Burlington Stores, Inc. (NYSE:BURL) Q2 2020 Earnings Conference Call - Final Transcript
Aug 27, 2020 • 08:30 am ET
this forum, is that I know that there are several investors listening to this call, who share our passion to drive positive change on these very important issues. My purpose is to make you aware of our commitment and also to invite any of you who are interested in hearing more, about our equity, inclusion and diversity initiatives to reach out to me, John or David.
Now, I would like to turn to our business update. We are going to structure this morning's discussion as follows. First, I will begin with an update on the second quarter. Second, I will talk about how we are thinking about the third quarter. And thirdly, I will offer some commentary on the longer-term outlook. I will then hand the call over to John to provide more financial details. After that, we will be happy to respond to any questions that you may have.
Okay, let's start with the second quarter. There were certainly some highs and some lows in the second quarter. We began we're opening stores in the middle of May and by the end of June, we had reopened all, but a handful of our stores. Following the reopening of our stores, we experienced an exceptionally strong sales trend, driven by pent-up demand and by our own great clearance values. This strong sales trend continued into the second half of June, to then sell off dramatically, as we struggled to replenish the depleted inventory levels in our stores.
I realize that by now, this is a familiar narrative. Our off-price peers have described a similar pattern. But I would say that we probably experienced more significant highs and lows than they did. Our trajectory was more V-shaped if you like.
There were several reasons for this. We started off with leaner inventories in our stores. We were more aggressive in clearing aged merchandise, and we had lower pack and hold inventory to pull back on. Given all these factors, it might be helpful to provide some additional color on how the quarter unfolded month-by-month. When we firstly opened stores in May, we saw very quickly, the traffic and sales levels were well ahead of our expectations. So we moved very fast to fund our buyers and to go back into the marketplace. We were probably one of the first retailers to go back into the markets to buy goods. At that point, we saw tremendous availability across merchandise categories. Our merchants were able to buy merchandise at really terrific values. In May and June, we wrote hundreds of millions of dollars of orders. At that point in the quarter, we were flying. We were exactly where we wanted to be. Strong sales trends, a lot of liquidity, and a huge availability of merchandise. In normal times, as an off-price retailer, those are all the things that you want. The trouble of course, is that these are not normal times.
Although we had written the orders and have bought the merchandise, so