernan

morning, new your Thanks question. on for John roles. and everyone. taking my Michael Good congrats

Michael O'Sullivan

you. Thank

John Crimmins

Thanks, John.

John Kernan

and you progress and color assortment some in of critical lays? in home the quarter provide like saw more strength that businesses the can trends you're Michael, on you key and what making

Michael O'Sullivan

first was transitioning that this did recently John. well, and in that I into to and all, of really, that teams we store execution the holiday. programs in question, really say and very I job, fourth chain of was – excellent. a for your nice merchants the say then you quarter by really supply should what actually, our firstly and from And very nice our those transition assortment, more fall, summer would job the quarter the Thank Sure. a worked fact, well planners did

businesses in a and our in with turned Accessories. remarks, Kids pleased mentioned I the performance. quarter Home, we assortments were These In individual Missy, in terms prepared third businesses of strong as all

comments on focus & -- me me add a couple on Home Let Missy. of let

QX store. big we've before longer with continues fourth XX% penetration term especially I about for of the Obviously, with goal or our toys very As our a the quarter. like That the said time this feel we at particularly business. to for business gifts a several in important compares assortments is as be us XX% more. year go Home and well-positioned, are times, of And of opportunity into

to business firstly, well as business, in Ladies quarter. QX Apparel perform the this sportswear, had in continued the On it second Missy

more I doing And think casual the the there. opportunity that been paying-off. have we really has distort been work have merchants still to classifications

show third the of Meanwhile, to during quarter continued Apparel improvement. other Ladies areas

as business a the Apparel the taken pretty QX. with So, in performance whole ladies happy of we're

John Kernan

then to Michael upon when want strengthen expand merchant Can it. you say that please? the Got you And you team.

Michael O'Sullivan

senior Sure. Yes a last organization. in time and of the the Jennifer lot I've merchants spent buying the Vecchio, broader with XX weeks,

team strong strong with and a partnerships and very with merchants they've some our a exceptional have We built supportive vendors.

But I more an further training, strengthen think could that opportunity could have it it do mean team to the mean headcount, we more support. greater additional mean could to

as in need details. work the in I through critical and that buying those to -- Jennifer skill-set is all the But success critical I said remarks, my merchandising drives off-price.

become executing I've model. at better us the off-price For

have a an capabilities to Our merchant generate than always investments great return. bigger And even become priority they already are. in off-price merchant

John Kernan

of luck lot. and and Happy Thanks holiday. Thanksgiving best you. Thank a

Operator

Thank you.

Hutchinson question with next of Lorraine comes from Bank America. Our

is now line Your open.

Lorraine Hutchinson

pretty sounds But near-term lead It guide algorithm. new double-digit earnings the you rewards everybody. to could your below morning these low some prior quickly? good in will of Thanks, like strategies reap

its I can about term. and raised gap competitors. the this be over longer think the big between just gap Do Burlington a There's or margin long-term? wanted you narrowed ask to

Michael O'Sullivan

morning Good Lorraine.

saying and look are at you the in we and But numbers what you're the when five us. that last job leadership, clear, that respond over of -- have that margins Tom's benchmarks, you is like XXX I done significant clear at job something six up basis driving the first look a up referencing a by we've me very done clear it's to all, years, potential think very Let we've feel to and margins it's points. I like period nice under nice ahead of

that at themselves. of expense breakthroughs and in come jumps care I merchant drive margin potential, sales going If from as will then look leverage big sales take in can think the margin And margin productivity. I are -- we to the

capabilities. way is was the one, drive in of kind talking earlier questions. of sales to merchant some to off-price strengthen I -- to the sales drive way what number Now, in is the The about and the in comments

chase off-price are business so those after with the two, And the we inventories more things can opportunistic reasons the really why Number buys. liquidity, go are winning. and those leaner is

better drive able drive potential sales we can think the things sales, if if to in do can And your we're that and question. referenced that go margin you those I will after think I we

Lorraine Hutchinson

Thank you.

Operator

Thank you.

