BURL - Earnings call transcript Q3 2021

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Operator

Good day ladies and gentlemen, and welcome to Burlington Stores Third Quarter 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this call is being recorded. [Operator Instructions] I would now like to turn the call over to David Glick, Senior Vice President, Investor Relations and Treasurer. ahead. go Please

David Glick

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

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

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

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

Michael. is here Now

Michael O'Sullivan

joining Good Thank everyone, for morning you, us. and you thank David.

moving for commenting outlook. The That slightly about and longer the be with will most these Then, different with will and that a unpredictable. our than order, we calls business. order in the next in value. on think shareholder in approach provide structure our ideal topics take going a recent said, for on Today, I a begin five cover on of We finally will quarter the starting these to ahead, to going and usual review could years. expectations. rather term Our these of to their approach, year the longer believe chronologically, is we're remarks quarter, term then it to chronological setup we talk the importance next XXXX. to timeframe our I remarks nearer the XXXX very be our long-term move will is

comment our outlook on will for year. results the I the of Finally, the and QX rest

competitive our the would Okay, the about. strategy. longer Number of term. progress to And are making we environment. on I and two, like are There longer that one, talk aspects two number economic macro term X.X the Burlington

On the environment, customer. start macroeconomic let's and the with competitive

In in For the consumers there be consumer been many focus that It attracted believe will great economy. we We up. not is growing a inflation entering trade to across environment on whole inflationary down possible period, more even of has a we an consumer value that rising prices, periods, of we price years, a value. offer. period shoppers prolonged are that the think

in strategy channel item in these would item this full are the a in price think for We prices. another either will I higher our anticipate implications been very wave additional market realized sustained. prices they the core the talk retail for realized now progress as is was to deliver happen, an The price advantage line versus If flexible retailers It our we take that supply grown. in in to value sustained, scenario, not the likely, environment possible, profitable of we trigger do and stores. of to we like habits, yet that capture a take the term may the scenario, see price clear other prices Burlington great then out. long then consolidation think so about bricks realized trends, third full how to were to store and quarters, we If other The come higher if a can will decline would opportunities, the for the the driven value has and on Leaner going a both. up to a of that have Burlington to price, at X.X. these favorable. to make have greater. at prices never mortar channel more down. inventories opportunity return price it's full price are we than think take promotional the be the Burlington is but has to business are making this and time it is in reason higher between as of One marginally coming is But promotional or second that business this that If of hand, some returned is plays to prices share, Our it retailers bigger then of a customers. sales our the on now that our we XXXX. to chase differentiation more delta

we from So comp of a year, have comp plan year-to-date of XX% versus far actual XXXX. an changed flat this to

excited to prototype. This very In opened stores XXX after store translates new growth, closures net relocations. to our XXXX, XX addition our comp have especially In we and new about smaller performance, we stores. new are store

about Our should we well. opening decided that our XXX new have new I store and new accelerate excited stores, XX stores new announce to open XXXX, after we net And In to extremely are about which program. expect performing stores. relocations to yield am closures

About expect open locations. of stores prototype smaller relocations older XX XXX we will be of price year. XXXX, stores to XXX. to newer, each to these new Beyond now

we XXX So overall, onwards, just from XXXX new over to XXX stores net stores. open have expect we Today, to each year. XXX

five next will of this the a drive exciting transformation our in program very So years, chain.

all three factors factors that difficult are could that XXXX for good predict. are to in, like a XXXX. there Burlington. Moving I We would closer talk very about now to make three But think year

all This checks sales. demand. Firstly, onetime from year, items benefited up stimulus pent like have retailers and

likely it conference will and seems As off these get retail lack that we sharply. into items, across XXXX fall

other On is rates government it decline. or will further wage this offset hand, possible rising that the spending

to have for ready either scenario. be We

pricing. Secondly,

As realized if XXXX. price higher these I up tremendous up, we a prices have this at even be economy, retails general yet opportunity will opportunity said sales know rise to then sustained. And think don't If to the in we in there or or moment is whole higher take if are will across full could even drive both. do will inflation to a sustained a then out greater. a ago, be retailers supply loosens we This play prices

of have Thirdly, supply the huge do, ease in on chains one not XXXX. off-price it chase. freight issues We be conservatively great could items. visibility and if we do this know they any But on these supply our No is And this three have don't business with could ready If lower situation, plan then in beneficial our impact a playbook does. supply. and to also expenses. global chain drive will always significantly to

prediction. do our is comp what a buying think anchored happen. of reliable not on XXXX We enough have a This not for are So plans for we visibility and prediction decline. mid-single will digit initial operating

chased baseline a X% above comp Year-to-date the the was we You flat have XX for should this point sales comp. baseline as XXXX of a chase. baseline. a think points minus our starting In

in moment, so down our freight a start my through that and remarks wrap much estimates, how should QX their to for our will expenses. and we will on We with As XXXX. expenses In and happen. John these we know on when, we costs begin do I'm Again, going moderate. how QX our these margin know remain a margins, mid-XXXX much come play to can don't chain few up assuming our performance depends if, that that will out. this supply outlook. current and not see these share at think to But levels comments then

