Burlington Stores Inc
For the period ended Aug 3, 2024. Filed Aug 29, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Aug 3, 2024 · Filed Aug 29, 2024
BURL$246.76-1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-05-04; filed 2024-05-30.
0000950170-24-066612
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-08-03; filed 2024-08-29.
0000950170-24-101847
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 168 previous paragraphs and 203 current paragraphs.
116 unchanged; 51 reworded; 29 added; 0 removed; 1 previous and 7 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
costs related to debt amendments;
Current report
amounts charged for certain litigation matters; and
Current report
Relates to the Term Loan Credit Agreement amendment in the second quarter of Fiscal 2023 changing from Adjusted LIBOR Rate to the Adjusted Term SOFR Rate.
Current report
(d)
Current report
Represents amounts charged for certain litigation matters.
Current report
(e)
Current report
costs related to debt amendments;
Current report
amounts charged for certain litigation matters;
Current report
(c)
Current report
Relates to the Term Loan Credit Agreement amendment in the second quarter of Fiscal 2023 changing from Adjusted LIBOR Rate to the Adjusted Term SOFR Rate.
Current report
(d)
Current report
Represents amounts charged for certain litigation matters.
Current report
Gross margin as a percentage of net sales increased to 43.2% during the six months ended August 3, 2024, compared with 42.0% during six months ended July 29, 2023, driven primarily by decreased markdowns and decreased freight costs.
Current report
Selling, general and administrative expenses as a percentage of net sales decreased to 35.1% during the second quarter of Fiscal 2024, compared to 35.7% during the second quarter of Fiscal 2023. The decrease was primarily driven by an improvement in product sourcing costs, resulting from supply chain efficiency initiatives, as well as an improvement in occupancy costs and corporate costs, partially offset by investments in store payroll costs. On a dollar basis, selling, general and administrative expenses increased by $88.7 million, or 11.4%, to $864.0 million during the second quarter of Fiscal 2024. The increase was primarily driven by our 118 net new stores opened since the end of the second quarter of Fiscal 2023.
Current report
There were no impairment charges on long-lived assets during the second quarter of Fiscal 2024. Impairment charges on long-lived assets were $4.7 million during the second quarter of Fiscal 2023, related to unrecoverable fixed assets at eight underperforming stores and unrecoverable lease assets at one of those stores.
Current report
Six Month Period Ended August 3, 2024 Compared With the Six Month Period Ended July 29, 2023
Current report
Net sales
Current report
Net sales improved approximately $515.3 million, or 12.0%, to $4,818.5 million during the first half of Fiscal 2024, primarily driven by an increase of 3% in comparable stores sales during the first half of Fiscal 2024, as well as the net sales of 118 net new stores since the end of the second quarter of Fiscal 2023.
Current report
Cost of sales
Current report
Selling, general and administrative expenses
Current report
Our acquisition of the Bed, Bath & Beyond store leases resulted in $9.4 million and $2.6 million of selling, general and administrative expenses during the first half of Fiscal 2024 and the first half of Fiscal 2023, respectively.
Current report
Depreciation and amortization
Current report
Impairment charges – long-lived assets
Current report
Interest expense
Current report
Income tax expense
Current report
Income tax expense was $57.0 million during the first half of Fiscal 2024 compared with income tax expense of $21.7 million during the first half of Fiscal 2023. The effective tax rate for the first half of Fiscal 2024 was 27.2% compared with 25.4% during the first half of Fiscal 2023. The increase in income tax expense and tax rate was due to higher pre-tax income and higher tax expense from stock based compensation, respectively.
Current report
Net income
Current report
We earned net income of $152.3 million for the first half of Fiscal 2024 compared with $63.6 million for the first half of Fiscal 2023. This increase was primarily driven by higher sales, as well as increased gross margin rate and leverage on selling, general and administrative expenses. Net income included $6.8 million and $1.9 million of expense, net of income taxes, for the first half of Fiscal 2024 and the first half of Fiscal 2023, respectively, related to recently acquired leases from Bed Bath & Beyond.
Current report
From time to time, we evaluate options to opportunistically increase, refinance or extend our debt. Our assessment will be based on our capital needs for, among other things, facility capital improvements and expenditures. No assurance can be given that we will enter into such agreements.
