burlington j p morgan global high yield leveraged finance conference
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[ C L I E N T N A M E ]
Presentation3
J.P. Morgan Global High Yield & Leveraged Finance Conference
February 2014
1
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.
2
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
3
Company Overview
Leading, nationally recognized retailer of high
quality, primarily branded apparel
National footprint with 521 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 approximately 4,000
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 LTM
3Q FY13 net sales of $4.4 billion (7.6% y-o-y
growth)1, and Adjusted EBITDA of $365 million
(19.7% y-o-y growth)1
Store Footprint (521 stores)
WA
6
OR
4
CA
59
NV
5
ID
2
MT
WY
UT
3
AZ
9 NM
2
TX
51
OK
3
CO
6 KS
6
NE
1
SD
ND
1 MN
5
IA
2
MO
7
WI
9
IL
28 IN
12
MI
17
OH
19
AR
2
LA
9
MS
2
AL
7
TN 6
FL
35
GA
16
SC
5
NC
10
VA
17 WV
KY 4
PA
27
NY
39
VT
ME
2 NH
2 MA
13 RI
4 CT
10 NJ
28 DE
2 MD
15
West
73 Stores
Midwest
111 Stores
Northeast
122 Stores
Southeast
136 Stores
Southwest
79 Stores PR
12
AK
2
1 Reflects 52-week year for FY 2012 Note: As of November 2, 2013
4
Women's Ready-to-Wear 23%
Accessories and Footwear
21%
Menswear 20%
Youth Apparel / Baby 20%
Coats 8%
Home 8%
Company Overview (cont.)
LTM 3Q FY13 Net Sales by Category ($4.4 billion)
Our core customer shops for her family as well as herself
5
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, 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
6
Large and Growing Off-Price Channel
$19.7
$21.3
$21.8
$15.0
$17.5
$20.0
$22.5
$25.0
2010 2011 2012
6.1%
5.4%
2.4%
0.5%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Off-Price US Retail Dep. Store/ Ntn'l Chain
2
1
Source: NPD Group
3 2
2010 – 2012 Off-Price Channel Sales ($B) 2010 – 2012 Sales CAGR (%)
1 FY 2010 – FY 2012 2 NPD Group 3 Euromonitor store-based retail
7
Recent Accomplishments
8
Transformation of Burlington
Before After
9
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
10
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
11
Refined Our Off-Price Model Through Improved Buying and Inventory Management (cont.)
(5.1)
(2.5)
(4.8)
(0.2)
0.7 1.2
5.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
FY 2008 FY 2009 FYE Shift¹ FY 2010 FY 2011 FY 2012 9 Mos. FY 2013
Annual Comparable Store Sales Growth (%)
1 Represents 35-week transition period from 5/30/2009 to 1/30/2010
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 YTD
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
(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
Quarterly Comparable Store Sales Growth (%)
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)
$551
$315
FY 2008 FY 2012
2.35x
3.57x
FY 2008 FY 2012
+12% in
9 Mos. FY 2013
vs. 9 Mos. FY
2012
17% reduction
from Oct’12
EOM to Oct’13
EOM
13
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
Introduce a new marketing campaign in Fall 2013
Expand Our Retail
Store Base
Enhance Operating
Margins
Optimize markdowns
Enhance purchasing power
Drive operating leverage
Open approximately 25 new stores per year
14
Recent Financial and Operating Highlights
IPO: Successfully commenced IPO on October 2, 2013. Offered 15.3 million primary
shares at $17.00
Comp Store Sales
Growth: Increased by 3.9% in 3Q FY13 and by 5.0% in 9 Mos. FY 2013
Net Sales Growth: Increased by 10.0% y/y in 3Q FY13 and by 9.9% in 9 Mos. FY 2013
Gross Margin: Increased by 40 bps y/y to 39.0% in 3Q FY13 and by 50 bps in 9 Mos. FY 2013
Adj. EBITDA: Increased 28.3% y/y in 3Q FY13 – represents an 80 bps improvement in Adj.
EBITDA margin. Increased 33.6% y/y, or 110 bps, in 9 Mos. FY 2013
Net New Stores: Opened 23 new stores and closed two existing stores since February 2, 2013,
bringing our total store count to 521 at the end of 3Q FY13
15
Financial Overview
16
($ in millions) FY 2010 FY 2011 FY 2012¹ 1Q FY13 2Q FY13 3Q FY13
9 Mos.
FY 2013
9 Mos.
FY 2012
Net New Stores Opened 18 17 23 3 0 18 21 20
Total Number of Stores 460 477 500 503 503 521 521 497
Comparable Store Sales Growth (0.2%) 0.7% 1.2% 3.4% 7.8% 3.9% 5.0% 1.8%
Net Sales $3,670 $3,854 $4,077 $1,065 $964 $1,065 $3,093 $2,814
% growth 4.2% 5.0% 5.8% 8.4% 11.5% 10.0% 9.9% 7.4%
Adjusted EBITDA $308 $315 $331 $80 $47 $62 $189 $141
% margin² 8.4% 8.2% 8.1% 7.5% 4.9% 5.9% 6.1% 5.0%
% growth 13.7% 2.2% 5.2% 22.8% 68.1% 28.3% 33.6% 1.1%
Comparable Store Inventory Turnover 2.9x 3.1x 3.6x - - - - -
Summary of Recent Financial Performance
1 52 weeks
2 Adjusted EBITDA margin for 1Q FY12, 2Q FY12, and 3Q FY12 were 6.6%, 3.2% and 5.0%, respectively
Recent Financial Performance
17
($ in millions) FY 2008 FY 2012¹ 9 Mos. FY 2012 9 Mos. FY 2013 Change
Comparable Store Sales Growth (5.1%) 1.2% 1.8% 5.0%
Net Sales Growth (vs. Prior Year) (0.3%) 5.8% 7.4% 9.9%
Gross Margin 38.3% 38.7% 37.5% 38.0%
Selling & Administrative Expense as % of
Net Sales 32.1% 31.7% 33.6% 32.9%
Adjusted EBITDA Margin 7.5% 8.1% 5.0% 6.1%
3-Year Adjusted EBITDA Growth CAGR (2.3%) 6.9% – –
Inventory Turnover 2.4x 3.2x – –
Off-Price Excellence: Financial Metrics
1 52 weeks
Financial Metrics
18
Before IPO 2-Nov-13 xLTM EBITDA[1,2]
ABL $15.0 $38.0
Term Loan 862.0 860.3
Other Debt / Cap Leases 23.6 23.4
Total Senior Secured Debt $900.6 $921.7 2.43x
Senior Unsecured Notes 450.0 450.0
Senior Unsecured HoldCo Notes[2] 343.7 122.2
Total Debt $1,694.3 $1,493.9 3.94x
Debt Profile
Debt Profile
1 LTM 3Q FY13 adjusted EBITDA of $379.0MM
2 $221.8MM of HoldCo Notes redeemed on November 7,2013, with proceeds of October IPO transaction xLTM EBITDA of 3.94x adjusted for
November redemption
19
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 Fourth Quarter Fiscal 2013 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%+
Fourth Quarter Comp Store Sales 2.0% - 3.0%
Adjusted EBITDA Margin Rate 30-40 bps
better than last
year
Net Interest Expense ~$128 million
Effective Tax Rate for Adjusted Net
Income
~41%
Pro forma Fully Diluted Shares
Outstanding
~74.8 million
shares
Fiscal 2013 Outlook
20
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 a vision for growth and 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 work and investment in our broad transformation are 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 24 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