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
Executive
Marc Katz

we start with sales, the high end of our comp sales guide was the 2%, we came in at a 3.8%. So the gross margin impact on the higher sales drove about $0.08. And then it was nice after we took our June fiscal inventories, we really picked up another $0.01 from some lower shortage which was nice to see.

In terms of the rest of it, we really came from lower product sourcing costs and in SG&A, really made up the rest. We were really pleased to be able to get a 30 basis points of leverage on that 3.8% comp.

As far as our full year guidance, Matt, before, I mean the quarter, our high end was at $7.01. We beat by $0.21, so, like we'd like to do it. So it's a full pass through, so a year now at the high end is $7.22. If you think about the sales supporting that, spring came in at 1.9% comp and we've got to fall at 2% to 3%. So that results in -- within our full year comp guide, 2% at the low end, 2.5% at the high end.

As far as I guess the EBIT components, you can understand how it plays out. We're still expecting for the year, merch margin to be up 40 basis points. Freight as we mentioned on the call, a 20 basis point headwind. Product sourcing, also a 10 basis point headwind. And that should result in loaded margin of up 10 basis points.

A little different here on the other SG&A line, it's the low end to sales other SG&A, a 5 basis point headwind and we're now saying at the high end of that 2.5% comp, we should be flat. And then really we took the other lines of the P&L depreciation and the other revenue, other income line. You put those together, it's the same as SG&A, minus 5 at the low end, flat on the high end. And then that's going to result hopefully in our EBIT flat up 10.

Analyst
Matthew Boss

Congrats again. Best of luck.

Executive
Thomas A. Kingsbury

Thank you.

Executive
Marc Katz

Thanks Matt.

Operator
Operator

Thank you. And our next question comes from Irwin Boruchow with Wells Fargo. Your line is now open.

Analyst
Irwin Boruchow

Hey, good morning, everyone, Tom, Marc, David and congrats on a great quarter. And Tom, big, well deserved, congratulations to you for the hardwork and success at Burlington over the years.

Executive
Thomas A. Kingsbury

Well, thanks Irwin.

Analyst
Irwin Boruchow

And also, Tom, I guess first question for you, I want to talk about the inventory, so I guess the inventory levels came in a little better than expected. Can you just maybe help me understand how you're able to drive the inventory down while you also delivered such a strong comp in the quarter?

Executive
Thomas A. Kingsbury

Yes. With our comp store inventory down 7%, that was a bit better than our expectations. That helped drive our total inventory levels below last year, which obviously is a significant improvement from where we were at the end of the