Reworded paragraphs (51)
Previous wording
We are a nationally recognized off-price retailer of high-quality, branded merchandise at everyday low prices. We opened our first store in Burlington, New Jersey in 1972, selling primarily coats and outerwear. Since then, we have expanded our store base to 1,021 stores as of May 4, 2024 in 46 states, Washington D.C. and Puerto Rico. We have diversified our product categories by offering an extensive selection of in-season, fashion-focused merchandise at up to 60% off other retailers’ prices, including: women’s ready-to-wear apparel, menswear, youth apparel, baby, beauty, footwear, accessories, home, toys, gifts and coats. We sell a broad selection of desirable, first-quality, current-brand, labeled merchandise acquired directly from nationally-recognized manufacturers and other suppliers.
Current wording
We are a nationally recognized off-price retailer of high-quality, branded merchandise at everyday low prices. We opened our first store in Burlington, New Jersey in 1972, selling primarily coats and outerwear. Since then, we have expanded our store base to 1,057 stores as of August 3, 2024 in 46 states, Washington D.C. and Puerto Rico. We have diversified our product categories by offering an extensive selection of in-season, fashion-focused merchandise at up to 60% off other retailers’ prices, including: women’s ready-to-wear apparel, menswear, youth apparel, baby, beauty, footwear, accessories, home, toys, gifts and coats. We sell a broad selection of desirable, first-quality, current-brand, labeled merchandise acquired directly from nationally-recognized manufacturers and other suppliers.
Previous wording
Fiscal 2024 is defined as the 52-week year ended February 1, 2025. Fiscal 2023 is defined as the 53-week year ending February 3, 2024. The first quarter of Fiscal 2024 and Fiscal 2023 each consist of 13 weeks.
Current wording
Fiscal 2024 is defined as the 52-week year ended February 1, 2025. Fiscal 2023 is defined as the 53-week year ending February 3, 2024. The first and second quarters of Fiscal 2024 and Fiscal 2023 each consist of 13 weeks.
Previous wording
During the three month period ended May 4, 2024, we opened 36 new stores, inclusive of 11 relocations, and permanently closed 11 stores, exclusive of the aforementioned relocations, bringing our store count as of May 4, 2024 to 1,021 stores.
Current wording
During the six month period ended August 3, 2024, we opened 76 new stores, inclusive of 15 relocations, and permanently closed 11 stores, exclusive of the aforementioned relocations, bringing our store count as of August 3, 2024 to 1,057 stores.
Previous wording
Net income. We earned net income of $78.5 million during the three month period ended May 4, 2024 compared with $32.7 million during the three month period ended April 29, 2023. This increase was primarily driven by higher sales, as well as increased gross margin rate. Refer to the section below entitled “Results of Operations” for further explanation.
Current wording
Net income. We earned net income of $73.8 million during the three month period ended August 3, 2024 compared with net income of $30.9 million during the three month period ended July 29, 2023. We earned net income of $152.3 million during the six month period ended August 3, 2024 compared with a net income of $63.6 million during the six month period ended July 29, 2023. This increase was primarily driven by higher sales, as well as increased gross margin rate and leverage on selling, general and administrative expenses. Refer to the section below entitled “Results of Operations” for further explanation.
Previous wording
We define Adjusted Net Income as net income, exclusive of the following items, if applicable: (i) net favorable lease costs; (ii) loss on extinguishment of debt; (iii) impairment charges; and (iv) other unusual or non-recurring expenses, losses, charges or gains, all of which are tax effected to arrive at Adjusted Net Income.
Current wording
We define Adjusted Net Income as net income, exclusive of the following items, if applicable: (i) net favorable lease costs; (ii) loss on extinguishment of debt; (iii) costs related to debt amendments; (iv) impairment charges; (v) amounts related to certain litigation matters; and (vi) other unusual, non-recurring or extraordinary expenses, losses, charges or gains, all of which are tax effected to arrive at Adjusted Net Income.
Previous wording
We define Adjusted EBITDA as net income, exclusive of the following items, if applicable: (i) interest expense; (ii) interest income; (iii) loss on extinguishment of debt; (iv) income tax expense; (v) depreciation and amortization; (vi) net favorable lease costs; (vii) impairment charges; and (viii) other unusual or non-recurring expenses, losses, charges or gains.
