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What changed in Burlington Stores, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Burlington Stores, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+270 added−318 removedSource: 10-K (2023-03-13) vs 10-K (2022-03-16)

Top changes in Burlington Stores, Inc.'s 2023 10-K

270 paragraphs added · 318 removed · 227 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe believe that, as we continue to reduce our comparable store inventory, we will be able to reduce the square footage of our stores while continuing to maintain our broad assortment. 2 Our store base is geographically diversified with stores located in 45 states and Puerto Rico as set forth below: State Number of Stores State Number of Stores State Number of Stores AK 2 LA 7 NY 49 AL 7 MA 20 OH 28 AR 6 MD 19 OK 8 AZ 17 ME 3 OR 5 CA 88 MI 22 PA 40 CO 13 MN 11 PR 12 CT 14 MO 11 RI 5 DE 3 MS 3 SC 11 FL 80 NC 25 SD 1 GA 26 ND 1 TN 14 IA 4 NE 4 TX 91 ID 2 NH 4 UT 9 IL 41 NJ 41 VA 23 IN 16 NM 4 WA 15 KS 5 NV 12 WI 10 KY 8 Store Expansion and Real Estate Strategy We continue to explore expansion opportunities both within our current market areas and in other regions.
Biggest changeOur store base is geographically diversified with stores located in 46 states and Puerto Rico as set forth below: State Number of Stores State Number of Stores State Number of Stores AK 2 LA 7 NY 57 AL 10 MA 20 OH 30 AR 6 MD 21 OK 8 AZ 20 ME 3 OR 7 CA 101 MI 25 PA 41 CO 14 MN 13 PR 15 CT 15 MO 11 RI 6 DE 3 MS 2 SC 12 FL 93 NC 26 SD 1 GA 30 ND 1 TN 15 IA 4 NE 4 TX 100 ID 3 NH 4 UT 9 IL 42 NJ 44 VA 26 IN 18 NM 5 WA 16 KS 5 NV 13 WI 10 KY 8 WV 1 Store Expansion and Real Estate Strategy We continue to explore expansion opportunities both within our current market areas and in other regions.
Any updates to the list of social media channels we may use to communicate material information will be posted on the Investor Relations page of our website at www.burlingtoninvestors.com . The information contained on, or accessible through, our website and these social media channels is not part of this Annual Report and is therefore not incorporated by reference.
Any updates to the list of social media channels we may use to communicate material information will be posted on the Investor Relations page of our website at www.burlingtoninvestors.com . 6 The information contained on, or accessible through, our website and these social media channels is not part of this Annual Report and is therefore not incorporated by reference.
Information that we post on our website or on social media channels could be deemed material; therefore, we encourage investors, the media, our customers, business partners and others interested in the Company to review the information posted on our website, as well 7 as the following social media channels: Facebook ( www.facebook.com/BurlingtonStores ) and Twitter ( www.twitter.com/burlington ).
Information that we post on our website or on social media channels could be deemed material; therefore, we encourage investors, the media, our customers, business partners and others interested in the Company to review the information posted on our website, as well as the following social media channels: Facebook ( www.facebook.com/BurlingtonStores ) and Twitter ( www.twitter.com/burlington ).
Build Teams & Partnerships. 5 • We Believe Everyone Matters : We listen to the individual viewpoints of our diverse workforce through open and honest communication. • We Win Together : We recognize those who make a difference.
Build Teams & Partnerships. • We Believe Everyone Matters : We listen to the individual viewpoints of our diverse workforce through open and honest communication. • We Win Together : We recognize those who make a difference.
These initiatives include, but are not limited to, those discussed under “Ongoing Initiatives for Fiscal 2022” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations. As used in this Annual Report, the terms “Company,” “we,” “us,” or “our” refer to Burlington Stores, Inc. and all of its subsidiaries.
These initiatives include, but are not limited to, those discussed under “Ongoing Initiatives for Fiscal 2023” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations. As used in this Annual Report, the terms “Company,” “we,” “us,” or “our” refer to Burlington Stores, Inc. and all of its subsidiaries.
We appeal to value seeking and brand conscious customers who understand the off-price model and love the thrill of the hunt. 6 Marketing and Advertising We use a mix of broad-based and targeted marketing strategies to efficiently deliver the right message to our audience at the right time.
We appeal to value seeking and brand conscious customers who understand the off-price model and love the thrill of the hunt. 5 Marketing and Advertising We use a mix of broad-based and targeted marketing strategies to efficiently deliver the right message to our audience at the right time.
The remaining 1% of merchandise units are drop shipped by our vendors directly to our stores. Our two east coast distribution centers are located in Edgewater Park, New Jersey and Burlington, New Jersey. Our three west coast distribution centers are located in San Bernardino, California, Redlands, California, and Riverside, California.
The remaining merchandise units are drop shipped by our vendors directly to our stores. Our two east coast distribution centers are located in Edgewater Park, New Jersey and Burlington, New Jersey. Our three west coast distribution centers are located in San Bernardino, California, Redlands, California, and Riverside, California.
We continue to improve the quality of our brand portfolio, driven by the growth of our merchandising team, wide breadth of our product categories, and a vendor community increasingly committed to grow with Burlington. We carry many different brands, none of which accounted for more than 5% of our net purchases during Fiscal 2021, Fiscal 2020 or Fiscal 2019.
We continue to improve the quality of our brand portfolio, driven by the growth of our merchandising team, wide breadth of our product categories, and a vendor community increasingly committed to grow with Burlington. We carry many different brands, none of which accounted for more than 6% of our net purchases during Fiscal 2022, Fiscal 2021 or Fiscal 2020.
Fiscal Ye ar End We define our fiscal year as the 52- or 53-week period ending on the Saturday closest to January 31. This Annual Report covers the 52-week fiscal year ended January 29, 2022 (Fiscal 2021). The fiscal years ended January 30, 2021 (Fiscal 2020) and February 1, 2020 (Fiscal 2019) also consisted of 52 weeks.
Fiscal Ye ar End We define our fiscal year as the 52- or 53-week period ending on the Saturday closest to January 31. This Annual Report covers the 52-week fiscal year ended January 28, 2023 (Fiscal 2022). The fiscal years ended January 29, 2022 (Fiscal 2021) and January 30, 2021 (Fiscal 2020) also consisted of 52 weeks.
Mill St) 2006 758,000 Leased Redlands, California (Pioneer Ave) 2014 800,000 Leased Riverside, California (Cactus Ave) 2021 900,000 Leased Warehousing Facilities: Burlington, New Jersey (Route 130 North)(a) 1987 402,000 Owned Burlington, New Jersey (Richards Run) 2017 511,000 Leased Burlington, New Jersey (Daniels Way) 2020 208,000 Leased Redlands, California (River Bluff Ave) 2017 543,000 Leased San Bernardino, California (Waterman Ave) 2020 394,000 Leased (a) Inclusive of corporate offices.