Our Stanley. Greenberger with next Kimberly comes from Morgan question

is line Your open. now

Kimberly Greenberger

morning Thank how from your from more Michael you, some metrics Great. about I'm and I wondering, chase this really can merchandise great comp it if benefit? you a and hear financial call this so wanted mode. a to to you the thank It's the ask you. the chase mode? to far. benefit, of little talk you about comprehensive John see a Is margin knock-on for benefit

don't know any be draw if the of; I'm financial benefits that not to that? There you early come from. you the I financial organization where might they would I the chase capabilities also of thoughts just thinking in benefits sort other to wanted increasing quantifying the And follow-on and have expect might link from see on between

Michael O'Sullivan

morning so you in it the sales for question. of this. first We've what before. know chase, so all, off-price Well, Yes, and know good Kimberly. about Thanks happens Sure. the I talked

in buys. opportunistic have more that a start the all for you if and just line. can more metrics a is described. But important? sales important the that It's off-price Why you of business with out more you let chase liquidity advantage me mode of you're you take is financial season, actually means can of up set when go in happens you What the

tend attractive that we merchandise be the get. buys most Opportunistic to

And more season it's have opportunistically and deal. better than getting that because opportunistic, we're So, bought probably by is much we're the a if merchandise we buying merchandise the attractive that before season. we're in may definition typically

that merchandise in merchandise that's merchandise -- the flowing to season stores -- and customer improving putting responds and our flowing stores, customer we're So, that buying more to it exciting the by to assortment off-price that. the

So, sales. that should drive

I So, paradoxical. know it's

better works how should You take lower and of benefits by sales but more opportunistic that you you to up -- planning have with number able also been is faster too. sales, the can of merchant have benefit also off-price kind financial markdowns. for otherwise buying to opportunistic, in merchandise you said a fact a that's the going to means you It's is line end a But potential turn would I see therefore, what achieve. to just that the you model than implied and sales because higher overall conservatively that margin on it's going which

on of the expenses. driving line you expense get then, course, sales leverage And up, by your operating

of So, it's all those benefits.

there If there you is are the can both and the trend margin then, chase if sales sales financial and more, expenses. numerous benefits business

Kimberly Greenberger

sales. to of expenses I've that you. at helpful. that's over maintenance, the things time non-base higher Burlington benchmark for the percentage sort bit one it is to very Burlington and of of And say Terrific, a Thank I then let's rent be peers commonary as observed the that tend a

of sales that base be historically. stores much had productivity, Potentially strategy store but a may in company also the the function Obviously, that larger function a smaller the of moving way. is

that down on number So, TAM? just opportunity ultimately over at there's to follow-up time? work you have a you looked had I an think do And

an size be looked future of optimal have Burlington's might which what of fleet the stores size, at you store think you any thoughts the And you ongoing would size? on area of And have on store look do like? opportunity,

Michael O'Sullivan

up sizes, store program. ramp the our So, the that's respond the of over many part story new size, Kimberly, years the commentary. of really heard is the on demonstrated few I'll in let me has us then past Burlington ability that and to size And opening common think of store have. take in part let an locations. a some question on helped maintenance that the But you I And operate John store that question area and different on second store you've really your big to company formats,

right the do that is last the years. to size the to as I don't But know to envelope. I what few I going in store point. time? to explore formats look size forward, think we and store as over at we're this Now, confidence different continue expect going able to over store can we've the have push to We're continue of limits the further demonstrated operate I knowing you be numerous that

John Crimmins

guess of the your first Kim, the So second, I'll take was question. I part

So individual our we a underwriting when line we're items, consider models don't to doing store. really focus on

the performance is expected store. on of the focus Our EBIT

we is our the we're based going update fleet TAM to going hurdles – not lower and how to drive for try EBIT we're to we So, level. performing. say, are But each on a year stores margin our

very be our We look overall we've accretive performance. to to been and the for new stores with EBIT, pleased

decision-making. can't we So, really how you what the and of tell I answer, I profitability our stores would that's just would very attack TAM. drives that we're of our conscious

Kimberly Greenberger

both. Thank Great. you

John Crimmins

you. Thank

Operator

you. Thank

Our with from Credit Binetti question Michael comes Suisse. next

open. now is line Your

Michael Binetti

you congrats you and let great another John role. talk Michael guys. on to company me Hey, nice to in the new again welcome

Michael O'Sullivan

Thanks Michael.