Current wording
We define Adjusted EBITDA as net income, exclusive of the following items, if applicable: (i) interest expense; (ii) interest income; (iii) loss on extinguishment of debt; (iv) costs related to debt amendments; (v) income tax expense; (vi) depreciation and amortization; (vii) net favorable lease costs; (viii) impairment charges; (ix) amounts related to certain litigation matters; and (x) other unusual, non-recurring or extraordinary expenses, losses, charges or gains.
Previous wording
We define Adjusted EBIT as net income, exclusive of the following items, if applicable: (i) interest expense; (ii) interest income; (iii) loss on extinguishment of debt; (iv) income tax expense; (v) impairment charges; (vi) net favorable lease costs; and (vii) other unusual or non-recurring expenses, losses, charges or gains.
Current wording
We define Adjusted EBIT as net income, exclusive of the following items, if applicable: (i) interest expense; (ii) interest income; (iii) loss on extinguishment of debt; (iv) costs related to debt amendments; (v) income tax expense; (vi) impairment charges; (vii) net favorable lease costs; (viii) amounts related to certain litigation matters; and (ix) other unusual, non-recurring or extraordinary expenses, losses, charges or gains.
Previous wording
During the three months ended May 4, 2024, Adjusted Net Income increased $31.8 million to $86.8 million compared to the same period in the prior year. This increase was primarily driven by higher sales, as well as increased gross margin rate. Refer to the section below entitled “Results of Operations” for further explanation.
Current wording
During the three and six months ended August 3, 2024, Adjusted Net Income increased $38.6 million to $77.5 million and increased $70.4 million to $164.3 million, respectively, compared to the same periods in the prior year. These increases were primarily driven by higher sales, as well as increased gross margin rate and leverage on selling, general and administrative expenses. Refer to the section below entitled “Results of Operations” for further explanation.
Previous wording
The following table shows our reconciliation of net income to Adjusted Net Income for the three months ended May 4, 2024 compared with the three months ended April 29, 2023:
Current wording
The following table shows our reconciliation of net income to Adjusted Net Income for the three and six months ended August 3, 2024 compared with the three and six months ended July 29, 2023:
Previous wording
Fiscal 2023 amounts relate to the partial repurchases of the $805.0 million, 2.25% Convertible Senior Notes due 2025 (2025 Convertible Notes).
Current wording
Fiscal 2023 amount relates to the partial repurchases of the $805.0 million, 2.25% Convertible Senior Notes due 2025 (2025 Convertible Notes).
Previous wording
Tax effect is calculated based on the effective tax rates (before discrete items) for the respective periods, adjusted for the tax effect for the impact of the reconciling items listed in the table above.
Current wording
Tax effect is calculated based on the effective tax rates (before discrete items) for the respective periods, adjusted for the tax effect for the impact of items (a) through (d).
Previous wording
impairment charges on long-lived assets; and
Current wording
impairment charges on long-lived assets;
Previous wording
During the three months ended May 4, 2024, Adjusted EBIT increased $42.6 million to $129.4 million compared to the same period in the prior year. Adjusted EBITDA increased $54.1 million to $211.4 million compared to the same period in the prior year. These increases were primarily driven by higher sales, as well as increased gross margin rate. Refer to the section below entitled “Results of Operations” for further explanation.
Current wording
During the three and six months ended August 3, 2024, Adjusted EBIT increased $47.5 million to $115.2 million and increased $90.1 million to $244.6 million, respectively, compared to the same periods in the prior year. During the three and six months ended August 3, 2024, Adjusted EBITDA increased $61.0 million and $115.1 million, respectively, compared to the same periods in the prior year. These increases were primarily driven by higher sales, as well as increased gross margin rate and leverage on selling, general and administrative expenses. Refer to the section below entitled “Results of Operations” for further explanation.