Mill St) 2006 758,000 Leased Redlands, California (Pioneer Ave) 2014 800,000 Leased Riverside, California (Cactus Ave) 2021 900,000 Leased Warehousing Facilities: Burlington, New Jersey (Route 130 North)(a) 1987 525,000 Owned Burlington, New Jersey (Richards Run) 2017 511,000 Leased Burlington, New Jersey (Daniels Way) (c) 2020 208,000 Leased Redlands, California (River Bluff Ave) 2017 543,000 Leased Riverside, California (Oleander Ave) (d) 2023 410,000 Leased San Bernardino, California (Waterman Ave) 2020 394,000 Leased (a) Inclusive of corporate offices.
Item 1. Business Overview We are a nationally recognized off-price retailer of high-quality, branded merchandise at everyday low prices. We opened our first store in Burlington, New Jersey in 1972, selling primarily coats and outerwear. Since then, we have expanded our store base to 840 stores as of January 29, 2022, in 45 states and Puerto Rico.
Item 1. Business Overview We are a nationally recognized off-price retailer of high-quality, branded merchandise at everyday low prices. We opened our first store in Burlington, New Jersey in 1972, selling primarily coats and outerwear. Since then, we have expanded our store base to 927 stores as of January 28, 2023, in 46 states and Puerto Rico.
These five distribution centers occupy an aggregate of 3,784,000 square feet, and each includes processing, shipping and storage capabilities. In addition, we entered into a lease for an additional distribution center in Logan, New Jersey occupying approximately 1,029,000 square feet.
These five distribution centers occupy an aggregate of 4,106,000 square feet, and each includes processing, shipping and storage capabilities. In addition, we entered into a lease during Fiscal 2021 for an additional distribution center in Logan, New Jersey occupying approximately 1,029,000 square feet.
Our goal for our stores is to reflect clean, organized merchandise presentations that highlight the brands, value and diversity of selection within our assortments. Our Off-Price Sourcing and Merchandising Model We believe that our ability to chase sales within the off-price model enables us to provide our customers with products that are nationally branded, fashionable, high quality and priced right.
Our goal is to facilitate a “treasure-hunt” experience for our customers with clean, organized merchandise presentations that highlight the brands, value and diversity of selection within our frequently refreshed assortments. 3 Our Off-Price Sourcing and Merchandising Model We believe that our ability to chase sales within the off-price model enables us to provide our customers with products that are nationally branded, fashionable, high quality and priced right.
(b) Stores opened during Fiscal 2021, Fiscal 2020 and Fiscal 2019 had an average size of approximately 31,000, 40,000 and 42,000 square feet, respectively. The total gross square footage of all stores as of the end of Fiscal 2021, Fiscal 2020, and Fiscal 2019 were 49.6 million, 48.0 million, and 47.4 million, respectively.
(b) Stores opened during Fiscal 2022, Fiscal 2021 and Fiscal 2020 had an average size of approximately 28,000, 31,000 and 40,000 square feet, respectively. 2 The total gross square footage of all stores as of the end of Fiscal 2022, Fiscal 2021, and Fiscal 2020 were 50.7 million, 49.6 million, and 48.0 million, respectively.
Our Marks include, but are not limited to, “Burlington Stores,” “BCF,” “Burlington,” “Burlington Coat Factory,” “Cohoes,” “MJM Designer Shoes,” “B” and “Baby Depot.” We consider these Marks and the accompanying name recognition to be valuable to our business. We believe that our rights to these properties are adequately protected.
Our Marks include, but are not limited to, “Burlington Stores,” “BCF,” “Burlington,” “Burlington Coat Factory,” “Cohoes,” “B” and “Baby Depot.” We consider these Marks and the accompanying name recognition to be valuable to our business. We believe that our rights to these properties are adequately protected. Our rights in these Marks endure for as long as they are used.
Fiscal 2021 Fiscal 2020 Fiscal 2019 Stores (beginning of period) 761 727 675 Stores opened(a)(b) 84 45 60 Stores closed(a) (5 ) (11 ) (8 ) Stores (end of period) 840 761 727 (a) Exclusive of relocations.
Fiscal 2022 Fiscal 2021 Fiscal 2020 Stores (beginning of period) 840 761 727 Stores opened(a)(b) 91 84 45 Stores closed(a) (4 ) (5 ) (11 ) Stores (end of period) 927 840 761 (a) Exclusive of relocations.
This building is expected to be operational for storage during Fiscal 2022, and for processing and shipping during Fiscal 2023. 3 We also operate warehousing facilities to support our distribution centers. The east coast has three supporting warehouses located in Burlington, New Jersey. The west coast has two supporting warehouses, located in Redlands, California and San Bernardino, California.
This building was used for storage and basic manual processing during Fiscal 2022, and is expected to be fully operational during Fiscal 2024. We also operate warehousing facilities to support our distribution centers. The east coast has three supporting warehouses located in Burlington, New Jersey.
These five warehousing facilities occupy an aggregate of 2,058,000 square feet and primarily serve as storage facilities. Calendar Year Operational Size (sq. feet) Leased or Owned Primary Distribution Centers: Edgewater Park, New Jersey (Route 130 South)(a) 2004 648,000 Owned Burlington, New Jersey (Daniels Way) 2014 678,000 Leased Logan, New Jersey (b) 2022 1,029,000 Leased San Bernardino, California (E.
Calendar Year Operational Size (sq. feet) Leased or Owned Primary Distribution Centers: Edgewater Park, New Jersey (Route 130 South)(a) 2004 648,000 Owned Burlington, New Jersey (Daniels Way) 2014 1,000,000 Leased Logan, New Jersey (b) 2022 1,029,000 Leased San Bernardino, California (E.
In addition, our Nominating and Corporate Governance Committee provides oversight of the social, political and environmental trends, issues and concerns, including legislative and regulatory developments, that could significantly affect our public affairs. Associates As of January 29, 2022, we employed 62,395 associates, including 47,592 part-time and seasonal associates.
In addition, our Nominating and Corporate Governance Committee reviews environmental, social and governance (“ESG”) trends, issues and concerns, including legislative and regulatory developments, that could significantly affect our public affairs. Our Board of Directors provides oversight of ESG matters. Associates As of January 28, 2023, we employed 61,166 associates, including 46,297 part-time and seasonal associates.
Of this total square footage, the area that represents the total selling square footage for all stores as of the end of Fiscal 2021, Fiscal 2020, and Fiscal 2019 were 30.0 million, 32.3 million, and 32.0 million respectively.
Of this total square footage, the area that represents the total selling square footage for all stores as of the end of Fiscal 2022, Fiscal 2021, and Fiscal 2020 were 31.0 million, 30.0 million, and 32.3 million respectively. Distribution and Warehousing We have five distribution centers that shipped more than 99% of merchandise units to our stores in Fiscal 2022.