As underlying words, release, reduced weather about in weather late XX%. was growth comp September other in QX from points. was comp QX today's our estimate about In described XX%. we onwards warmer believe press adjusted three comp by that our that We in

the For QX, projecting comp low be digits. are currently performance in to double we our

Our of stronger chase five it. we move running well at the is we Then sales than to XX% were slightly to weeks. If the into on month-to-date really trend of the four end What down next the is now talk levels. ready Comp this. to This about are matters were inventories in-store quarter. QX. they plan our ahead means, coming inventory comp above is

be plan for to high inventories XXs. in-store down in Our was the

of inventory QX news holiday. is other usually inventory, in that third you XXXX. The drain the pull inventory goods you reserve XX% out your to case that the XX% reserve prepared is quarter, end reserve It in total get promising of versus the for of was

be quarter. the we turn down QX, as the inventories environment Reserve reserve range. cancel months, extrapolate, able over too other year would can were in-store we deliveries. XXX% the buys the receipts we like in on to mid retailers to think seasons. thereby to we We call QX end to past, believe favorable buying QX. We that are more that over early At point to great some and fact, inventories. in us planning coming I transition inventory XXXX. the cleanly opportunistic In are the make through more our than It final of built we the period John to details. financial end have but a in is increased versus see effectively walk during we in the to in to very late spring One now likely same XX% the

John Crimmins

nearer the on going start term about good QX And in expectations I in morning Michael. Michael. And Thanks, then I finally, move our to our similar our will results I'll Then and and comments follow will XXXX. fourth current about prospects. to financial quarter. make talking longer approach with color additional everyone. for a few up finish by a I'm

longer excited the Michael are we very to term program. as opening be store that accelerating On will announce new we our described,

believe open stores masked then XXX that margin in percentage XXX planning the very chain XXX. stores over this openings every sales top expect freight the can five has these net Combining now year. years Over been a faster range. low good net with points But to XXXX growth we made are new achieve XX we with XXX expansion. expansion next should and this pace conservative margin to this We've average assumptions, also expenses. this next of line higher and open progress comp We basis from sales year. double annual we onwards, of generate year. by And new operating assumption to and between growth period on digit supply

and available additional period. operating believe This moderate We mid-teens. some approximately annual will time. growth expansion I the opportunity especially for we We using repurchase But not in should pay these year the to in does thereby the This expenses reducing annual leverage, growth over any average significant costs of expenses. these to have of expect in further drive or benefit estimate numbers margin year-to-year. interest to that are shares The five we also the results cash combination occupancy drive flow growth down sales variability expense. described that include anticipate averages debt, have earnings from

addition, you this each plan our with we In growth. may as of level know, not year business

to then described. Our chase of performance successfully, in manage inventories expenses is plan and more year you the plan, just we I fiscal would with ahead to model sales. then take of that advantage accordingly, If matrix conservative begin this expect annual a each average trend execute model achieve the and

move me a about few comments on make Let XXXX. and

described, to when earnings. bottom yet. day line not look we sales, Michael of we line forward at We the point return is that are providing year top next As unpredictable in traditional But guidance. terms and can very to clearly

For to enough provide year. guidance not meaningful we for do have XXXX, the visibility

on initial decline. our anchoring X% this plans that comp setup are operating operators. and our merchants of baseline Think We is a using buying the to we are and

So we could chase the supply opportunities. merchandise advantage trend of and take

cost based is that optic we through drive begin then and line this X% XXX This operating and the inflation. points. freight their supply margin remain assumes also about at current moderate. point, to material increase chain in deleverage know we significant levels estimate expect prices, would no a retail on mid-XXXX what other and basis of expenses assumption This at to Given no

margins would of flat generate deleverage same versus points basis these comp assumptions, comp operating drive expect outlook. talk now our our using we to about and to I a X% about would XX operating like a to margin reference, QX and performance XXXX. flat QX For

XX% XXXX. to As our comp while in the a of are Total sales third results quarter fiscal quarter being grew reminder, sales QX compared XX%. the increased

our As million three we important regions was impacted the was XXX XX.X%. weather other as as XXXX, point XXXX percentage quarter decrease points percentage points compare to Adjusted basis basis most quarter rate XX the warm consistent quarter of increase basis about trade prior comp down XX.X%, recoveries. or growth what of margin margin third chain income were our Michael quarter XXXX, by revenue the million gross estimate of an increasing points in costs in Adjusted rate basis supply of The of was was benefited were unseasonably of of from $XX by sourcing Higher mentioned, offset of a we third margin other third negatively insurance $XXX year XXX of XXXX’s have driven versus during quarter. by higher fiscal markdowns. lower October a in and a This third sales. basis sales versus $X in than that million merchandise of sales and than XXX in X.X%, some quarters. million in the points XXXX. deleverage. driven by expense, points costs lower XXX XXX million EBIT point discussed more which $X were XX most the of which basis a these million basis Product $XXX in increase decreasing drivers as points represented SG&A versus The $XXX costs with we

product expense FY basis was to our way, and QX points. our XXX of fully income of costs But this margin comp. margin freight we merchant adjusted operating sourcing by margin XXX income in comparison other leverage during XXXX. declined points on offset and basis drove other non-operating the and our in points non-recurring deleverage, XX% Said from expansion more QX than deleverage basis other operating Excluding revenue XXX of EBIT on