Previous wording
The following table shows our reconciliation of net income to Adjusted EBIT and Adjusted EBITDA for the three months ended May 4, 2024 compared with the three months ended April 29, 2023:
Current wording
The following table shows our reconciliation of net income to Adjusted EBIT and Adjusted EBITDA for the three and six months ended August 3, 2024 compared with the three and six months ended July 29, 2023:
Previous wording
Fiscal 2023 amounts relate to the partial repurchases of the 2025 Convertible Notes.
Current wording
Fiscal 2023 amount relates to the partial repurchases of the 2025 Convertible Notes.
Previous wording
We define comparable store sales as merchandise sales of those stores commencing on the first day of the fiscal month one year after the end of their grand opening activities, which normally conclude within the first two months of operations. If a store is closed for seven or more days during a month, our policy is to remove that store from our calculation of comparable store sales for any such month, as well as during the month(s) of their grand re-opening activities. To account for the shift in weeks from the 53rd week of Fiscal 2023, comparable store sales for the first quarter of Fiscal 2024 is comparing the 13 weeks ended May 4, 2024 to the 13 weeks ended May 6, 2023. The change in our comparable store sales was as follows:
Current wording
We define comparable store sales as merchandise sales of those stores commencing on the first day of the fiscal month one year after the end of their grand opening activities, which normally conclude within the first two months of operations. If a store is closed for seven or more days during a month, our policy is to remove that store from our calculation of comparable store sales for any such month, as well as during the month(s) of their grand re-opening activities. To account for the shift in weeks from the 53rd week of Fiscal 2023, comparable store sales for the second quarter and first half of Fiscal 2024 are comparing the 13 weeks and 26 weeks ended August 3, 2024, respectively, to the 13 and 26 weeks ended August 5, 2023, respectively. The change in our comparable store sales was as follows:
Previous wording
Gross margin as a percentage of net sales increased to 43.5% during the three month period ended May 4, 2024, compared with 42.3% during three month period ended April 29, 2023, driven primarily by increased merchandise margins and decreased freight costs.
Current wording
Gross margin as a percentage of net sales increased to 42.8% during the three month period ended August 3, 2024, compared with 41.7% during three month period ended July 29, 2023, driven primarily by decreased markdowns and decreased freight costs.
Previous wording
Product sourcing costs, which are included in selling, general and administrative expenses, decreased approximately 100 basis points as a percentage of net sales, primarily driven by supply chain efficiency initiatives.
Current wording
Product sourcing costs, which are included in selling, general and administrative expenses, decreased approximately 60 basis points as a percentage of net sales during the three month period ended August 3, 2024, compared with the three month period ended July 29, 2023, primarily driven by supply chain efficiency initiatives. Product sourcing costs decreased approximately 80 basis points as a percentage of net sales during the six months ended August 3, 2024, compared with the six months ended July 29, 2023, primarily driven by supply chain efficiency initiatives.
Previous wording
Inventory. Inventory at May 4, 2024 decreased to $1,140.8 million compared with $1,231.1 million at April 29, 2023. The decrease was attributable primarily to a decrease in reserve inventory and a decrease in comparable store inventory, partially offset by 88 net new stores opened since the end of the first quarter of Fiscal 2023.
Current wording
Inventory. Inventory at August 3, 2024 increased to $1,222.7 million compared with $1,161.5 million at July 29, 2023. The increase was attributable primarily to 118 net new stores opened since the end of the second quarter of Fiscal 2023 and an increase in comparable store inventory, partially offset by a decrease in reserve inventory.
Previous wording
Liquidity. Liquidity measures our ability to generate cash. Management measures liquidity through cash flow, which is the measure of cash generated from or used in operating, financing, and investing activities. Cash and cash equivalents, including restricted cash and cash equivalents, decreased $183.0 million during the three months ended May 4, 2024, compared with a decrease of $340.2 million during the three months ended April 29, 2023. At May 4, 2024, we also had $779.1 million available under the ABL Line of Credit with no borrowings during the three month period ended May 4, 2024. Refer to the section below entitled “Liquidity and Capital Resources” for further explanation.
Current wording
Liquidity. Liquidity measures our ability to generate cash. Management measures liquidity through cash flow, which is the measure of cash generated from or used in operating, financing, and investing activities. Cash and cash equivalents, including restricted cash and cash equivalents, decreased $265.4 million during the six months ended August 3, 2024, compared with a decrease of $358.2 million during the six months ended July 29, 2023. Refer to the section below entitled “Liquidity and Capital Resources” for further explanation.
