Burlington Stores (BURL) Stock: Why The Price Jumped Today

By Amit Chowdhry ● Nov 23, 2021
  • The stock price of Burlington Stores Inc (NYSE: BURL) increased by over 9% during intraday trading today. This is why it happened.

The stock price of Burlington Stores Inc (NYSE: BURL) increased by over 9% during intraday trading today. Investors responded positively to the company’s Q3 2021 results.

All Q3 2021 comparisons are made vs. the Q3 2019. These are the highlights:

— On a GAAP basis, total sales increased 30%, net income was $14 million, and diluted EPS was $0.20, inclusive of an $86 million debt extinguishment charge, or $1.22 per share

— Comparable store sales increased 16%

— On a non-GAAP basis, Adjusted EBIT was $140 million

— On a non-GAAP basis, Adjusted EPS was $1.36

Fiscal 2021 Third Quarter Operating Results (for the 13-week period ended October 30, 2021 compared with the 13-week period ended November 2, 2019)

— Total sales increased 30% compared to the third quarter of Fiscal 2019 to $2,300 million, while comparable store sales increased 16% compared to the third quarter of Fiscal 2019.

— Gross margin rate was 41.4% vs. 42.4% for the third quarter of Fiscal 2019, a decrease of 100 basis points. Merchandise margins increased 80 basis points, which was more than offset by a 180 basis point increase in freight expense.

— Product sourcing costs, which are included in selling, general and administrative expenses (SG&A), were $173 million vs. $90 million in the third quarter of Fiscal 2019. Product sourcing costs include the costs of processing goods through the supply chain and buying costs.

— SG&A was 33% as a percentage of net sales vs. 32.9% in the third quarter of Fiscal 2019. Adjusted SG&A, as defined below, was 25.3% as a percentage of net sales vs. 27.4% in the third quarter of Fiscal 2019, an improvement of 210 basis points.

— Other Income and Other Revenue were $7 million in the aggregate vs. $16 million in the third quarter of Fiscal 2019. This decline was primarily due to a non-recurring insurance gain of $8 million recognized in the third quarter of Fiscal 2019. This decrease had a 60 basis point negative impact on Adjusted EBIT margin in the third quarter of Fiscal 2021.

— The effective tax rate was 56.8% vs. 19.2% in the third quarter of Fiscal 2019. This increase was primarily due to an $86 million loss on debt extinguishment charge related to the partial repurchase of the Convertible Notes, most of which is not tax deductible. And the Adjusted Effective Tax Rate was 25.5% vs. 19.6% in the third quarter of Fiscal 2019, primarily driven by a reduced benefit from stock-based compensation and an increase in disallowed executive compensation.

— The net income was $14 million, or $0.20 per share vs. $96 million, or $1.44 per share for the third quarter of Fiscal 2019. This decrease was primarily due to the $86 million loss on debt extinguishment charge noted above, or $1.22 per share. Adjusted Net Income was $93 million, or $1.36 per share vs. $103 million, or $1.53 per share for the third quarter of Fiscal 2019.

— The diluted weighted average shares outstanding amounted to 68.2 million during the quarter compared with 67.2 million during the third quarter of Fiscal 2019.

— The adjusted EBITDA was $205 million vs. $192 million in the third quarter of Fiscal 2019, a decrease of 190 basis points as a percentage of sales. Adjusted EBIT was $140 million, flat vs. the third quarter of Fiscal 2019, a decrease of 180 basis points as a percentage of sales. And excluding the decline in Other Income and Other Revenue, as described above, Adjusted EBIT margin declined 120 basis points vs. the third quarter of Fiscal 2019.

KEY QUOTES:

“We are very pleased with our third quarter results. We continued to demonstrate our ability to chase the business and deliver great value to our customers. With Total Sales up 30% in Q3, and up 32% YTD, clearly we are taking significant market share.”

“As predicted, freight and supply chain headwinds pressured margins in Q3. We fully expect these headwinds to moderate over time and, as they do, this should generate very attractive off-price buying opportunities as well as significantly lower expenses.”

“As the economy moves into a more inflationary environment, we think that shoppers will be even more attracted to our great values. Our value differentiation vs. most other retailers has grown this year, as they have raised realized prices. If these higher realized prices are sustained then we believe that in the coming quarters we will have the opportunity to drive additional sales, to raise retails, or to do both.”

“This year we have been very excited about the performance of our new stores, especially our smaller prototype. Based on this performance and on the tremendous market share opportunity that we see ahead of us, we have decided to accelerate the pace of our new store opening program.”

— Michael O’Sullivan, CEO

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.