Burlington Stores, Inc. (NYSE:BURL) Q2 2019 Earnings Conference Call Transcript

Aug 29, 2019 • 08:30 am ET

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Burlington Stores, Inc. (NYSE:BURL) Q2 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

Thank you. [Operator Instructions] Our first question comes from Matthew Boss with JP Morgan. Your line is now open.

Analyst
Matthew Boss

Great. Congrats on a great quarter in a tough backdrop. And Tom, congrats on an incredible run.

Executive
Thomas A. Kingsbury

Thank you.

Executive
David J. Glick

Thanks, Matt.

Executive
Thomas A. Kingsbury

Thanks, Matt.

Analyst
Matthew Boss

I guess first, Tom, from your prepared remarks and it's supported by recent checks, it sounds like you've made encouraging progress in improving the ladies apparel business in the second quarter. Can you give us some color on what drove that improvement and where you stand on the category into the back half of the year?

Executive
Thomas A. Kingsbury

Yes, Matt. We did make some progress in Ladies Apparel in the second quarter. We were pleased with the improvement, as I mentioned, in trend that we made across our various heritage businesses. And our Missy sportswear growth did accelerate in the second quarter. In our better sportswear and active businesses were very strong, and we believe we have adjusted our receipt plans appropriately and are well positioned for the fall season.

In addition, we have significant in-season open to buy in ladies apparel and have added merchant headcount to increase market coverage in missy sportswear. So I do believe we are taking the right steps for this business. But let's be clear, as I mentioned on the last call, we don't expect to improve our ladies apparel penetration in 2019, particularly given the challenges we experienced in the spring season.

We are likely to see the penetration of ladies apparel go down in 2019 given the first half performance as well as the growth of other businesses. This is a rebuilding process, so we think ultimately it will enable us to take advantage of the opportunity in missy sportswear. We still believe Ladies Apparel overall is a long-term penetration opportunity for us.

I think the second quarter clearly demonstrated that we don't need to increase our ladies apparel penetration to achieve our sales objectives. We have significant sales opportunities this year and beyond in a number of under penetrated categories such as home and beauty, as well as those market share opportunities I mentioned in my prepared remarks, such as baby apparel, baby depot, toys and footwear. All these areas performed well in the second quarter as our off price model allows us to pivot quickly. So hopefully that's some good color for you.

Analyst
Matthew Boss

Absolutely. And then just a follow-up. Marc, can you walk us through the components of your 2Q earnings beat maybe versus internal plan drivers behind the operating margin raise to flat to up 10 basis points for the year. Just any additional color on the underlying components of the raised fiscal year guide, I think would be really helpful.

Executive
Marc Katz

Sure, Matt. Good morning. So in terms of the beat $0.08 came from lower tax rate due to the accounting for share based compensation. So we like to back it out and really look at what was our true operating beat, and our true operating beat was $0.13. So