Previous wording
The following table sets forth certain items in the Condensed Consolidated Statements of Income as a percentage of net sales for the three months ended May 4, 2024.
Current wording
The following table sets forth certain items in the Condensed Consolidated Statements of Income as a percentage of net sales for the three and six months ended August 3, 2024 and the three and six months ended July 29, 2023.
Previous wording
Net sales improved approximately $224.5 million, or 10.5%, to $2,357.3 million during the first quarter of Fiscal 2024, primarily driven by a 2% increase in comparable stores sales during the first quarter of Fiscal 2024, as well as net sales from our 88 net new stores opened since the end of the first quarter of Fiscal 2023.
Current wording
Net sales improved approximately $290.7 million, or 13.4%, to $2,461.2 million during the second quarter of Fiscal 2024, primarily driven by an increase of 5% in comparable stores sales during the second quarter of Fiscal 2024, as well as the net sales of 118 net new stores since the end of the second quarter of Fiscal 2023.
Previous wording
Cost of sales as a percentage of net sales decreased to 56.5% during the first quarter of Fiscal 2024, compared to 57.7% during the first quarter of Fiscal 2023. This decrease was primarily driven by decreased markdowns and decreased freight costs. On a dollar basis, cost of sales increased $99.1 million, or 8.0%, primarily driven by our overall increase in sales.
Current wording
Cost of sales as a percentage of net sales decreased to 57.2% during the second quarter of Fiscal 2024, compared to 58.3% during the second quarter of Fiscal 2023. This decrease was primarily driven by decreased markdowns and decreased freight costs. On a dollar basis, cost of sales increased $141.9 million, or 11.2%, primarily driven by our overall increase in sales.
Previous wording
During Fiscal 2023, we acquired 64 store leases directly from Bed, Bath & Beyond. We started paying rent immediately upon acquisition for all of the stores. 32 of these stores were opened during Fiscal 2023, 20 opened during the first quarter of Fiscal 2024, and the remaining are planned to open during the second and third quarters of Fiscal 2024. This transaction resulted in $6.0 million of selling, general and administrative expenses during the first quarter of Fiscal 2024.
Current wording
During Fiscal 2023, we acquired 64 store leases directly from Bed, Bath & Beyond. We started paying rent immediately upon acquisition for all of the stores. We opened 32 of these stores during Fiscal 2023, 20 during the first quarter of Fiscal 2024, 11 during the second quarter of Fiscal 2024, and the remaining store is planned to open during the third quarter of Fiscal 2024. This transaction resulted in $3.3 million and $2.6 million of selling, general and administrative expenses during the second quarter of Fiscal 2024 and the second quarter of Fiscal 2023, respectively.
Previous wording
Depreciation and amortization expense amounted to $82.0 million during the first quarter of Fiscal 2024 compared with $70.5 million during the first quarter of Fiscal 2023. The increase in depreciation and amortization expense was primarily driven by capital expenditures related to new and non-comparable stores, as well as our supply chain.
Current wording
Depreciation and amortization expense amounted to $86.7 million during the second quarter of Fiscal 2024 compared with $73.1 million during the second quarter of Fiscal 2023. The increase in depreciation and amortization expense was primarily driven by capital expenditures related to new and non-comparable stores, as well as our supply chain.
Previous wording
Other income - net improved $1.9 million to $10.9 million during the first quarter of Fiscal 2024, compared to the same period in the prior year. The increase was primarily driven by increased interest income.
Current wording
Other income - net improved $3.3 million to $9.5 million during the second quarter of Fiscal 2024, compared to the same period in the prior year. The increase was primarily driven by increased interest income.
Previous wording
Interest expense improved $2.7 million during the first quarter of Fiscal 2024 to $16.6 million, compared to the same period in the prior year. This improvement was primarily driven by a reduction in interest expense related to accumulated other comprehensive income on our previous interest rate swap, which was fully amortized as of the end of Fiscal 2023. Additionally, we had a lower average balance of 2025 Convertible Notes, and a lower interest rate on the 2027 Convertible Notes compared to the 2025 Convertible Notes that were extinguished, partially offset by a higher interest rate on the unhedged portion of the term loan.
