Agenda
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[ C L I E N T N A M E ]
Presentation3
Investor Presentation:
September 2014
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 1934. Burlington’s forward-looking statements are subject to risks and uncertainties. Such statements 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 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 forward-looking 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, 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.
3
Investment Highlights
Leading destination for on-trend, branded merchandise at a great value
Vision for growth and accelerating momentum
Flexible off-price sourcing and merchandising model
Attractive store economics and white space
Proven management and merchant team with extensive retail experience
4
Company Overview
Leading, nationally recognized retailer of high quality, primarily branded apparel
National footprint with 523 stores, inclusive of its online store, in 44 states and Puerto Rico
Extensive selection of quality brands, on-trend, at great value
Feature merchandise from >4,500 vendors, with a focus on major nationally-recognized brands
Every Day Low Price (“EDLP”) model with savings up to 60-70% off department and specialty store regular prices
Consistent operating performance, generating FY13 net sales of $4.4 billion (7.2% y-o-y growth)1, Adjusted EBITDA of $384 million (15.6% y-o-y growth)1,
and Adjusted Net Income of $70 million (17.9% y-o-y growth)1
National Store Footprint
WA6
OR4
CA60
NV5
ID2
MT
WY
UT3
AZ9 NM
2
TX51
OK3
CO6 KS
6
NE1
SD
ND1 MN
5
IA2
MO6
WI9
IL28
IN12
MI17
OH19
AR2
LA9
MS2
AL7
TN 6
FL35
GA16
SC5
NC10
VA17
WVKY 4
PA28
NY34
VT
ME2 NH
2MA13
RI4CT
10NJ28
DE2MD
16
West74 Stores
Midwest110 Stores
Northeast123 Stores
Southeast137 Stores
Southwest79 Stores PR
12
AK2
Note: As of August 2, 20141 Reflects 52 weeks ended February 1, 2014 compared with the 53 weeks ended February 2, 2013
5
Women's Ready-to-Wear Apparel
24%
Accessories and Footwear 21%
Menswear19%
Youth Apparel / Baby 20%
Home8%
Coats8%
Company Overview (cont.)
FY13 Net Sales by Category ($4.4 billion)
Our core customer shops for her family as well as herself
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Provides customers the value inherent in true EDLP, but with much more product,category depth and variety than our off-price competitors
Differentiated Off-Price Business Model
Moderate Department Store
50,000 - 80,000 sq. ft.
Men’s, Ladies and Children’s Apparel, Baby Products, Family
Footwear, Accessories, Linens and Home Décor
Premium and moderate national brands
EDLP / Off-Price
Substantial in-season liquidity to capitalize immediately on trends and opportunistic
buys
Younger (~39 years old)
~$64K avg. income
Store Size
Product Breadth
Brands
Pricing Strategy
Sourcing / Vendors
Customers
Broad apparel range with more depth in available items
Moderate brands, private label
Highly promotional
Pre-season sourcing strategy, limited flexibility, margin guarantees / promotional
allowances
Older (~45 years old)
~$78K avg. income
Typically > or =
80,000 sq. ft.30,000 sq. ft.
Similar product categories to Burlington but less depth within each category (smaller
stores)
Premium and moderate national brands
EDLP / Off-Price
More reliance on packaway merchandise (Ross) and pre-season cuttings (TJX)
Younger (~39 years old)
~$77K avg. income
Other Large Off-Price Retailers
7
Large and Growing Off-Price Channel
2010 2011 2012 2013$15.0
$17.5
$20.0
$22.5
$25.0
$19.5
$21.1
$21.8
$22.5CAGR: 5.0%
Off-Price US Retail Dep. Store/Ntn'l Chain
(1.0%)
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
6.2%
5.0%
2.0%
(0.2%)
21
*The NPD Group, Inc. / Consumer Tracking Service; Apparel, Feb ‘10 to Jan ‘14
22
2010 – 2013 Off-Price Channel Apparel Sales ($bn)* 2010 – 2013 Apparel Sales CAGR (%)
1 FY 2010 – FY 2013 Apparel Sales2 The NPD Group, Inc. / Consumer Tracking Service; Apparel, Feb ‘10 to Jan ‘14
8
Recent Accomplishments
9
Transformation of Burlington Stores
Before After
10
Significant Investments in People, Processes and Systems to Transform Our Business
Since hiring Tom Kingsbury as President and CEO in December 2008, we have:
Assembled a talented, experienced management and merchandising team
Refined our off-price model through improved buying and inventory management
Invested in technology and systems to drive growth and improve efficiency