Michael Binetti

outlook, talked here. me touchstones lot was about the a of clear. let you came appreciated very We've and conservative from the business guidance had mentioned that framework you Michael, a that known for be just but

that of the more three framework fairly about that versus focused point think conservative operating here, to planning, walking Given ask to the peers on larger I algorithm the differences I to we about. this to think asked some position have comps, to XXX gap consistently if two the has basis to starting and think closing guide margins been to in I is you a business us business Lorraine so XXX

seems that's of down against like little with to a range it a you range X%. end much progress gap near comp hard gap make a are that seems a to you'd bit if about It lower be the range low on X% able comps X% talking that counterintuitive close to that the

leverage to the and be that age you able foot going to higher stores rent the you'd imagine, to business just in have move per as into industry. are the Hard natural inflation

think should that think think us on, and about framework your downside to thoughts So, the trying if the we love help hear we today? upside about about I'd how you're of to

Michael O'Sullivan

for question, you thank Well, Sure. Michael. your

clear I a say I that's our conservatively want signaling be the to outlook. what I good that think I change would a growth long-term is question. guess, more by in slightly I'm not business planning

the long-term confident more reason The pessimistic I'm that's is of growth part conservatively I've our weeks off-price because most the over plan the and become get you not, the way prospects. model. from it last to more I'm more XX about actually out and manage business the

get way is margin the can and buys sales drive you you the really can doing great you can sure expense and by there opportunistic make that out and you really go that drive leverage. that That's

but So, that not I'm our that's to no. several you saying how I I that, signaling over years think that, earnings next would should algorithm the answer be lowered. I'm actually

to the become But our off-price do business perhaps we a effectively been potential hopefully achieve model thing the have more able that more more margin to. so perspective, to we and comp sales the actually manage here stronger and is at and conservatively otherwise right can from and than rapidly plan might

Michael Binetti

Okay.

What then pursuing the of a chase Let from higher and into after that do on the me bit you kept the early guess value quarter little in ask you differently. strategy past? is do think you in the days has of doing maintaining in from your question past? organization What a chasing think it them kept follow-up liquidity the the the you think what is deeper opportunities I company

Michael O'Sullivan

I actually don't think there's anything.

of evolution. part is natural think I all a this

a done over of proposing line things Tom's say if that Tom I've what between the years, been many I'm and the direct Tom last doing I there's has and to described would do look what you record think I at here? XX has

the that think investment we good last the And liquidity we a for over -- do in And years chase we've merchant business. I been There's have several certainly that very been includes doing organization. there's time. and some been plans

make not and model I'm at company I'm a good more off-price effective. into the make even taking even and here. is it off-price turning off-price we're a new platform not to What that's what's happening. very to taking not looking to ways it it off-price more non-off-price So,

for that. stopping that's So, there's doing nothing us been

you natural this evolution think I is a just like. if part of

Michael Binetti

all guys. you, this for help. Thanks Thank Okay.

Michael O'Sullivan

Thank you.

Operator

Thank you.

Daniel with comes question Hofkin William from next Blair. Our

now is line open. Your

Daniel Hofkin

question Good morning. just you. for Michael a

As it e-commerce site, Burlington former having and an employer relates does. to your transaction obviously e-commerce not

Just think curious initially that fits here general it particular? and Burlington you terms in you're in how thinking how about into Thanks. in of off-price

Michael O'Sullivan

Sure.

an small. e-commerce we right so you're do it's percentage not our of it's very So, It's sales, approximately X.X very point have material. but business,

That's first has on been weeks been the I'm in been focused. the e-commerce. really -- bricks-and-mortar really It's So, business. my where focus in XX on the XX.X% hasn't