Current wording
Interest expense improved $3.0 million during the second quarter of Fiscal 2024 to $16.6 million, compared to the same period in the prior year. This improvement was primarily driven by a reduction in interest expense related to accumulated other comprehensive income on our previous interest rate swap, which was fully amortized as of the end of Fiscal 2023. Additionally, we had a lower average balance of 2025 Convertible Notes, and a lower interest rate on the 2027 Convertible Notes compared to the 2025 Convertible Notes that were extinguished, partially offset by a higher interest rate on the unhedged portion of the term loan.
Previous wording
The average interest rate on the Term Loan Facility was 7.4% and 6.7% for the first quarter of Fiscal 2024 and the first quarter of Fiscal 2023, respectively. The average balance on the Term Loan Facility, excluding the original issue discount, was $936.5 million and $946.2 million for the first quarter of Fiscal 2024 and the first quarter of Fiscal 2023, respectively.
Current wording
The average interest rate on the Term Loan Facility was 7.4% and 7.1% for the second quarter of Fiscal 2024 and the second quarter of Fiscal 2023, respectively. The average balance on the Term Loan Facility, excluding the original issue discount, was $934.0 million and $943.8 million for the second quarter of Fiscal 2024 and the second quarter of Fiscal 2023, respectively.
Previous wording
Income tax expense was $31.1 million during the first quarter of Fiscal 2024 compared with income tax expense of $10.6 million during the first quarter of Fiscal 2023. The effective tax rate for the first quarter of Fiscal 2024 was 28.4% compared with 24.4% during the first quarter of Fiscal 2023. The increase in expense is primarily driven by an increase in pre-tax income while the increase in the effective tax rate is mainly attributable to higher tax expense from stock-based compensation.
Current wording
Income tax expense was $25.9 million during the second quarter of Fiscal 2024 compared with income tax expense of $11.1 million during the second quarter of Fiscal 2023. The effective tax rate for the second quarter of Fiscal 2024 was 26.0% compared with 26.4% during the second quarter of Fiscal 2023. The increase in income tax expense is due to higher pre-tax income. The decrease in tax rate is due to less tax expense from stock-based compensation.
Previous wording
At the end of each interim period we are required to determine the best estimate of our annual effective tax rate and then apply that rate in providing for income taxes on a current year-to-date (interim period) basis. Use of this methodology during the first quarter of Fiscal 2024 resulted in an annual effective income tax rate of approximately 26% (before discrete items) as our best estimate.
Current wording
At the end of each interim period we are required to determine the best estimate of our annual effective tax rate and then apply that rate in providing for income taxes on a current year-to-date (interim period) basis. Use of this methodology during the second quarter of Fiscal 2024 resulted in an annual effective income tax rate of approximately 26% (before discrete items) as our best estimate.
Previous wording
We earned net income of $78.5 million for the first quarter of Fiscal 2024 compared with $32.7 million for the first quarter of Fiscal 2023. This increase was primarily driven by higher sales, as well as increased gross margin rate. Net income for the first quarter of Fiscal 2024 included $4.3 million of expense, net of income taxes, related to the acquired leases from Bed Bath & Beyond, included in the line item “Selling, general and administrative expenses” in the Company’s Condensed Consolidated Statements of Income.
Current wording
We earned net income of $73.8 million for the second quarter of Fiscal 2024 compared with $30.9 million for the second quarter of Fiscal 2023. This increase was primarily driven by higher sales, as well as increased gross margin rate and leverage on selling, general and administrative expenses. Net income included $2.5 million and $1.9 million of expense, net of income taxes, for the second quarter of Fiscal 2024 and the second quarter of Fiscal 2023, respectively, related to recently acquired leases from Bed Bath & Beyond.
Previous wording
Selling, general and administrative expenses as a percentage of net sales decreased to 35.0% during the first quarter of Fiscal 2024, compared to 35.4% during the first quarter of Fiscal 2023. The decrease was primarily driven by a 100 basis point improvement in product sourcing costs, resulting from supply chain efficiency initiatives, as well as an improvement in advertising costs. These improvements were partially offset by increased store related costs and store payroll costs. On a dollar basis, selling, general and administrative expenses increased by $69.6 million, or 9.2%, to $825.2 million during the first quarter of Fiscal 2024. The increase was primarily driven by increases in occupancy costs and store payroll costs.