The SEC maintains a website ( www.sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. You can access financial and other information about us in the Investor Relations page of our website at www.burlingtoninvestors.com .
You can access financial and other information about us in the Investor Relations page of our website at www.burlingtoninvestors.com .
(b) The lease for this distribution center was signed during Fiscal 2021 and is expected to become operational during Fiscal 2022 for storage and Fiscal 2023 for processing and shipping.
(b) This distribution center was used for storage and basic manual processing during Fiscal 2022. The building is expected to be fully operational during Fiscal 2024. (c) The lease for this warehousing facility is expected to terminate during Fiscal 2023. (d) This warehousing facility is expected to become operational during Fiscal 2023.
The DEI team will be further supported by an enhanced governance structure consisting of additional DEI counsels to support corporate, merchandising, distribution centers, and field/store operations, along with expanded Associate Resource Groups, which will give associates more ways to participate in DEI efforts as members of an associate-led community.
Our DEI strategy consists of five pillars that support all areas of the business: • Leadership & Workforce Diversity • Inclusive & Equitable Environments for Associates and Customers • Enhanced Education & Awareness • Product, Vendor & Supplier Diversity. • C ommunity Advocacy Burlington has a DEI team that is further supported by an enhanced governance structure consisting of additional DEI counsels to support corporate, merchandising, distribution centers, and field/store operations, along with expanded Associate Resource Groups, which gives associates more ways to participate in DEI efforts as members of an associate-led community.
Buyers spend time interacting face-to-face with new and existing vendors and on continuously evaluating trends in the market to which we believe our customers would respond positively.
Buyers spend time interacting face-to-face with new and existing vendors and on continuously evaluating trends in the market to which we believe our customers would respond positively. Our buyers use a merchant scorecard that rates products across four key attributes—fashion, quality, brand and price—to help formalize a framework for buying decisions.
Today, Burlington.com highlights our great merchandise values, while encouraging customers to discover fantastic deals on the brands and products they love - from stylish apparel to everything they need and want for their entire family and home. Merchandise sold directly from our website represented approximately 0.5% of our total sales in Fiscal 2019.
Burlington.com highlights our great merchandise values, while encouraging customers to visit our stores to discover fantastic deals on the brands and products they love - from stylish apparel to everything they need and want for their entire family and home. Competition The U.S. retail apparel and home furnishings markets are highly fragmented and competitive.
Based on our smaller store prototype, as well as the opportunity presented by accelerating retail disruption and industry wide store closures, we have increased our long-term store target to 2,000 stores, up from our previous store target of 1,000 stores, which was established in connection with our IPO in 2013.
Our store base has grown from 13 stores in 1980 to 927 stores as of January 28, 2023. Based on our smaller store prototype, as well as the opportunity presented by accelerating retail disruption and industry wide store closures, our long-term store target remains at 2,000 stores.
Our strategy to chase the sales trend allows us the flexibility to purchase less pre-season merchandise with the balance purchased in-season and opportunistically. It also provides us with the flexibility to shift purchases between suppliers and categories. This enables us to obtain better terms with our suppliers, which we expect to help offset any rising costs of goods.
Our broad selection provides a wide range of apparel, accessories and furnishings for all ages. Our strategy to chase the sales trend allows us the flexibility to purchase less pre-season merchandise with the balance purchased in-season and opportunistically. It also provides us with the flexibility to shift purchases between suppliers and categories.
Our staffing requirements fluctuate during the year as a result of the seasonality of our business. We hire additional associates and increase the hours of part-time associates during seasonal peak selling periods. As of January 29, 2022, associates at one of our stores were subject to a collective bargaining agreement.
As of January 28, 2023, 74% of our associates self-identified as female and 77% of our associates self-identified as having a racial or ethnic minority background. 4 Our staffing requirements fluctuate during the year as a result of the seasonality of our business. We hire additional associates and increase the hours of part-time associates during seasonal peak selling periods.
Our Stores Over 99% of our net sales are derived from stores we operate as Burlington Stores. We believe that our customers are attracted to our stores principally by the availability of a large assortment of first-quality, current, brand-name merchandise at everyday low prices.
We believe that our customers are attracted to our stores principally by the availability of a large assortment of first-quality, current, brand-name merchandise at everyday low prices. Burlington Stores offer customers a complete line of merchandise, including: women’s ready-to-wear apparel, menswear, youth apparel, baby, beauty, footwear, accessories, home, toys, gifts and coats.
Our rights in these Marks endure for as long as they are used. Available Information We are subject to the reporting requirements of the Exchange Act. Therefore, we file reports, proxy statements and other information with the Securities and Exchange Commission (SEC).
Available Information We are subject to the reporting requirements of the Exchange Act. Therefore, we file reports, proxy statements and other information with the Securities and Exchange Commission (SEC). The SEC maintains a website ( www.sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.
Corporate Culture We recognize the critical importance of talent and culture to our success.
As of January 28, 2023, associates at one of our stores were subject to a collective bargaining agreement. Corporate Culture We recognize the critical importance of talent and culture to our success.
Sales percentage by major product category over the last three fiscal years was as follows: Category Fiscal 2021 Fiscal 2020 Fiscal 2019 Ladies apparel 23 % 20 % 21 % Accessories and shoes 23 % 24 % 26 % Home 20 % 21 % 17 % Mens apparel 16 % 16 % 17 % Kids apparel and baby 14 % 15 % 15 % Outerwear 4 % 4 % 4 % Certain classifications have been updated in the above table compared to prior years in order to conform to the manner in which we manage our operations.
Sales percentage by major product category over the last three fiscal years was as follows: Category Fiscal 2022 Fiscal 2021 Fiscal 2020 Ladies apparel 22 % 23 % 20 % Accessories and shoes 24 % 23 % 24 % Home 21 % 20 % 21 % Mens apparel 17 % 16 % 16 % Kids apparel and baby 12 % 14 % 15 % Outerwear 4 % 4 % 4 % Human Capital Resources Attracting, developing and retaining top talent is key to our growth, and our success depends on cultivating an engaged and motivated workforce.
Diversity, Equity and Inclusion As Burlington continues to grow, innovate, and thrive, we are integrating diversity, equity, and inclusion (DEI) best practices across the entire spectrum of business functions. In 2021, Burlington developed a new DEI strategy and governance framework to support this effort.
The survey results help us understand the associate experience, evaluate our performance, identify our strengths and pinpoint opportunities for improvement. Diversity, Equity and Inclusion As Burlington continues to grow, innovate, and thrive, we are integrating diversity, equity, and inclusion ("DEI") best practices across the entire spectrum of business functions.
Our buyers use a merchant scorecard that rates products across four key attributes—fashion, quality, brand and price—to help formalize a framework for buying decisions. 4 Our merchandising model allows us to provide our customers with a wide breadth of product categories.
Our merchandising model allows us to provide our customers with a wide breadth of product categories.