$XX resulted earnings per of charge XXXX. of XXXX, driven were the extinguishment of partial in the quarter earnings related our to versus primarily versus notes. third per million diluted of diluted All $X.XX $X.XX convertible in share an this quarter third Adjusted $X.XX the of redemption share in debt $X.XX

the This we the closure. eight stores. of bringing have opened new at quarter, the stores, XX store an end open net third stores, count XX, expect to we stores. and to XX one In our During store additional and new quarter, included quarter fourth relocations new two openings, XXX the we close

As end the stores. we XXX a year should result, with

turn to our for will I QX. outlook Now

We range. the projecting be growth in comp are sales to QX in low double percentage digit

to expenses, We for the supply of will extraordinary freight year XXX means means with chain expense QX, This versus continue on XXXX. reinforce of have projection P&L. we QX. expect and the to that basis be deleverage the areas is that double that point are this flat headwinds now and absorbed the XXX to of offsetting chain low deleverage outlook margin translate other full XXX quarter. full of creating to favourability year, points through points points basis operating margin expecting our operating during It should comp important this the a and about supply we for digit With basis

higher merchant leverage margin like Specifically, I and With SG&A much to closing expenses. the remarks. for call significant that, back on to turn Michael would

Michael O'Sullivan

Thank you, John.

it reinforce up like have open morning. made points and this would key that to we recap to we some I Before questions,

prospects term are longer our that think we Firstly, extremely bright.

decided we have to are store the foot accelerating our and put on we new So our program. gas,

greater could to believe take out. think retails this to our could plays take offer that Secondly, price do to to But opportunity we both. stores. us or environment we need see We up inflationary it share, an drive the traffic how

unpredictable. very anticipate we will that Thirdly, XXXX be

plan is and playbook our to manage business. Our

we supply significant believe might chase margin very emerge. the we that sales can aggressively So opportunities and

QX trend above original still with Finally, great our quarter strong. remained million in-store the $XXX we inventories in sales and inventories But our very shape. reserve We ended chased in plan.

the like very well I now would to call are the turn quarter. to We questions. operator over for for fourth the your positioned

Operator

question Matthew Boss [Operator line Instructions] the first from JPMorgan. Our you. comes of Thank with

now Your open. line is

Matthew Boss

thanks the Great all color. and appreciate really

just term unit store Could confidence what to this expand new maybe Michael, first drivers you to for accelerate ramp you openings long prospects, growth the to behind of decision the program now? your on Michael, So speak gives

Michael O'Sullivan

Well, question. your good morning Thanks Matt. for

of due to into There our on this led looking accelerate year. three at to decision our know beginning pace, driven the of we partly strong. how done we've are know many should call, year. has with tailwinds the term this numbers to running open And this store the estimate you or math, is long to our And this stores. count our store this potential our this year, sure new ahead new we see financial. extremely that that morning, for XXXX the And since at first stores those this at what hurdles. still have stores it's year, analysts As well have been But that already each our we time I'm is press raised new many the factors looking and if are store pace our you of productivity really the you same openings, been productivity. release adjust new even is of store those comp tailwinds growth internal this that

just of As the stores feet. point XXX so a are square year, reference over under that XX,XXX or opened we half this

us So lot new this performance a our store smaller of confidence prototype. really in gives

that's the first financial. reason, So

really dead bigger stores, our offering, won't, we're confidence about almost in with market be we'll won't was gives earlier we'll Secondly, we'll I in suggests XXXX. third share. I beat as is this well share. it us that the remarks, my is more years, be that That the we swimming great a second the that to next the talked tide, be and a taking it were significant we year-to-date to horse. few the factor open Again, than business is strategic. so I customer taking us over very responding that value But

have The other price to off two have. three stores retailers times we number major that of the

feels opportunity really a, an to that's this Burlington. like So unique

significantly decision included that in we take estate in was this look we making would planning, described remarks. store internal third expansion, operational. we functional actions The faster areas. this functional at, factor team and cross our developed, to IT and cross the that that earlier team We to an what of it team real year, together based that put merchandising, comfortable the other pace stores, on supply can that chain, openings very support And feel plans the we accelerate

with scores, you of have obviously Now, two over years. out pipeline new next to a new the that locations goes three

can at can with say number ahead So pipeline the we we of and of actually we store that that very see look and quality happy we're us. the locations

excited tell opportunity. So you by can very we're this

Matthew Boss

Great. up And maybe for then just a John. follow

out On just the line on those of targets bottom the share and and expansion to that Could multi-year top more margin growth? with laid of EPS the building levels growth, call. you us growth blocks to you sales get