Current wording
Selling, general and administrative expenses as a percentage of net sales decreased to 35.1% during the first half of Fiscal 2024, compared to 35.6% during the first half of Fiscal 2023. The decrease was primarily driven by an improvement in product sourcing costs, resulting from supply chain efficiency initiatives, as well as an improvement in advertising costs. These improvements were partially offset by investments in store payroll costs and increased corporate costs. On a dollar basis, selling, general and administrative expenses increased by $158.3 million, or 10.3%, to $1,689.2 million during the first half of Fiscal 2024. The increase was primarily driven by our 118 net new stores opened since the end of the second quarter of Fiscal 2023.
Previous wording
Impairment charges on long-lived assets were $8.2 million during the first quarter of Fiscal 2024, related to one owned store selling below carrying value in a sale-leaseback transaction. Impairment charges on long-lived assets were $0.8 million during the first quarter of Fiscal 2023, primarily related to store-level assets at seven stores.
Current wording
Impairment charges on long-lived assets were $8.2 million during the first half of Fiscal 2024, related to one owned store selling below carrying value in a sale-leaseback transaction. Impairment charges on long-lived assets were $5.6 million during the first half of Fiscal 2023, related to unrecoverable fixed assets at ten underperforming stores and unrecoverable lease assets at three of those stores
Previous wording
There were no debt extinguishment charges during the first quarter of Fiscal 2024. During the first quarter of Fiscal 2023 we entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes. Under the terms of the exchange agreements, the holders exchanged $110.3 million in aggregate principal amount of Convertible Notes held by them for $133.3 million in cash. These exchanges resulted in aggregate pre-tax debt extinguishment charges of $24.6 million.
Current wording
There were no debt extinguishment charges during the first half of Fiscal 2024. During the first half of Fiscal 2023, we entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes. Under the terms of the exchange agreements, the holders exchanged $110.3 million in aggregate principal amount of Convertible Notes held by them for $133.3 million in cash. These exchanges resulted in aggregate pre-tax debt extinguishment charges of $24.6 million.
Previous wording
Cash Flow for the Three Month Period Ended May 4, 2024 Compared With the Three Month Period Ended April 29, 2023
Current wording
Cash Flow for the Six Month Period Ended August 3, 2024 Compared With the Six Month Period Ended July 29, 2023
Previous wording
We used $183.0 million of cash during the three month period ended May 4, 2024 compared with $340.2 million during the three month period ended April 29, 2023.
Current wording
We used $265.4 million of cash during the six month period ended August 3, 2024 compared with a use of $358.2 million during the six month period ended July 29, 2023.
Previous wording
Net cash provided by operating activities amounted to $49.4 million during the three month period ended May 4, 2024, compared with net cash used of $78.0 million during the three month period ended April 29, 2023. The increase in our operating cash flows was primarily driven by improved sales and gross margin, as well as the impact of changes in working capital.
Current wording
Net cash provided by operating activities amounted to $209.8 million during the six month period ended August 3, 2024, compared with $29.8 million during the six month period ended July 29, 2023. The increase in our operating cash flows was primarily driven by improved sales and gross margin, as well as the impact of changes in working capital.
Previous wording
Net cash used in investing activities was $165.5 million during the three month period ended May 4, 2024 compared with $86.2 million during the three month period ended April 29, 2023. This change was primarily the result of an increase in capital expenditures related to increased store openings.
Current wording
Net cash used in investing activities was $362.3 million during the six month period ended August 3, 2024 compared with $177.7 million during the six month period ended July 29, 2023. This change was primarily the result of an increase in capital expenditures related to increased store openings and supply chain.
Previous wording
Net cash used in financing activities was $66.9 million during the three month period ended May 4, 2024 compared with $176.1 million during the three month period ended April 29, 2023. This change was primarily driven by less debt repayments, partially offset by increased repurchases of shares of our common stock under our share repurchase program in Fiscal 2024.