Of those associates, 86% worked in our stores, 10% worked in our distribution centers and 4% worked in our corporate organization. As of January 29, 2022, 74% of our associates self-identified as female and 78% of our associates self-identified as having a racial or ethnic minority background.
Of those associates, 88% worked in our stores, 8% worked in our distribution centers and 4% worked in our corporate organization.
Furthermore, we believe the “treasure hunt” nature of the off-price buying experience drives frequent visits to our stores. We believe the breadth of our selection and our ability to successfully operate in stores of varying square footage represents a competitive advantage.
This enables us to obtain better terms with our suppliers, which we expect to help offset any rising costs of goods. Furthermore, we believe the “treasure hunt” nature of the off-price buying experience drives frequent visits to our stores.
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COVID-19 On March 11, 2020, the World Health Organization declared the novel coronavirus (known as COVID-19) outbreak to be a global pandemic.
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COVID-19 Results for Fiscal 2020 were significantly impacted by the COVID-19 pandemic. All our stores were temporarily closed for a portion of Fiscal 2020, resulting in a sales decline and higher inventory markdowns. These store closures did not repeat in Fiscal 2021 or Fiscal 2022.
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As a result, we began the temporary closing of some of our stores, and effective March 22, 2020, we made the decision to temporarily close all of our stores, distribution centers (other than processing of received inventory) and corporate offices to combat the rapid spread of COVID-19.
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However, certain lingering economic effects of the pandemic did continue to impact results, including supply chain disruptions. 1 Our Stores Over 99% of our net sales are derived from stores we operate as Burlington Stores.
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We began re-opening stores on May 11, 2020, with the majority of stores, as well as all distribution centers, re-opened by mid-June 2020, and substantially all stores re-opened by the end of the second quarter of Fiscal 2020. 1 In response to the COVID-19 pandemic and the temporary closing of our stores, we provided two weeks of financial support to associates impacted by these store closures and by the shutdown of distribution centers.
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The west coast has three supporting warehouses, located in Redlands, California, Riverside, California, and San Bernardino, California. We entered into a lease for the Riverside, California warehousing facility during Fiscal 2022, and the building is expected to become operational during Fiscal 2023. These six warehousing facilities occupy an aggregate of 2,591,000 square feet and primarily serve as storage facilities.
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We temporarily furloughed most store and distribution center associates, as well as some corporate associates, but continued to provide benefits to furloughed associates in accordance with our benefit plans. In addition, we paid 100% of their medical benefit premiums during the period they were furloughed.
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During the second quarter, we recalled all furloughed associates at our re-opened stores, as well as our corporate and distribution facilities. In order to maintain financial flexibility during these uncertain times, we completed several debt transactions in the first quarter of Fiscal 2020. Refer to Note 7, "Long Term Debt," for further discussion regarding these debt transactions.
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Additionally, we took the following steps to further enhance its financial flexibility: • Carefully managed operating expenses, working capital and capital expenditures, including ceasing substantially all buying activities while stores were closed.
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We subsequently resumed its buying activities, while continuing its conservative approach toward operating expenses and capital expenditures; • Negotiated rent deferral agreements with landlords, which were substantially complete as of the end of Fiscal 2021; • Temporarily suspended our share repurchase program, which resumed during the third quarter of Fiscal 2021; • Our CEO voluntarily agreed to not take a salary; our Board of Directors voluntarily forfeited their cash compensation; our executive leadership team voluntarily agreed to decrease their salary by 50%; and smaller salary reductions were temporarily put in place for all associates through a certain level.
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This compensation was reinstated once substantially all of our stores re-opened; and • The annual incentive bonus payments related to Fiscal 2019 performance were delayed to the second quarter of Fiscal 2020, and merit pay increases for Fiscal 2020 were delayed to the third quarter of Fiscal 2020.
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Due to the aging of inventory related to the temporary store closures discussed above, as well as the impact of seasonality on the our merchandise, we recognized inventory markdown reserves of $271.9 million during the three month period ended May 2, 2020. These reserves covered markdowns taken during the second quarter of Fiscal 2020.
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These charges were included in “Cost of sales” on the Consolidated Statement of Income (Loss). On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act was signed into law, which provided emergency economic assistance for American workers, families and businesses affected by the COVID-19 pandemic.
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As a result of amending prior returns to carry back the federal net operating loss generated on the Fiscal 2020 tax return, we expect to obtain a one-time tax refund of $245.5 million, which is included in the line item “Prepaid and other current assets” on our Consolidated Balance Sheet.
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Burlington Stores offer customers a complete line of merchandise, including: women’s ready-to-wear apparel, accessories, footwear, menswear, youth apparel, baby, home, coats, beauty, toys and gifts. Our broad selection provides a wide range of apparel, accessories and furnishings for all ages.
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Our store base has grown from 13 stores in 1980 to 840 stores as of January 29, 2022.
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Total selling square footage decreased in Fiscal 2021 despite opening 79 net new stores, primarily due to optimizing the selling space at existing locations, as well as the smaller size of our new stores compared to prior years. Distribution and Warehousing We have five distribution centers that shipped approximately 99% of merchandise units to our stores in Fiscal 2021.
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These updates include a shift in certain cold weather categories from apparel to accessories and footwear, as well as in certain gifts, electronics, automotive and other miscellaneous categories from menswear to home. Prior year amounts have been reclassified to conform to the current period presentation.
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The sales mix for Fiscal 2020 in the above table was significantly impacted by the COVID-19 pandemic, and may not be reflective of continuing trends. Human Capital Resources Attracting, developing and retaining top talent is key to our growth, and our success depends on cultivating an engaged and motivated workforce.
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The survey results help us understand the associate experience, evaluate our performance, identify our strengths and pinpoint opportunities for improvement.
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Our 2021 survey, which included feedback from more than 43,000 associates, revealed: 92% believe Burlington makes it easy for people from diverse backgrounds to fit in and be accepted; 90% reported that their manager treats them with dignity and respect; and 86% believe in our Core Values.
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Our DEI strategy consists of five pillars that support all areas of the business: • Leadership & Workforce Diversity • Inclusive & Equitable Environments for Associates and Customers • Enhanced Education & Awareness • Product, Vendor & Supplier Diversity • Community Advocacy Further evidencing our commitment to advancing DEI, Burlington welcomed three new DEI leaders since the beginning of Fiscal 2021, who will oversee our ongoing efforts.
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During Fiscal 2020, we made a strategic business decision to transition from an e-commerce website to a marketing content-based website designed to inspire consumers to shop in stores.
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During Fiscal 2019, we launched a private label credit card program in all our stores. We believe this program has the potential to deepen customer loyalty, inform customer contact strategies, and drive increases in trip frequency and transaction size. Competition The U.S. retail apparel and home furnishings markets are highly fragmented and competitive.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFinally, as the COVID-19 pandemic continues, we could continue to experience supply disruptions, reduced workforces or labor shortages, transportation delays, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas, each of which could have a material adverse effect on our business and results of operations.