John Crimmins

Good sales is mentioned that. annual a this growth. basis this average talking percent line low we're model. percent to on low can Sure, morning, a achieve straightforward. comp the double you pretty I annual single And were The annual new more confident digit the a store about, top you bit our gets you increase, with of to growth detail we conservative program through that that digit take that Matt. we happy little Really, combine if

revisit kind happened just with this year. what let's of margins margins, the on Moving

as to For be versus we're remarks, operating points. freight But about to sourcing XXX just basis projecting approximately expecting margin said my costs by and the full year product in XXXX. was flat I delever

margin other from we've areas. really and lower other with merch markdowns words, that expenses. higher by operating driven basis in XXX driven and higher points on And leverage comes So favourability

there significant a may our opportunity. be there margin year, haven't we've increase additional forward, improvement merch this But model. we any Looking because further some seen such assumed in

chain high will margin to expenses bit prototype. stickier. migrate points assuming all be on store to that supply that capture towards will decline you time, all combine capture store we some levels, they expect too efficiency the chain additional of and freight five expenses. as we the our year's historically We're more to For years levels. that can as we drive When different do leverage further expenses we over moderate smaller though basis will degree We of this predictable these not seek out. think from But in the XXX factors necessarily store we in become operating But we see the occupancy, back reliable. to XXX opportunities flows supply next a together, probably way called pre-pandemic to think that

be we that, tailwinds the course, Of that move that could out time. impact even period. than these our And to us, headwinds higher single digit margin years we achieve should modeled comps this individual operating drive to think on in additional were expect there there the or expansion. that we've favor, be average could for against move But if could low would things average, during over significantly period, we more

anyone the years, that top basis XXX next basis projection digit for of to prepared for If XXX earnings described mid-teens five remarks. you low growth, growth the to combine points get my with the margin in a then I expansion line you points double

Operator

you. Thank

of comes Fargo. Ike a question Boruchow next with Wells Our from line

now open. is Your line

Ike Boruchow

store Can questions, inventory has And the and of me excuse chain. they're And supply is level issues up? just affecting couple question on bit follow levels? have I specifically for my it’s a A a guess, I you how then had then more your first on what company? little about impact talk example,

Michael O'Sullivan

Ike. I'll morning, Yes, take that. Good

think a some of a I know there's question. and inventories. reporting about concerns that's been great I lot

the delivery receipts and merchandise supply I it the hand. one might timely of helpful draw the other and So on a to think be on distinction, availability hand

of availability good. to be been very merchandise has continues the Firstly,

be true. but there there where always are constraints, that's brands course, Of and certain might categories

there's price. poor That's where brand, weak dependent an we That's supply we're off-price good from strong sales of where opportunities. businesses category single on money crack not businesses do. what either retailer, or there's kind we're off very or good supply trend a and to moving As a at

represents provides In chased gross build $XXX levels time, for an flat. able our data ahead the good plan we our were to in-store of That up we illustration pretty And inventory think the comp ended still on of plan. ahead I reserve QX QX sales. of about of million of plan a XX% same QX, [Ph] inventory. at this. But original

So we were supplying think and better. very good be is a about get because there's We QX happy. to happy to with chance even supply continue we

me a timely supply. So move let that's of bit me, delivery little But on and let talk receipts. about the receipts, specifically,

other As whole availability found I these to stronger, we chase We Ironically, In how the headwinds is chain But just we've and of the vendors receipts. timely described, created merch network. had fault. supply and when with else not inefficiencies more isn't transportation been and goods our This you everyone in with showing delivery are to had with look issue the have Well in those year. challenges, there global words, The have store, along challenges and try to really across the become the it an late. the this problems up open trend. buy. very business widespread. merchandise you great has spent respond

levels money. with very that And So it's we And goods challenge. cost happy our been we've inventory But the a to get we've store. been able there's been us the in definitely need.

it. frankly, But we've been the supply flow but has navigating recap, good, get issue very receipt to merchandise and an done to expensive, your been have availability think and been it's they're better. So and we going

I So drive that. would that's how

Ike Boruchow

prices retail the company Super you kind And something you alluding prices this curious are prices the you past, what sustainable? that how done prices helpful. all just do the see raise do Do you think follow guys Then to quick up? higher were across frame has just, with on then this industry? happening in believe you up Michael, can is you of

Michael O'Sullivan

question, so Yes, Mike. great a it's

this over evolve. months evolved now. on I has last two few the continues and think see situation right to I really things going actually

is, because clear inventories. full retailers it's realized been Firstly, that getting why much of prices. it’s have leaner And year price much higher this

soon just loosened Now, then initially, this. would And the up, now, that down. would back sceptical I retailers stronger My view margins. back. But higher not say I to are as clearly prices I'm supply these come have was was promotions enjoying on as sure these come

and maybe I forward, want word, their the going inventories tightly. will less will the So environment these maybe underline more promotional maybe, to retailers control be

going But the what again, I'm underlining we need it. value can back see and to really the When promotions full supply the value point maybe. We less price us. word I'm go going to happens forward, repeat great So they about offering not. our talk if to margins. environment higher I to stores. constraints as preserve be that think pricing could really or the do at customers, ease, for we value is reference promotional for But is