Built a data-driven testing culture to ensure successful rollout of new initiatives
Transformed the marketing model and sharpened focus on our core female customer
Introduced program to improve customer experience and store operations
Refreshed existing and expanded new store base
Enhanced real estate underwriting and new store selection process
We believe that we are in the early stages of realizing the return on these investments
11
Refined Our Off-Price Model Through Improved Buying and Inventory Management
Deliver VALUE through
Fashion, Quality, Brand and Price
(FQBP)
Minimal pre-season purchasing –
Staying liquid
In-season closeouts
Flexible floor sets –
Allocate square footage and
buying dollars to strongest categories
Rejuvenated pack and hold program –
Seasonal deals from highly
desirable national brands
Shallow and broad assortments –
More selection
More categories
Off-price excellence and comparable store sales growth from better buying
12
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)
FY 2008 FY 2013
$551 (397 stores)
$260 (521 stores)
FY 2008 FY 2013
2.35x
3.97x 69% Improvement 53% Reduction
+22% in Q2 2014 vs. Q2
2013
13
Invested in Technology and Systems to Drive Growth and Improve Efficiency
Right product to the right stores at the right time at the right price
Markdown optimization –
Right price
Planning and forecasting –
Right product
Business intelligence and product attribution –
Metrics and analytics
Allocation –
Right stores at the
right time
Off-price excellence and comparable store sales growth from better selling
14
Introduced Program to Improve Customer Experience and 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
Off-Price Excellence and Comp Store Sales Growth from Store Operations
15
Recent Initiatives Have Resulted in Improved Performance
FY 2008 FY 2009 FYE Shift¹ FY 2010 FY 2011 FY 2012 FY 2013² Q1 2014 Q2 2014(6.0)
(4.0)
(2.0)
0.0
2.0
4.0
6.0
(5.1)
(2.5)
(4.8)
(0.2)0.7
1.2
4.7
2.7
4.7
Annual Comparable Store Sales Growth (%)
Tom takes over as CEO
Build merchant team
Ongoing comp improvement
Define buying model
FY 2008 FY 2009 FYE Shift FY 2010 FY 2011 FY 2012 FY 2013 FY 20141Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q2 4Q2 1Q 2Q 3Q 4Q
(2.0) (8.0) (6.0) (2.0) 0.2 (2.1) (4.3) (2.3) 3.3 0.3 (5.6) 1.2 0.5 4.0 1.5 (1.7) 0.6 2.9 2.1 (0.3) 3.4 7.8 3.9 4.0 2.7 4.7
Quarterly Comparable Store Sales Growth (%)
1 Represents 35-week transition period from 5/30/2009 to 1/30/20102 Including Hurricane Sandy impacted stores, comps were 4.3% for 3Q13, 4.3% for 4Q13 and 4.9% for FY 2013
16
Growth Strategies
17
Growth Strategies
Drive Comparable Store Sales Growth
Continue to enhance execution of the off-price model
Improve merchandise localization
Increase sales of Women’s Apparel, Shoes and Accessories
Grow our Home business
Expand Our Retail Store Base
Enhance Operating Margins
Optimize markdowns
Enhance purchasing power
Drive operating leverage
Open approximately 25 new stores per year
18
Financial Overview
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Fiscal Q2 2014 Financial and Operating Highlights
Comp Store Sales Growth:
Increased by 4.7% following a 7.8% increase in Q2’13
Increased by 3.6% following a 5.5% increase in 1H-13
Net Sales Growth: Increased by 8.3% Increased 7.1%
Adj. EBITDA: Increased by 23.8% – a 70 bps improvement in Adj. EBITDA margin
Increased by 18.9% – a 70 bps improvement in Adj. EBITDA margin
Adj. Net Income (Loss):
Improved $12.5 million to $(0.9) million from $(13.6) million in Q2’13
Improved $25.1 million to $17.7 million from a loss of $(7.4) million in 1H-13
Adj. Earnings (Loss) Per Share:
Improved to $(0.01) per share from $(0.19) per share
Improved to $0.23 per share from $(0.10) per share
Comp Store Inventory Turnover:
Increased by 22%
Note: Reflects 13 and 26 weeks ended August 2, 2014 compared with the 13 and 26 weeks ended August 3, 2013
Q2 2014 results*
*For additional detail regarding Burlington Stores Q2 2014 results and forward looking guidance, please find the full earnings release, a webcast of our earnings call, and our 10Q filing with the SEC on the IR website – www.burlingtoninvestors.com
1H 2014 results*
20
Debt Profile
Debt Profile
1 TTM adjusted EBITDA of $407.6mm
($ in millions) Before IPO (1-Oct-13) 2-Aug-14 xLTM EBITDA1
ABL $15 $0
Term Loan 862 826
Cap Leases 23 28
Total Senior Secured Debt $900 $854 2.10x