Biggest changeFinally, outbreaks of the COVID-19 pandemic, new COVID-19 variants or other public-health related concerns could lead us to experience supply disruptions, reduced workforces or labor shortages, transportation delays, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas, each of which could have a material adverse effect on our business and results of operations. 13 If we are unable to protect our information systems against service interruption, misappropriation of data, breaches of security, or other cyber-related attacks, our operations could be disrupted, we may suffer financial losses and our reputation may be damaged.
While have identified numerous market opportunities that we believe will allow us to operate 2,000 stores over the long term, the success of these strategies is dependent upon, among other things, the current retail environment, the identification of suitable markets and the availability of real estate that meets our criteria for traffic, square footage, co-tenancies, lease economics, demographics and other factors, the negotiation of acceptable lease terms, construction costs, the availability of financing, the hiring, training and retention of competent sales personnel, and the effective management of inventory to meet the needs of new and existing stores on a timely basis.
While we have identified numerous market opportunities that we believe will allow us to operate 2,000 stores over the long term, the success of these strategies is dependent upon, among other things, the current retail environment, the identification of suitable markets and the availability of real estate that meets our criteria for traffic, square footage, co-tenancies, lease economics, demographics and other factors, the negotiation of acceptable lease terms, construction costs, the availability of financing, the hiring, training and retention of competent sales personnel, and the effective management of inventory to meet the needs of new and existing stores on a timely basis.
Such factors include: • political or labor instability in countries where vendors are located or at foreign ports which could result in lengthy shipment delays, which, if timed ahead of the Fall and Winter peak selling periods, could materially and adversely affect our ability to stock inventory on a timely basis; • disruptions in the operations of domestic ports through which we import our merchandise, including labor disputes involving work slowdowns, lockouts or strikes, which could require us and/or our vendors to ship merchandise to alternative ports in the United States or through the use of more expensive means, and shipping to alternative ports in the United States could result in increased lead times and transportation costs; disruptions at ports through which we import our goods could also result in unanticipated inventory shortages; • political or military conflict, which could cause a delay in the transportation of our products to us and an increase in transportation costs; • heightened terrorism security concerns, which could subject imported goods to additional, more frequent or more thorough inspections, leading to delays in deliveries or impoundment of goods for extended periods; • disease epidemics, pandemics (including COVID-19), outbreaks and other health-related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in affected areas; • natural disasters and industrial accidents, which could have the effect of curtailing production and disrupting supplies; • increases in labor and production costs in goods-producing countries, which would result in an increase in our inventory costs; • the migration and development of manufacturers, which can affect where our products are or will be produced; • fluctuation in our vendors’ local currency against the dollar, which may increase our cost of goods sold; and • changes in import duties, taxes, charges, quotas, loss of “most favored nation” trading status with the United States for a particular foreign country and trade restrictions (including the United States imposing antidumping or countervailing duty orders, safeguards, remedies or compensation and retaliation due to illegal foreign trade practices).
Such factors include: • political or labor instability in countries where vendors are located or at foreign ports which could result in lengthy shipment delays, which, particularly if timed ahead of the Fall and Winter peak selling periods, could materially and adversely affect our ability to stock inventory on a timely basis; • disruptions in the operations of domestic ports through which we import our merchandise, including labor disputes involving work slowdowns, lockouts or strikes, which could require us and/or our vendors to ship merchandise to alternative ports in 12 the United States or through the use of more expensive means, and shipping to alternative ports in the United States could result in increased lead times and transportation costs; disruptions at ports through which we import our goods could also result in unanticipated inventory shortages; • political or military conflict, which could cause a delay in the transportation of our products to us and an increase in transportation costs; • heightened terrorism security concerns, which could subject imported goods to additional, more frequent or more thorough inspections, leading to delays in deliveries or impoundment of goods for extended periods; • disease epidemics, pandemics (including COVID-19), outbreaks and other health-related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in affected areas; • natural disasters and industrial accidents, which could have the effect of curtailing production and disrupting supplies; • increases in labor and production costs in goods-producing countries, which would result in an increase in our inventory costs; • the migration and development of manufacturers, which can affect where our products are or will be produced; • fluctuation in our vendors’ local currency against the dollar, which may increase our cost of goods sold; and • changes in import duties, taxes, charges, quotas, loss of “most favored nation” trading status with the United States for a particular foreign country and trade restrictions (including the United States imposing antidumping or countervailing duty orders, safeguards, remedies or compensation and retaliation due to illegal foreign trade practices).
If we or third parties with which we do business were to fall victim to successful cyber-attacks or experience other material cybersecurity incidents, including the loss of individually identifiable customer or other sensitive data, we may incur substantial costs and suffer other negative consequences, which may include: 15 • remediation costs, such as liability for stolen assets or information, repairs of system damage or replacement of systems, and incentives to customers or business partners in an effort to maintain relationships after an attack; • increased cybersecurity protection costs, which may include the costs to continuing to make organizational changes, deploy additional personnel and protection technologies, train employees, and engage third party consultants; • lost revenues resulting from the unauthorized use of proprietary information or the failure to retain or attract customers following an attack; • litigation and legal risks, including regulatory actions by state and federal governmental authorities; • increased cybersecurity and other insurance premiums; • reputational damage that adversely affects customer or investor confidence; and • damage to our competitiveness, stock price, and long-term stockholder value.
If we or third parties with which we do business were to fall victim to successful cyber-attacks or experience other material cybersecurity incidents, including the loss of individually identifiable customer or other sensitive data, we may incur substantial costs and suffer other negative consequences, which may include: • remediation costs, such as liability for stolen assets or information, repairs of system damage or replacement of systems, and incentives to customers or business partners in an effort to maintain relationships after an attack; • increased cybersecurity protection costs, which may include the cost of continuing to make organizational changes, deploy additional personnel and protection technologies, train employees, and engage third party consultants; • lost revenues resulting from the unauthorized use of proprietary information or the failure to retain or attract customers following an attack; • litigation and legal risks, including regulatory actions by state and federal governmental authorities; • increased cybersecurity and other insurance premiums; • reputational damage that adversely affects customer or investor confidence; and • damage to our competitiveness, stock price, and long-term stockholder value.
In 20 addition, the stock market has experienced price and volume fluctuations that have affected the market price of many retail and other stocks that have often been unrelated or disproportionate to the operating performance of these companies. Anti-takeover provisions in our charter documents and Delaware law might discourage or delay acquisition attempts for us that stockholders might consider favorable.
In addition, the stock market has experienced price and volume fluctuations that have affected the market price of many retail and other stocks that have often been unrelated or disproportionate to the operating performance of these companies. Anti-takeover provisions in our charter documents and Delaware law might discourage or delay acquisition attempts for us that stockholders might consider favorable.