drive sales or higher. category a reference to that have a Anyway, there. huge we're that opportunity product decision thing price that's upon depend So I talking might on. if think to could or If realized we'll that that reference plenty then of that that specific opportunities drive margin going permanently But both. one about. frankly, point that's moves up, if those either And to higher prices really do permanent, become be is

and the has other months. the few over The The going this last really on, prospects that's it this, have grown. thing price changed feels prospects, the really inflation for economy across like generalized

in, As we of of compete opportunity believe next sales this think that this have it's see could, us and even sectors But could become remarks, quarters. the higher in happens proposition rising isn't we margins. very couple also it's prices, it do we the an that to gas just higher well, over we environment living. it's drive present stronger that would to in value is environment. prices, our we also but And it could Again, already what I of cost said strong, very it's in with again, the my food, an

at there of look a lot to a just of the maybes transcript see I are and of lot that back lot Now, what this said, when in call, you'll ifs. you a ifs

fairly so be could started very well. where prices those than cautious at a said, the pricing may sense our worked. we testing will very to retails higher push us, modest turning think We patient. needs this really don't That our up it's We've this some know to are at been worked looked to tested, We've up, to it adjustments. makes it we businesses. So some the at things in think be we've making it's favorable prices fast, or sharper point. play point, be. we've little It's and and And us out. trends But be and pushed we've these but at looked fast for we've businesses how far, this that we businesses

thing is expect, very other also that as closely. competitors watching you'd The we're

merchants visit time. the stores competitor all Our

trade higher if is displayed would that prices So largest by the are ticket. guess, I markdowns. actually looking I there are are working this, or pricing can you no the up secrets that saying we finish if that they're on in all by clearance we're driving there mindful just at rack, price retailer. third off And those the see are also no with price

something is see falling. for clearly raising it us nothing take believe sense If to wouldn't we're to there's on stop proud. So But working, and prices. retail something us make lead we really we the not from

Operator

you. Thank

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

now line is open. Your

Lorraine Hutchinson

follow John, it possible do or think that to pressures. wanted of reasonable any situation? the here? a permanent easing I it's you chain to and morning. this Good sign you that on And is is freight when Thanks. up see more seeing supply are

John Crimmins

believe it's expenses the Good morning, so Yes, over driven last We supply temporary. for couple are seen far Thanks think imbalance this year, we that think me itself. heard breaking in it still mostly that question. you've question. in And record Lorraine. demand. your We that of by calls. that an good correct and this Well, freight we've should say time

So, we case. And like think that anything we seen really when things to to certainly starting haven't that would going But know happen. we indicate that's that's are improve. the else, yet, don't everyone

operating chain going incentives that to it, expenses better. some the happen. seen expense work any stuff the happens seen way. we are is improves, We And this said actually be that efficiencies inflationary just consider particularly wage But we've base. they the in expenses that piece just way we've here mostly of But think that are again, good the higher going is chain that the have wage are we the As part scenario. supply going of don't become as year, permanent when to Suppose situation we year previously, it only the expect this into these side let's get that it. this rate to of an more a permanent. out we and supply the is, higher but to Suppose of other think doesn't visibility stay,

permanently what be to was rise most all refer was, than would costs that higher retailers would Michael about. I'd the retail, so absorb expect that able prices And permanently across to just talking the we way would If are only costs. it's

in this our And proposition. value proposition continuing us inflationary customers. be situation, that likely would so prices, to important that certainly apply our more [Ph] maintain be while to inflationary well. value burn, And to would scenario, to certainly even as we'd an our In able raise

Lorraine Hutchinson

about share the But capital down then you back this debt. added going pretty repurchase of Thanks. in you've we should And allocation been paying forward? quarter. expect proactive What terms

Michael O'Sullivan

ratios. good last considerable Lorraine. provide paid And Yes That's that a of debt be amount take a well question. I'll recap think our may of kind it we leverage Thanks, as debt kind down debt over a helpful down of as outstanding our to John, that of pay year. have question. the and I

back height pandemic, down go strong a XXX to have about pay and borrowed given billion we of been X.X But and we you on last debt. of out about the our one our market raised ABL, half able million the million XXX the recovery and we the over public If we XXXX. during year, to borrowed billion

Now we pay our down zero. to ABL

we our in As you make-whole we on quarter executed recently million a notes. yield And QX notes. past high $XXX convertible repurchased in may call recall,

million about $XXX net does $XXX where about billion we the given in debt, $X.X the quarter, and $X.X loan in debt So our We a million total on And on and $XXX converts. term that that's leave our added million. a basis, have unrestricted in over billion under us? little cash gross

So numbers those what all mean.

trailing gross X.X we is basis, perspective. a if times XX-month operating to to to gross would leases, in expect those is much a leaves place down And, just leverage it net on on down from excluding And us comfortable debt-to-EBITDA a a leverage reduce and look debt more think you I to capitalized our X.X. leverage ratio our continue ratios.

