Presentation3. Agenda. Page [ C L I E N T N A M E ]

Transcription

1 Presentation3 Agenda Page [ C L I E N T N A M E ] Investor Presentation September 8, 2016

2 Forward Looking Statements This presentation contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about Burlington Stores, Inc., together with its consolidated subsidiaries including, without limitation, Burlington Coat Factory Warehouse Corporation and its operating subsidiaries ( Burlington or the Company ), the industry in which we operate and other matters, as well as Burlington management s beliefs and assumptions and other statements regarding matters that are not historical facts. For example, when Burlington uses words such as aim, project, projection, expect, forecast, outlook, anticipate, intend, plan, believe, seek, estimate, should, would, could, will, can, can have, likely, opportunity, potential or may, and the negatives thereof and variations of such words or other words that convey uncertainty of future events or outcomes, Burlington is making forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of Burlington s forward-looking statements are subject to risks and uncertainties. Such statements may include, but are not limited to, proposed store openings and closings, proposed capital expenditures, projected financing requirements, proposed developmental projects, projected sales, earnings, revenues, costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, growth or initiatives, our strategies, Burlington s ability to maintain or grow selling margins, and the effect of the adoption of any new accounting pronouncements on our consolidated financial position, results of operations and cash flows, and the expected outcome or impact of pending or threatened litigation. Actual events or results may differ materially from the results anticipated in these forwardlooking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by Burlington include: competition in the retail industry, competitive factors such as pricing and promotional activities of major competitors, seasonality of Burlington s business, adverse weather conditions, changes in consumer preferences and consumer spending patterns, import risks, inflation, general economic conditions, unforeseen computer related problems, cyber security risks, unforeseen material loss or casualty, regulatory changes, our relationship with our employees, the impact of current and future law, terroristic attacks, natural and man-made disasters, Burlington s ability to implement its strategy, its substantial level of indebtedness and related debt-service obligations, restrictions imposed by covenants in its debt agreements, availability of adequate financing, its dependence on vendors for its merchandise, events affecting the delivery of merchandise to its stores, existence of adverse litigation, availability of desirable locations on suitable terms, and other risks discussed from time to time in the filings of Burlington and Burlington Coat Factory Investments Holdings, Inc. with the Securities and Exchange Commission. Many of these factors are beyond Burlington s ability to predict or control. In addition, as a result of these and other factors, Burlington s past financial performance should not be relied on as an indication of future performance. The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by Burlington or persons acting on its behalf. Burlington undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur. Furthermore, Burlington cannot guarantee future results, events, levels of activity, performance or achievements. 1

3 Investment Highlights Leading destination for on-trend, branded merchandise at a great value Proven track record of performance with strong current business trends Flexible off-price sourcing and merchandising model Attractive store economics and white space allowing for continued growth Proven management and merchant team with extensive retail experience 2

4 Company Overview Leading, nationally recognized retailer of high quality branded apparel National footprint with 570 stores, inclusive of its online store, in 45 states and Puerto Rico Extensive selection of quality brands, on-trend, at great value Feature merchandise from ~5,000 vendors, with a focus on major nationally-recognized brands Every Day Low Price ( EDLP ) model with savings up to 65% off other retailers prices everyday National Store Footprint West 82 Stores AK 2 CA 63 OR 4 WA 11 NV 5 ID 2 AZ 9 UT 3 MT WY NM 3 CO 6 ND 1 MN 7 SD 1 NE 1 KS 6 TX 59 OK 3 Midwest 120 Stores IA 2 MO 7 AR 5 LA 9 WI 9 IL 31 MS 2 MI 17 IN 12 AL 7 OH 21 VA WV KY 5 18 NC TN 7 13 GA 15 VT NY 36 PA 31 SC 5 FL 40 Northeast 131 Stores ME 2 NH 3 MA 14 RI CT 4 NJ DE MD 2 16 Southeast 149 Stores Southwest 88 Stores PR 12 Note: As of July 30,

5 Company Overview (cont.) FY14 Net Sales by Category ($4.8 billion) FY15 Net Sales by Category ($5.1 billion) Home 9% Coats 7% Women s Ready-to-Wear Apparel 24% Home 11% Coats 6% Women s Ready-to-Wear Apparel 24% Youth Apparel/ Baby 18% Accessories and Footwear 22% Youth Apparel/ Baby 16% Accessories and Footwear 22% Menswear 20% Menswear 21% 4

6 Differentiated Off-Price Business Model Provides customers the value inherent in true EDLP, but with much more product, category depth and variety than our off-price competitors Moderate Department Store Other Large Off-Price Retailers Store Size Typically > or = 80,000 sq. ft. 40,000-80,000 sq. ft. 30,000 sq. ft. Product Breadth Broad apparel range with more depth in available items Men s, Ladies and Children s Apparel, Baby Products, Family Footwear, Accessories, Linens and Home Décor Similar product categories to Burlington but less depth within each category (smaller stores) Brands Moderate brands, private label Premium and moderate national brands Premium and moderate national brands Pricing Strategy Highly promotional EDLP / Off-Price EDLP / Off-Price Sourcing / Vendors Pre-season sourcing strategy, limited flexibility, margin guarantees / promotional allowances Substantial in-season liquidity to capitalize immediately on trends and opportunistic buys More reliance on packaway merchandise (Ross) and pre-season cuttings (TJX) Customers Older (~45 years old) ~$78K avg. income Younger (~39 years old) ~$64K avg. income Younger (~39 years old) ~$77K avg. income 5