In addition, even if holders of Convertible Notes do not elect to convert their notes, 19 we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
In addition, even if holders of Convertible Notes do not elect to convert their notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
Availability and skill of employees may differ across markets in which we do business and in new markets we enter, and we need to manage our labor needs effectively. In addition, because of the distinctive nature of our off-price model, we must provide significant internal training and development for key employees across the company, including within our buying organization.
Availability and skill of employees may differ across markets in which we do business and in new markets we enter, and we need to manage our labor needs effectively. 11 In addition, because of the distinctive nature of our off-price model, we must provide significant internal training and development for key employees across the company, including within our buying organization.
We cannot make any assurances that we would be able to arrange for alternate or replacement contracts, transactions or business relationships on terms as favorable as our existing contracts, 13 transactions or business relationships, if at all. Any inability on our part to do so could negatively affect our cash flows, financial condition and results of operations.
We cannot make any assurances that we would be able to arrange for alternate or replacement contracts, transactions or business relationships on terms as favorable as our existing contracts, transactions or business relationships, if at all. Any inability on our part to do so could negatively affect our cash flows, financial condition and results of operations.
Although we source the majority of our merchandise from third party vendors located in the U.S., the production of that merchandise occurs primarily overseas. As a result, we continue to evaluate the impact of 14 currently effective tariffs, as well as any additional proposed tariffs, on our supply chain, costs, sales and profitability.
Although we source the majority of our merchandise from third party vendors located in the U.S., the production of that merchandise occurs primarily overseas. As a result, we continue to evaluate the impact of currently effective tariffs, as well as any additional proposed tariffs, on our supply chain, costs, sales and profitability.
Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition. 21 Because we do not intend to pay cash dividends in the near term, stockholders may not receive any return on investment unless they are able to sell their common stock for a price greater than their purchase price, and we cannot guarantee that we will continue to repurchase our common stock pursuant to our stock repurchase program.
Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition. 19 Because we do not intend to pay cash dividends in the near term, stockholders may not receive any return on investment unless they are able to sell their common stock for a price greater than their purchase price, and we cannot guarantee that we will continue to repurchase our common stock pursuant to our stock repurchase program.
Complying with local zoning codes, real estate land use restrictions, employment-related laws, and other local laws across numerous jurisdictions is particularly challenging as we grow the number of our stores in new municipalities and need to stay abreast of changes in such local laws.
Complying with local zoning codes, real estate land use restrictions, employment-related laws, and other local laws across numerous jurisdictions is particularly challenging as we grow the number of our stores in new municipalities and need to stay abreast of changes 15 in such local laws.
However, we cannot accurately predict the ultimate outcome of any such proceedings due to the 18 inherent uncertainties of litigation. Regardless of the outcome or whether the claims are meritorious, legal and regulatory proceedings may require that we devote substantial time and expense to defend our Company.
However, we cannot accurately predict the ultimate outcome of any such proceedings due to the inherent uncertainties of litigation. Regardless of the outcome or whether the claims are meritorious, legal and regulatory proceedings may require that we devote substantial time and expense to defend our Company.
In addition, any event of default or acceleration under one debt instrument could also result in an event of default under one or more of our other debt instruments. The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results.
In addition, any event of default or acceleration under one debt instrument could also result in an event of default under one or more of our other debt instruments. 17 The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results.
In addition, there are additional inherent risks associated with modifying or replacing systems, and with new or changed relationships, including accurately capturing and maintaining data, realizing the expected benefit of the change and managing the potential disruption of the operation of the systems as the changes are implemented.
In addition, there are inherent risks associated with modifying or replacing systems, and with new or changed relationships, including accurately capturing and maintaining data, realizing the expected benefit of the change and managing the potential disruption of the operation of the systems as the changes are implemented.
Extreme weather conditions in the areas in which our stores or distribution centers are located - especially in areas with a high concentration of our stores - could have a material adverse effect on our business, financial condition and results of operations.
Extreme weather conditions in the areas in which our stores or distribution centers are located - especially in areas with a high 9 concentration of our stores - could have a material adverse effect on our business, financial condition and results of operations.
In addition, our customers could lose confidence in certain payment types, 16 which may result in a shift to other payment types or potential changes to our payment systems that may result in higher costs. As a result, our business and operating results could be adversely affected.
In addition, our customers could lose confidence in certain payment types, which may result in a shift to other payment types or potential changes to our payment systems that may result in higher costs. As a result, our business and operating results could be adversely affected.
Although we have implemented policies and procedures to facilitate 17 compliance with laws and regulations, this does not guarantee that vendors and other third parties with whom we do business will not violate such laws and regulations or our policies.
Although we have implemented policies and procedures to facilitate compliance with laws and regulations, this does not guarantee that vendors and other third parties with whom we do business will not violate such laws and regulations or our policies.
Compliance with the evolving privacy regulatory landscape will likely increase the costs of doing business, especially if we face differing regulatory requirements across multiple jurisdictions and/or a lack of adequate regulatory guidance.
Compliance with the evolving privacy regulatory landscape will likely increase the costs of doing business, especially if we face differing regulatory requirements across multiple jurisdictions and/or a lack 16 of adequate regulatory guidance.
Factors that could negatively impact our ability to successfully operate during the current or future outbreaks of the COVID-19 pandemic, either more broadly or within our stores, include: • our ability to continue to operate and preserve liquidity; • our ability to retain and incentivize associates; • our ability to manage supply chain disruptions due to closed factories or distribution centers or other events, reduced workforces or labor shortages, increased labor and materials costs, scarcity of raw materials and scrutiny or embargoing of goods produced in affected areas; • reduced demand for the merchandise we sell or our ability to move existing inventory, including potentially having to sell existing inventory at a discount or write-down the value of inventory, and the costs, challenges and expenses of updating, procuring and replacing inventory; • delays in, or our ability to complete, planned store openings on the expected terms or timing, or at all; 8 • fluctuations in regional and local economies, including inflation, and related impacts on consumer confidence and spending; • our ability to attract customers to our stores, and the willingness of our associates to staff our stores and distribution centers, given the risks, or perceived risks, of gathering in public places; • our ability to negotiate payment terms with vendors and landlords; • the impact of pandemic-related litigation or claims from customers, associates, suppliers, regulators or other third parties; • incremental costs to operate during a pandemic, including costs of implementing additional safety measures; and • difficulty accessing debt and equity capital on attractive terms, or at all, to fund business operations or address maturing liabilities.