Current wording
Net cash used in financing activities was $113.0 million during the six month period ended August 3, 2024 compared with $210.4 million during the six month period ended July 29, 2023. This change was primarily driven by less debt repayments, partially offset by increased repurchases of shares of our common stock under our share repurchase program in Fiscal 2024.
Previous wording
Changes in working capital also impact our cash flows. Working capital equals current assets (exclusive of restricted cash) minus current liabilities. We had working capital at May 4, 2024 of $140.8 million compared with $265.4 million at April 29, 2023. The decrease in working capital was primarily due to increased current maturities of long term debt related to the 2025 Convertible Notes, increased accounts payable, decreased inventory, and increased other current liabilities (primarily accrued expenses), partially offset by increased cash balance and increased prepaid assets (primarily rent and supplies). We had working capital at February 3, 2024 of $298.2 million.
Current wording
Changes in working capital also impact our cash flows. Working capital equals current assets (exclusive of restricted cash) minus current liabilities. We had working capital at August 3, 2024 of $79.3 million compared with $273.4 million at July 29, 2023. The decrease in working capital was primarily due to increased accounts payable, increased current maturities of long term debt related to the 2025 Convertible Notes and increased other current liabilities (primarily accrued expenses), partially offset by increased cash balance, increased prepaid assets (primarily rent), and increased inventory. We had working capital at February 3, 2024 of $298.2 million.
Showing the first 40 of 51 pairs. Open the source sections for the rest.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Cost of sales as a percentage of net sales decreased to 56.8% during the first half of Fiscal 2024, compared to 58.0% during the first half of Fiscal 2023. This decrease was primarily driven by decreased markdowns and decreased freight costs. On a dollar basis, cost of sales increased $241.0 million, or 9.6%, primarily driven by our overall increase in sales.
Current report — wording carried from elsewhere
Depreciation and amortization expense amounted to $168.6 million during the first half of Fiscal 2024 compared with $143.7 million during the first half of Fiscal 2023. The increase in depreciation and amortization expense was primarily driven by capital expenditures related to new and non-comparable stores, as well as our supply chain.
Current report — wording carried from elsewhere
The recoverability assessment related to these store-level assets requires various judgments and estimates, including estimates related to future revenues, gross margin rates, store expenses and other assumptions. We base these estimates upon our past and expected future performance. We believe our estimates are appropriate in light of current market conditions. However, future impairment charges could be required if we do not achieve our current revenue or cash flow projections for each store. Refer to Note 6, “Fair Value Measurements,” for further discussion regarding impairment charges.
Current report — wording carried from elsewhere
Interest expense improved $5.7 million during the first half of Fiscal 2024 to $33.2 million, compared to the same period in the prior year. This improvement was primarily driven by a reduction in interest expense related to accumulated other comprehensive income on our previous interest rate swap, which was fully amortized as of the end of Fiscal 2023. Additionally, we had a lower average balance of 2025 Convertible Notes, and a lower interest rate on the 2027 Convertible Notes compared to the 2025 Convertible Notes that were extinguished, partially offset by a higher interest rate on the unhedged portion of the term loan.
Current report — wording carried from elsewhere
The average interest rate on the Term Loan Facility was 7.4% and 6.9% for the first half of Fiscal 2024 and the first half of Fiscal 2023, respectively. The average balance on the Term Loan Facility, excluding the original issue discount, was $935.3 million and $945.0 million for the first half of Fiscal 2024 and the first half of Fiscal 2023, respectively.
Current report — wording carried from elsewhere
At the end of each interim period we are required to determine the best estimate of our annual effective tax rate and then apply that rate in providing for income taxes on a current year-to-date (interim period) basis. Use of this methodology during the first half of Fiscal 2024 resulted in an annual effective income tax rate of approximately 26% (before discrete items) as our best estimate.
Current report — wording carried from elsewhere
We had $1,798.0 million of purchase commitments related to goods that were not received as of August 3, 2024, and had $4,313.6 million of future minimum lease payments under operating leases as of August 3, 2024.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
$212.5 million on October 1, 2024, and (iii) $200 million on January 1, 2025. BCFWC and the agent may extend the foregoing dates under clauses (i) and (ii), as long as the sublimit is reduced to $200 million no later than January 1, 2025.