So, no comments other this point. at

Daniel Hofkin

And then maybe follow-up. just a quick

have thoughts are you already further think them this earlier this develop against outsized maybe bit able may terms talked has opportunities to where you're you terms some stage but curious little there? of your what Burlington there time, In about the be just touched particular might to for on context of share any of early in that categories -- at a but what

Michael O'Sullivan

Yes. Sure.

in this yes be question sound businesses -- certainly have opportunity, to similar answer my or we to going similar the previous would opportunities I under-penetration call. So very clear a are to Because business. on of but where is very there very have that Tom our are answer think Ladies that Apparel areas business in given our our our biggest it's Home and

XX% when reasonable a like of as And which longer And earlier, sales. you Home I with store XX% -- or about that the our goal. business compares mentioned seems our business that Home has total of look term certainly The our more. a pretty penetration goal share to peers our at

have come And think our nice we making I still there missy Apparel have to Ladies opportunity there. I and there's been with progress more the opportunity business, business. Similarly, we think sportswear

there. opportunity So, more

underdeveloped beauty, toys. again And are Now, there callouts we've opportunity. there. making. either we just share two we guess good are a quarter the I performance or On feel And where third the would good businesses other there about be been and market we have was beauty our progress

And assortments toys, walk we in very into toys to the at point. feel about few a period our this obviously, we're weeks, about next important good but over

we've same of have think been past category, we but So, year as yes, so. or lines along the by pursuing what plenty it's the opportunity I over much very we

Daniel Hofkin

in much. very of Thanks Best luck holiday. Great. the

Michael O'Sullivan

time for one question. more have we Operator,

Operator

you. Thank

Our next question comes from with John Morris Davidson.

line open. Your now is

John Morris

know here. to to getting your I to a welcome Thank more or you and own upside, words. in but to answer the answer adding start I you but I this, chance also to hearing chase My I shift Do risk about Question; not see here We're a that necessarily? think adding it opportunistic. great And mode congratulations the on think give all. you. Good. you want

Michael O'Sullivan

absolutely the perhaps off-price, let because always liquidity dried share aren't create that's conceptually might the debate can mode you my risk goods go into been the perhaps question. season chase actually in perspective good what you having the imagine off-price, I say a there, is is my a John, And would and And it's Yes, why experience. with more me in but maybe up. availability

Conceptually, you tell always reality, that's But it In me let never there's available. happens. goods possible. in reality,

growth availability. had structural that's -- So, been for there's know XX now growing always don't has because XX, and for, XX, why years, I off-price

why a conceptually it but works full for able not if understand might chase well that's So, I you really people how out. won't it, plan comp, maybe be be to worried don't

actually talk chasing But let and the little of your shift about the a business. risks not bit question me

So, it optimistic the risks of baking in comp to be greater. a more seems much

much weakens, in If you more materialize, a the you you before up buy doesn't optimistic making goods. to sales if then more more a And end bake if season difficult comp, end and that up commitments position. take in approach starts trend trend a the the sales you

try you time earnings. some your have difficult You those a protecting in end really you to, and if cancel cases, can, so having up commitments

where over reason has environments the so is years XX environments flexible past deal the that strong. can really sales can actually with why off-price off-price and or five been trend actually the part that's -- you with where So, sales and weakens the trend of deal actually

the at I risk of actually be, you the can think you're guess, full more benefits in you it when the off-price saying preaching off-price rather than that assessment, I'm and look think I really risk risk. minimizing a So, taking more just here actually I

John Morris

holiday. for and luck Thank answer best Excellent you. of

Michael O'Sullivan

Thank you.

John Crimmins

you. Thank

Operator

session. the Thank closing turn O'Sullivan This for back to like now question-and-answer remarks. you. to over today's Michael would I concludes call

Michael O'Sullivan

your for questions. appreciate the on call us We Thank today. you joining all

the Let very you. all by holidays. the Thank your me close Happy families best for you season. and wishing

Operator

for Ladies and gentlemen, this call. concludes Thank today's conference you participating.

You now may disconnect.

Burlington Stores (BURL) 26 Nov 192019 Q3 Earnings call transcript