Factors 7 that could negatively impact our ability to successfully operate during future outbreaks of the COVID-19 pandemic, new COVID-19 variants or other public health-related concerns, either more broadly or within our stores, include: • our ability to continue to operate and preserve liquidity; • our ability to retain and incentivize associates; • our ability to manage supply chain disruptions due to closed factories or distribution centers or other events, reduced workforces or labor shortages, increased labor and materials costs, scarcity of raw materials and scrutiny or embargoing of goods produced in affected areas; • reduced demand for the merchandise we sell or our ability to move existing inventory, including potentially having to sell existing inventory at a discount or write-down the value of inventory, and the costs, challenges and expenses of updating, procuring and replacing inventory; • delays in, or our ability to complete, planned store openings on the expected terms or timing, or at all; • fluctuations in regional and local economies, including inflation, and related impacts on consumer confidence and spending; • our ability to attract customers to our stores, and the willingness of our associates to staff our stores and distribution centers, given the risks, or perceived risks, of gathering in public places; • our ability to negotiate payment terms with vendors and landlords; • the impact of pandemic-related litigation or claims from customers, associates, suppliers, regulators or other third parties; • incremental costs to operate during a pandemic, including costs of implementing additional safety measures; and • difficulty accessing debt and equity capital on attractive terms, or at all, to fund business operations or address maturing liabilities.
All of the above legal, regulatory and administrative requirements collectively affect multiple aspects of our business, including those involving labor and employment benefits; health, welfare and finance; real estate management; consumer protection and product safety; climate change, supply chain, energy and waste; electronic communications, data protection and privacy; protection of third party intellectual property rights; and income taxes.
All of the above legal, regulatory and administrative requirements may, individually or collectively, affect multiple aspects of our business, including those involving labor and employment benefits; health, welfare and finance; real estate management; consumer protection and product safety; climate change, supply chain, energy and waste; electronic communications, data protection and privacy; protection of third party intellectual property rights; and income taxes.
We must carry a significant amount of inventory, especially before the holiday season selling period.
We must carry a significant amount of 8 inventory, especially before the holiday season selling period.
Despite advances in security hardware, software, and encryption technologies, the methods and tools used to obtain unauthorized access, disable or degrade service, or sabotage systems are constantly changing and evolving, and may be difficult to anticipate or detect for long periods of time, and there is no guarantee that the proactive measures we put in place will be adequate to safeguard against all data security breaches or misuses of data.
Despite advances in security hardware, software, and encryption technologies, the methods and tools used to obtain unauthorized access, disable or degrade service, or sabotage systems are constantly changing and evolving, and may be difficult to anticipate or detect, and there is no guarantee that the proactive measures we put in place will be adequate to safeguard against all data security breaches or misuses of data.
If our sales forecasts do not match customer demand, we may experience higher inventory levels and need to markdown excess or slow-moving inventory, leading to decreased profit margins, or we may have insufficient inventory to meet customer demand, leading to lost sales, either of which could adversely affect our financial performance.
If our sales forecasts do not match customer demand, we may experience higher inventory levels and need to mark down excess or slow-moving inventory, leading to decreased profit margins, or we may have insufficient inventory to meet customer demand, leading to lost sales, either of which could adversely affect our financial performance.
Our performance depends on recruiting, developing, training and retaining quality sales, systems, distribution center and other employees in large numbers as well as experienced buying and management personnel, and we invest significant resources in training and motivating them to maintain a high level of job satisfaction.
Our performance depends on recruiting, developing, training and retaining quality store, distribution center and other employees in large numbers as well as experienced buying and management personnel, and we invest significant resources in training and motivating them to maintain a high level of job satisfaction.
Notably, as we continue to evolve our off-price model, we plan on more effectively chasing the sales trend, making greater investments in our merchandising capabilities, operating with leaner inventories, improving operational flexibility, and challenging expenses, among other things.
Notably, as we continue to evolve our off-price model, we plan on more effectively chasing the sales trend, making greater investments in our merchandising capabilities, operating with leaner inventories, improving operational flexibility, and challenging expenses, among other strategic initiatives.
Consumer confidence is also affected by the domestic and international political situation and periods of social unrest. The outbreak or escalation of war, or the occurrence of terrorist acts or other hostilities in or affecting the U.S. could lead to a decrease in spending by consumers.
Consumer confidence is also affected by the domestic and international political situation and periods of social unrest. The occurrence of terrorist acts or other hostilities in or affecting the U.S. could lead to a decrease in spending by consumers.
To address a potential transition away from LIBOR, the Term Loan Facility and ABL Line of Credit agreements each were amended in 2021 to provide for an agreed upon methodology to replace LIBOR with a SOFR-based rate (or, if a SOFR-based rate is unavailable, amend such agreements to substitute LIBOR with an agreed replacement rate), subject to our consent and the applicable administrative agent, and in each case subject to a short lender negative consent period.
To address a potential transition away from LIBOR, the Term Loan Facility was amended in 2021 to provide for an agreed upon methodology to replace LIBOR with a SOFR-based rate (or, if a SOFR-based rate is unavailable, amend such agreements to substitute LIBOR with an agreed replacement rate, subject to our consent and the applicable administrative agent, and in each case subject to a short lender negative consent period).
Perceived uncertainties as to our future direction as a result of stockholder activism or potential changes to the composition of the Board of Directors may lead to the perception of a change in the direction of the business or other instability, and may make it more difficult to attract and retain qualified personnel and business partners. Item 1B.
Perceived uncertainties as to our future direction as a result of stockholder activism or potential changes to the composition of the Board of Directors may lead to the perception of a change in the direction of the business or other instability, and may affect our stock price or may make it more difficult to attract and retain qualified personnel and business partners.
In addition, natural disasters, industrial accidents, acts of war, and public health issues such as pandemics or epidemics could have the effect of disrupting supplies and raising prices globally (such as that caused by the COVID-19 pandemic) which, in turn, may have adverse effects on the world and U.S. economies and lead to a downturn in consumer confidence and spending.
In addition, natural disasters, industrial accidents, acts of war, and public health issues such as pandemics or epidemics could have the effect of disrupting supplies and raising prices globally which, in turn, may have adverse effects on the world and U.S. economies and lead to a downturn in consumer confidence and spending.
The extent of the continuing impact of the COVID-19 pandemic on our business, financial performance and condition, operating results, liquidity and cash flows will depend largely on future developments, including the production and administration of effective medical treatments and vaccines, the timing and extent of the recovery in traffic and consumer spending at our stores, additional costs and delays related to our supply chain, reduced workforces or labor shortages and scarcity of raw materials, and any future required store closures because of COVID-19 resurgences, all of which are highly uncertain and cannot be predicted.
The extent of future outbreaks of the COVID-19 pandemic, new COVID-19 variants or other public health-related concerns on our business, financial performance and condition, operating results, liquidity and cash flows will depend largely on future developments, including the production and administration of effective medical treatments and vaccines, the timing and extent of the recovery in traffic and consumer spending at our stores, additional costs and delays related to our supply chain, reduced workforces or labor shortages and scarcity of raw materials, and any future required store closures, all of which are highly uncertain and cannot be predicted.
As the regulatory environment relating to retailers’ and other companies’ obligation to protect such sensitive data becomes increasingly rigorous, with new and evolving requirements applicable to our business, compliance with those requirements could result in additional costs; could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of customer and/or employee information, and some of our current or future business plans; and a material failure on our part to comply could subject us to fines or other regulatory sanctions and potentially to lawsuits.