leaves repurchased So stock $XXX of remaining and share were million our during that authorization. us repurchases resuming quarter. $XXX on around we leverage, our million given that progress the our reducing and We comfortable past

from going it use. So evaluate lens We're what do we do through here? we the always to

we're And most continue cash do. way our to secondly, in shareholders we'll going First to invest and utilize excess and what and the we'll our that's foremost, growth. for accretive

Lorraine Hutchinson

you. Thank

Operator

Cowen. question John comes of from next Our with Kernan line a

line is open. now Your

John Kernan

the morning. than Good I many the It's the gross for if peers particularly productivity, around new my taking new you quick John, we're level question. through then John, getting modeling Michael, across And guidance up. one for now quite a bit follow next have given prototype? your store of for the all helpful some narrative. bigger more David, Be Thanks part could guess year. I sector. high just new provide store assumptions thanks a store

Michael O'Sullivan

happy Thanks, do Be to that. John.

They variability Obviously, sales outperforming comp you volumes store. year, seeing tailwinds us each strong volume On have are same reasonable some that think a So this help XX% for average, slightly if be stronger for stores. start stores that a the initial XX% tail averages performance. around than to our average, Actually, chain use open we're their you plans. store stores assumption as they But how our with sales are should to expect modeling. deliver about there'll be of for individual let's new being driven up. we by have should our helped performance new are our this that new

new should feet, the five you square would to with smaller growth sales a for stores, big will than you less next years, several years. that's so last we've seen Across stores there, opening, chain to way. from now than new for expect more after in So, faster really several the comp consistent be what format should which the be the anticipate our years store store and than moving XX,XXX XX% of

store in past, accretive that's their $XX capital second sales profitability year, and each each per invested store to to million. and company's In our In we've that is you store on also return about expected can been accretive the on returns, capital. rely to invested to deliver on average continued terms is EBIT XXXX, capital, are saying the return margins say be what for of to company expected in the we've

a is years. that this XXXX be average is over store the If the chain do that of and above seen our then comp of With home means that growth million X XX% we've sales $XX to year, should the our store. average, north sales per new store of average going for store per million, several

So the productivity from a we're foot in to XX,XXX over a our expecting XX,XXX a foot perspective, $XXX foot selling square basis a $XXX foot on gross square stores, in foot basis. square on

growing locations, a big of expect we terrific rent at the and foot, more us to expansion, per paying and this lower high help the of from these little forward level that margin the combined level. delivering footprint, And faster operating smaller many store productivity line on the operating step with really drive and we're the So as even while productivity, better traffic should expense returns top a stores. structure

numbers for opportunity sales lift excited we years in average In usually stores. of sales include The and So of refreshing out improved also laid cases, we're are oversized really boxes least healthy we're productivity, reloads with occupancy about overall the profit. have. that result and net per into with But going these them us relocation next at XX year. for excited to an about highly be lower older our today, pretty and most we a boxes smaller moving that new new five from fresh, low need many in moves of new, productive, Relocations cost. store

John Kernan

has planned Thank the you Got follow on last in just QX productivity last outlook call? is you it, my us through? move versus significantly us the you. What changed to sounds a higher. just outlook up lot walk like in the the is August. I since on call Could gave QX, guess happened

Michael O'Sullivan

John. right, all Great, Okay, thanks.

said for December. we're, our double of actually risk we're big we move So some of running really But us into ahead with sales forecast. still, in we some as weeks comfortable our there's front sales QX, low and digit forecast. We're

be forecast. a margin front, the it conservative just to to wanting our bit more really On comes on down EBIT

we quarter, at last points. down look Our implied outlook XXX what for QX, gave was around we, basis if you

forecasting digit XXX we're double low basis comp, a points. on down now So about

really reason volatility cost any the flat and EBIT The we're So with forecast freight they is that supply timing year. our I remind would and pressures along forecast degree, reality to for you the some chain still in receipts, with for are that maintaining the with margin wages dealing this, or that just full to difficult the we're precision.

protect bit the So we these we the really more just a to to conservatism that add against difficulty recognize and wanted volatility expenses see. forecasting

John Kernan

you. Thank it. Got

Operator

Our question with from comes line of Morgan Stanley. next Greenberger Kimberly the

now is open. line Your

Kimberly Greenberger

I to comments. much. wanted up so Great, thanks follow in inventory on Michael, your

about inventory wondered if supply talking get could that I expand there's just a is you for you think to You were chance that you good us? to mentioned when that better. on

Michael O'Sullivan

Yes, morning, good from good Well, hear Sure. you. so. Kimberly, to

it's point the Southern And every of California the like is on and going period, hitting at chains is the records receipt it have seems are no ships supply like that too that it delays lost off example. selling holiday some ships the for global feel have expectation there period, coast this I I've just time. keeps well And no Then been for in have congestion, But reported. that taking or Frankly, by the merchandise season. point, would it's those late. containers So if point. of landed been holiday of retailer, now, that systems they new the to in fairly be count on a retailers January, get the waiting there's the delivered it for of with of in already containers, of clear not some merchandise and hasn't the for had fall holiday here ordered merchandise the vendors, transportation and number day.

the for way merchandise And should itself inventory. we that especially big to be that find reserve find is our expectation our channel. off-price likely So to a its that's think into opportunity,

to to lead. of that of is for a could started buying next I project too opportunity where Now, early months think good the to be be hunch that's that. couple too But I some see going it's we've It's could very mentioned early signs that our off-price.