7 Refined Our Off-Price Model Through Improved Buying and Inventory Management Off-price excellence and comparable store sales growth from better buying Deliver VALUE through Fashion, Quality, Brand and Price (FQBP) Minimal pre-season purchasing Staying liquid In-season closeouts Shallow and broad assortments More selection More categories Rejuvenated pack and hold program Seasonal deals from highly desirable national brands Flexible floor sets Allocate square footage and buying dollars to strongest categories 6

8 Refined Our Off-Price Model Through Improved Buying and Inventory Management (cont.) Improved Comparable Store Inventory Turnover Reduced Inventory Aged 91 Days and Older ($mm) 4.86x 5.32x $551 (397 stores) 2.35x 3.97x $258 (521 stores) $138 (542 stores) $120 (567 stores) FY 2008 FY 2013 FY 2014 FY 2015 FY 2008 FY 2013 FY 2014 FY 2015 Key Inventory Metrics Comparable Store Inventory Turnover: +10% in 1H 16 vs 1H 15 Comparable Store Inventory: -6% in 1H 16 vs 1H 15 7

9 Invested in Technology and Systems to Drive Growth and Improve Efficiency Off-price excellence and comparable store sales growth from better selling Right product to the right stores at the right time at the right price Planning and forecasting Right product Allocation Right stores at the right time Markdown optimization Right price Business intelligence and product attribution Metrics and analytics 8

10 Introduced Program to Improve Customer Experience and Store Operations Off-Price Excellence and Comp Store Sales Growth from Store Operations Customer Experience Clean, well lit, easy to shop stores Improved navigation signage Well maintained fitting rooms Friendly associates Staffing commensurate with customer traffic Fast, efficient checkout Friendly return / layaway policies Store Execution Simplified merchandising Clear brand signage Sized fixtures Well executed clearance section Organized, recovered selling floor Fast movement of receipts to floor 9

11 Proven Track Record With Accelerating Momentum Net Sales (M) 1H YoY Performance $3,670 $3,854 $4,131 $4,428 $4,815 $5,099 $2,327 $2, H H 2016 Comp Store Sales 4.7% 4.9% 4.9% 2.1% 0.7% 1.2% -0.2% EBITDA (M) $484 $448 $384 $332 $308 $ % 1H H 2016 $220 $ H H

12 Significant Opportunities for Continued Growth Drive Comparable Store Sales Growth Increase sales in underpenetrated areas including Home, Beauty and Ladies Apparel Utilize web-based survey to continue to improve overall customer satisfaction scores Maintain focus on improving merchandise localization Continue to drive traffic with the marketing testimonial campaign Expand Our Retail Store Base New stores have an average payback period of less than three years The vast majority of stores are profitable on a store-level cash flow basis Successful across geographic regions, population densities, store footprints and real estate settings Significant white space for growth with potential for approximately 1,000 stores, expanding in both existing and new markets Expand Operating Margins Drive Earnings per Share Opportunistic Share Repurchase Continue to improve inventory turnover Increase purchasing power Leverage expense base Execute share repurchase program opportunistically 11

13 Appendix 12

14 First Half Fiscal Year 2016 Performance 1H FY2016 1H FY2015 Revenue $2,537.7M 2,327.3M Comp 4.9% 3.1% Gross Margin 39.9% 39.5% SG&A Less Product Sourcing Costs % of Sales 27.0% 27.8% Adjusted EBITDA Margin 8.7% 7.6% ~9.0% ~1.8% ~0.4% ~0.8% ~1.1% Tax Rate 37.6% 39.0% Net Income $57.9M $36.6M Adjusted Net Income $69.9M $46.1M Adjusted EPS $0.97 $0.60 ~58% ~52% ~62% 13

15 Fiscal Year 2016 Outlook Q3-16 Net Sales: % Comps: % Adjusted EPS: $ $0.32 FY 2016 Guidance Net Sales: % (open 25 net new stores) Comps: % (Inclusive of 0.5% from Fragrance) Adjusted EBITDA Margin: bps Adjusted EPS: $ $2.96 FY 2016 Adjusted net income per share is expected to increase 26-28% as compared to the prior year 14

16 Debt Profile Debt Profile ($ in millions) Before IPO (1-Oct-13) 30-Jan-16 xltm EBITDA 1 ABL $64 $167 Term Loan 862 1,113 Cap Leases Total Senior Secured Debt $949 $ 1, x Senior Unsecured Notes Senior Unsecured HoldCo Notes Total Debt $1,743 $ 1, x 1 TTM Adjusted EBITDA of $484.0mm 15

17 Adjusted Net Income and Adjusted EBITDA Reconciliation Historical Adjusted Net Income Reconciliation ($ in millions) FY 12 1 FY 13 FY 14 FY 15 1H FY 16 Net Income $25.3 $16.2 $66.0 $150.5 $57.9 Net Favorable Lease Amortization Costs Related to Debt Amendments & Offering Loss on Extinguishment of Debt Impairment Charges Advisory Fees Stock Option Modification Expense Litigation Accural Tax Effect (19.2) (30.9) (45.1) (14.1) (7.2) Adjusted Net Income $59.6 $70.2 $138.6 $174.6 $69.9 Historical Adjusted EBITDA Reconciliation ($ in millions) FY 12 1 FY 13 FY 14 FY 15 1H FY 16 Net Income $25.3 $16.2 $66.0 $150.5 $57.9 Interest Expense, Net Loss on Extinguishment of Debt Income Tax Expense Depreciation and Amortization Impairment Charges Advisory Fees Stock Option Modification Expense Litigation Accural Costs Related to Debt Amendments & Offering Adjusted EBITDA $332.0 $383.7 $448.1 $484.0 $ weeks 16