Senior Unsecured Notes 450 450
Senior Unsecured HoldCo Notes 344 69
Total Debt $1,694 $1,373 3.37x
21
Long-Term Financial Objectives
These objectives are forward-looking, are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results will vary and those variations may be material. For discussion of some of the important factors that could cause these variations, please consult the “Risk Factors” section of the preliminary prospectus. Nothing in this presentation should be regarded as a representation by any person that these objectives will be achieved and the Company undertakes no duty to update its objectives
Long-Term Financial Objectives* Third Quarter Fiscal 2014 Outlook*
Annual Store Growth 25 per year
Annual Comparable Store Sales Growth 2.0% - 3.0%
Annual Net Sales Growth 6.0% - 6.5%
Annual Adjusted EBITDA Margin Expansion
10 – 20 bps
Annual Adjusted Net Income Growth 20%+
Net Sales 6.4% - 7.4%
Comp Store Sales 3.0% - 4.0%
Adjusted EPS (using 75.8m diluted share count) $0.09 - $0.12
Net Sales 6.5% - 7.2%
Comp Store Sales ~3.0%
Adjusted EBITDA Margin Rate 20-30 bps better than last year
Net Interest Expense ~$85 million
Effective Tax Rate for Adjusted Net Income
~40%
Adjusted EPS (using 75.7m diluted share count) $1.52 - $1.58
Fiscal 2014 Outlook*
*For additional detail regarding Burlington Stores Q2 2014 results and forward looking guidance, please find the full earnings release, a webcast of our earnings call, and our 10Q filing with the SEC on the IR website – www.burlingtoninvestors.com
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Investment Highlights
Leading Destination for On-Trend, Branded Merchandise at a Great Value
Broad merchandising assortment provides customers with a wide range of choices
Limited number of units per style fosters a sense of scarcity and urgency, and frequent arrival of new merchandise encourages customers to return to stores regularly
Savings to customer of up to 60-70% off department and specialty store regular prices
EDLP approach eliminates the need to wait for sales, use coupons or participate in loyalty programs to realize savings
Vision for Growth, and Accelerating Momentum
We have clear strategies which pave the way for growth in comp sales, expansion of our retail store base, and leverage for our operating margins
Much of the investment in our broad transformation is behind us
Our recent results demonstrate the growing momentum in our business
Flexible Off-Price Sourcing and Merchandising Model
Ability to buy more in-season product to capitalize on strong performing categories
Preserves option to take advantage of highly desirable opportunistic product in the marketplace
Ability to allocate additional square footage to the strongest performing categories and items
Attractive Store Economics & White Space
New stores have an average payback period of less than three years
Over 98% 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
Proven Management and Merchant Team with Extensive Retail Experience
Median experience of 25 years in the retail industry, median tenure of five years with Burlington
Complementary experiences across a broad range of disciplines, including at other leading off-price retailers
23
Appendix
24
Adjusted Net Income and Adjusted EBITDA Reconciliation
Historical Adjusted Net Income Reconciliation
Historical Adjusted EBITDA Reconciliation
1 53 weeks
($ in millions) FY121 FY13 Q2 13 Q2 14
Net Income (Loss) $25.3 $16.2 ($25.0) ($6.5)
Net Favorable Lease Amortization 31.3 29.3 6.8 6.5
Costs Related to Debt Amendments & Offering 4.2 23.0 2.6 0.9
Loss on Extinguishment of Debt 2.2 16.1 0.6 0.0
Impairment Charges 11.5 3.2 0.1 0.8
Advisory Fees 4.3 2.9 1.1 0.1
Stock Option Modification Expense 0.0 10.4 7.3 1.0
Income Tax Expense (Benefit) (19.2) (30.9) (7.1) (3.7)
Adjusted Net Income (Loss) $59.6 $70.2 ($13.6) ($0.9)
($ in millions) FY121 FY13 Q2 13 Q2 14
Net Income (Loss) $25.3 $16.2 ($25.0) ($6.5)
Interest Expense, Net 113.8 127.5 33.2 25.5
Loss on Debt Extinguishment 2.2 16.1 0.6 0.0
Income Tax Expense (Benefit) 3.9 16.2 (14.2) (4.3)
Depreciation and Amortization 166.8 168.2 41.2 40.6
Impairment Charges 11.5 3.2 0.1 0.8
Advisory Fees 4.3 2.9 1.1 0.1
Stock Option Modification Expense 0.0 10.4 7.3 1.0
Costs Related to Debt Amendments & Offering 4.2 23.0 2.6 0.9
Adjusted EBITDA $332.0 $383.7 $46.9 $58.1
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