Kimberly Greenberger

smaller then Fantastic, just to feel want Michael. you the I correctly those square I year. I well make sounds inventory I about you seeing on XX,XXX holiday. particular of much. And in care this to this quickly if particular, And you're Thanks results, the volumes you share that. wanted your just stores. how stores could in on up like on those sure sounds foot stores plan like delivering really year. as annual wondered if And subset locations, for above position good that I it It here new follow understand how to so they're a

Michael O'Sullivan

let November. John for on inventory in we're Okay, the on I'll levels take we're third week levels, on the sitting doing at part then the of prototypes. point, that, inventory Kimberly with what first obviously, the this I’ll of holiday and respond But

double a we that that on low in we our I'm to confident judge. in inventory our the to to sales stores very position digit that have stores, number. the and way receipts good I'm enough projection, have will support So

means might Now, well very gaps ahead strong. start double very to run were that see if very, that the to businesses. some sales in high those we trending just But digit, in then some low sales of businesses were

I our And an about issue then talk have you it's is in that It's outpace want not we So or problem. to sales class us we do a the now, inventory high that to the right risk with, with receipts. smaller..? some John, think, that expectations, ways

John Crimmins

sure. Yes,

had as a we the we underwritten as as year, them. far the stores this them So all, has first retail running well think new performance they're tailwind of way of I surprisingly, that planned all our strong in of year. Yes, everybody not this above

as these smaller that's the see also of perform. Understanding which what does behind large new percentage big a expect some that tailwinds a to of way that we're confidence kind would include to it. as we all us they're big the of moving But them certainly give So it us. performing stores, we stores, not have But part toward.

of about size very the more trade stores, with strength area. the the group performance. and less It's of about we're the pleased their smaller new Within become

what If stores at performing that we're we've And there you're so of the we've, proof-of-concept, far opened some are the individual looking as seen then others But far. really very are with blowing that it stores that format pleased are stores, smaller as of from water. got out well. we've the overall, smaller

Kimberly Greenberger

all hear Great thanks really color you. of Thank helpful. long for on to the it's and outlook, the term strategic

John Crimmins

welcome. You're

Operator

comes a from of with Michael Our next question Suisse. Credit line Binetti

is now line Your open.

Michael Binetti

you're you I today, and Michael, and that for first the your better? in what far, costs gains value And in channel? seen second your comment, laughing to think that then that to we've really that your whether really comment it's obviously, being spread inventories the spoke that closer the have when the you wide right is to algorithm today. to raising you to is wide? in $X.XX, Hey, think that longer like store think such we Maybe really price operating do line need competitors think half versus you better historically to full stimulus detail guys, that half and seems relative I spread thanks you may it John. a do second on wide longer for versus that your the How Is a are the raising XX one value continuing your important, between said to retails the they're locations, as be you your about governor from half you have share one's widen pretty drawing the all come helpful price operations too you widen higher very, gauge first traffic comments the that fine But that let from think, you I'll you hard through now? and pretty term. for based to really to stores you. repeat term? Do year. the to half AUR pretty how the about the And language tough, dollar the line, earlier, value moving, point next rolling AUR from this hear it's competitors of stores [Ph] very what understand as in-store the raising Today,

Michael O'Sullivan

Alright, of so on year. Mike, the and pressures I'll start cost with time question next kind the

freight What see said we I yet we crystal particularly can seen the ball before, started. have really, indicates haven't as that a has today anything on don't improvement, side, really we that So, is, here.

some that didn't a But next for improvement so deep I our assumption the So, about we, and that not I, this that's it's inside to something way a but see we're have think that start if information. see year, first improvement second think using, any to that we yes, it's as modeling there. really you fair in as half, half, the thinking goes you it's

So there be the goes happen, be room If happen, and take may it more an margins. more impact the back it's based and to seen environment, on had, of improvement does comments price then if we've that inflationary may this to on to that modelled. that's doesn't to start it that our that's, we've start we

how think about of So scenarios we year. way we the that's modeled for the kind next

Michael Binetti

Okay.

Michael O'Sullivan

I points the on in up think it's the because reference matters And for understand of encourage walks that actually, they're think in is expecting that the taking to is, when And to store, important what are customer off-price, And really into store, a it's it's the when off-price They're walking then, by I sort walks question retails? it's what be the AUR good expecting we mean store, Michael, And a that deal. question. great. the [Ph] governor's price. that. your I customer on the a really the they're values what what's and an important,

our look when the a shows a at at compare out is comparable it compare act retailer. price, So that our price, another you price or door a it -- price Burlington, shows but based ticket price and the upon at

you this other this you had would price cost it here's what saying So look, to place. Burlington, have we're can gone at you of buy

what proposition really kind is. off-price that's what So off customer the of

you've that how us your that. no where doubt should the So we're stay moving up little And the question, that differentiation be they price because customer There's competitors being move stores patient realized stores, sure to that back retail time. the is promotional. over bringing then here competitors? They about to prices are we up is to to in full in going say have. high those move you the long before very been prices, I our we stay own pretty department an go? the umbrella uncertainty I've years, up the else going is the been at That would prices got your have start that higher a prices the And to. prices. are. going are reason about It’s think they versus to where to gives very, If

being that have you'd now that's going going to promotional. believe They're stop. So stop to to

prices by fact those have chain department up the prices case, going stores and that were year their we that down, will actually prices. the had really short realized it stop and have if would those as supply if actually to inventories this higher happen, promoting prices. prices, supply on realized are mistake then leaner come realized term to it raised going a up driven loosens a were we higher yes, being year to move But just to been is they that were our next happened were that to we if So this thing, then and could and hold our constraints

we're reason the that's that So hesitating.

I will of in out this quarters, couple all play think. Now next the

key us. have So to won't long. driver the But we for that's wait really

happens, the that's takes other economy issue what script Now Well, raising happens obviously this if But prices. inflation off? if think. drive I've in there whole about well, a is that that different the all mentioned then across I we're

about we're how So that's thinking it.

Michael Binetti

Thanks lot help. for the a

Operator

you. Thank

will Our line Barclays. final the come of question Yih Adrienne with from

line open. now Your is

Adrienne Yih

about of XXK. what if U.S. thank target all you health couple And to you long your under quick income then your Good knowing just range much. XX, plan. again, us what we're are the A afternoon XX% XX. going embedded household or sharing color the detail. about core the And And talk it's you minimum John, you that, of wage remind of are my and the questions for can Thank is, follow households customers here. is in of cash for good proceeds very can target there. some inflation buyers? percent structural up of on customer, Michael, then Obviously, non-credit And morning.

Michael O'Sullivan

the Adrienne, Yes, question. I'll start with first

Our certainly think we look able very when throughout customer offer. this we right trend our our been sustain. that is that we've at the our customer, good responding think very is comps, customer year values very you to customer, We we we underlying, think healthy about now. the feel well clearly The to the

customers one find more we value shop Now, differs lot. at cross shop know And customer from customer the a other anything the about is every thing our they in way they retailer, they cares how our customers retailers than off-price our terms because of customers, is about value.

which market going raise chance take huge a shopping own customers, if share, that, other know we we're other know to we us retailers there because I retailers, that that raise or So cross have is retails, retailers. say, probably to retails a with have our is between overlap and other we why

lot have sort new this higher really does up, but I may a our strong. to Now, economy, perhaps about trend as are in If skew I very actually a been And spend price think take we to healthy getting the income. higher customers add if the slightly those tend who question customers they're squeezed a specifically, size, inflation more off incomes, showing year, customers your we family customers to on forward by say, of of thought pretty and next inflation. younger, sales more just I larger think has now, moderate right and project answer

is So we across consumers inflation that feel levels if in the we economy, somewhat at more that reason ever, going than that's be optimistic income value offer. to why interested are the the different there

John Crimmins

Yes.

take of part I'll wage Adrienne. so Okay, question, the your your piece,

market very side all, Jersey New in This the we've wage most year. had kind different necessary. on way distribution see years. of with year, they're adjustments, as it we So make several that just to using this which our way than used we working. reminder, planned We've the first start can been significant the changes We've much we're are we for turned attract operate the by ensure analysis, And of the California, been workers some centers, out the where remain market of we pleased to had that's at we need made DC very competitive, that competitive in to that and markets. of

brought our wages permanent a being we of So up part our wage And, outlook of this there. the supply And part that's chain our quite a as refer of that course, year base. to included stickier, bit we've little that's a our in in bit costs modeling. now it's

been a the storage bit DC as side, hasn't it's On little been a of the situation. as as different nearly story been hasn't competitive quite

had adjustments, seen the a than to but we tighter competitive, the had the what remain start kind by and of bit it's at market of year bit very little expected different have we've half of it second some get the make a higher in market. year, Although little we to

still comfortable market our approach. market So with by very we're

for So far I we've in competitive. these forward, five we’ll informed adjustments. modeled what that's an need would continue expect learned remain normally say modeling you forward what year. as – about would we've we've a then step to to as to assumption this have we in single by do going what, taken bigger than year And market a we And

Adrienne Yih

you. best Thank luck holiday. you. for and Great of Thank color

John Crimmins

Thank you.

Operator

remarks. closing Sullivan, now and will for turn to call I question today's concludes This session. back CEO answer Michael the

Michael O'Sullivan

the Before around their quarter, and opportunity Burlington at excitement like sense we in thank the us. the know and entire of supply for Burlington opportunity hang take up, I that energy margin to and of hard would my year. team everyone see work we I throughout that this third shares the to ahead sales

call March. Thank would you to Thanksgiving. sharing a you. fourth everyone wish look results like quarter happy with on in peaceful today's very and to forward We I Finally, our

Operator

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

You disconnect. may now

Burlington Stores (BURL) 23 Nov 212021 Q3 Earnings call transcript