As the regulatory environment relating to retailers’ and other companies’ obligation to protect such sensitive data becomes increasingly rigorous, with new and evolving requirements applicable to our business, compliance with those requirements could result in additional costs and could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of customer and/or employee information, and some of our current or future business plans.
These provisions: • authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock; • prohibit stockholder action by written consent, requiring all stockholder actions be taken at a meeting of our stockholders; • establish advance notice requirements for nominations for elections to our Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; • establish a classified Board of Directors, as a result of which our Board of Directors is divided into three classes, with each class serving for staggered three-year terms, which prevents stockholders from electing an entirely new Board of Directors at an annual meeting; • limit the ability of stockholders to remove directors only for cause and only upon the affirmative vote of at least 75% of the outstanding shares of our common stock; • prohibit stockholders from calling special meetings of stockholders; • provide that the Board of Directors is expressly authorized to alter or repeal our amended and restated bylaws; and • require the approval of holders of at least 75% of the outstanding shares of our voting common stock to amend the amended and restated bylaws and certain provisions of the amended and restated certificate of incorporation.
These provisions: • authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock; • prohibit stockholder action by written consent, requiring all stockholder actions be taken at a meeting of our stockholders; • establish advance notice requirements for nominations for elections to our Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; • establish a classified Board of Directors, as a result of which our Board of Directors is divided into three classes, with each class serving for staggered three-year terms, which prevents stockholders from electing an entirely new Board of Directors at an annual meeting; • limit the ability of stockholders to remove directors only for cause and only upon the affirmative vote of at least 75% of the outstanding shares of our common stock; • prohibit stockholders from calling special meetings of stockholders; • provide that the Board of Directors is expressly authorized to alter or repeal our amended and restated bylaws; and • require the approval of holders of at least 75% of the outstanding shares of our voting common stock to amend the amended and restated bylaws and certain provisions of the amended and restated certificate of incorporation These anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change in control of the Company, even if doing so would benefit our stockholders.
Governmental authorities nationally and locally have taken numerous actions and mandated various restrictions in an effort to slow the spread of COVID-19, including travel restrictions, restrictions on public gatherings, “shelter at home” orders and advisories, temporary closure of non-essential businesses and quarantining of people who may have been exposed to the virus.
During the COVID-19 pandemic, governmental authorities nationally and locally took, and may in the future take, numerous actions in an effort to slow the spread of COVID-19, including travel restrictions, restrictions on public gatherings, “shelter at home” orders and advisories, temporary closure of non-essential businesses and quarantining of people who may have been exposed to the virus.
In addition, consumer purchasing patterns may be influenced by consumers’ disposable income, credit availability and debt levels. Slowdown in the U.S. economy, an uncertain global economic outlook (such as that caused by the COVID-19 pandemic) or a credit crisis could adversely affect consumer spending habits, resulting in lower net sales and profits than expected on a quarterly or annual basis.
In addition, consumer purchasing patterns may be influenced by consumers’ disposable income, credit availability and debt levels. Slowdown in the U.S. economy, an uncertain global economic outlook, interest rate volatility, or a credit crisis could adversely affect consumer spending habits, resulting in lower net sales and profits than expected on a quarterly or annual basis.
In addition to our own execution, we may need to react to factors affecting inventory flow that are outside our control, such as adverse weather, natural disasters, epidemics or pandemics (including COVID-19) or other changes in conditions affecting our vendors and others in our supply chain, such as political instability, labor issues (including strikes or threats of strikes and scarcity of labor) and increased labor costs, reduced freight capacity and other transportation issues, or increasing cost of regulations.
Failure to effectively execute our opportunistic inventory buying and inventory management strategies could adversely affect our performance and our reputation. 10 In addition to our own execution, we may need to react to factors affecting inventory flow that are outside our control, such as adverse weather, natural disasters, epidemics or pandemics (including COVID-19) or other changes in conditions affecting our vendors and others in our supply chain, such as political instability, labor issues (including strikes or threats of strikes and scarcity of labor) and increased labor costs, reduced freight capacity and other transportation issues, or increasing cost of regulations.
However, there is no guarantee that any such amendment to adopt a replacement rate would be agreed by the applicable agents and lenders or that such consents would be obtained, and in such event we would be required to pay a rate of interest higher than expected on the amount owed under such agreements where the interest rate is subject to LIBOR.
However, to the extent that any such replacement rate would require the consent of the administrative agent or lenders under the Term Loan Facility, there is no guarantee that any such amendment to adopt a replacement rate would be agreed by such administrative agent and the lenders under the Term Loan Facility or that such consents would be obtained, and in such event we would be required to pay a rate of interest higher than expected on the amount owed under such agreements where the interest rate is subject to LIBOR.
Any decreases in consumer discretionary spending could result in a decrease in store traffic and same store sales, all of which could negatively affect the Company’s business, operations, liquidity, financial results and/or stock price, particularly if consumer spending levels are depressed for a prolonged period of time. We face increased competition from other retailers that could adversely affect our business.
Any decreases in consumer discretionary spending could result in a decrease in store traffic and same store sales, all of which could negatively affect the Company’s business, operations, liquidity, financial results and/or stock price, particularly if consumer spending levels are depressed for a prolonged period of time.
In addition, most of our products are sold to us on a non-exclusive basis. As a result, our current and future competitors may be able to duplicate or improve on some or all of our product offerings that we believe are important in differentiating our stores.
As a result, our current and future competitors may be able to duplicate or improve on some or all of our product offerings that we believe are important in differentiating our stores.
The discontinuance of LIBOR and the replacement of LIBOR with an alternative reference rate may adversely affect our borrowing costs and could impact our business and results of operations. Certain of our credit agreements currently use LIBOR as a reference rate to calculate interest rates.
The discontinuance of LIBOR and the replacement of LIBOR with an alternative reference rate may adversely affect our borrowing costs and could impact our business and results of operations. Our Term Loan Facility currently uses LIBOR as a reference rate to calculate interest rates.
As of January 29, 2022, our obligations include (i) $950.7 million, inclusive of original issue discount, under our $1,200.0 million senior secured term loan facility (Term Loan Facility) and (ii) $572.3 million under the Convertible Notes. We had no outstanding balance on our $650.0 million asset-based lending facility (ABL Line of Credit) as of January 29, 2022.
As of January 28, 2023, our obligations include (i) $942.0 million, inclusive of original issue discount, under our $1,200.0 million senior secured term loan facility (Term Loan Facility) and (ii) $507.7 million under the Convertible Notes. We had no outstanding balance on our $900.0 million asset-based lending facility (ABL Line of Credit) as of January 28, 2023.
The conversion of some or all of the Convertible Notes will dilute the ownership interests of existing stockholders to the extent we deliver shares of our common stock upon conversion of any of the Convertible Notes.
The conversion of some or all of the Convertible Notes will dilute the ownership interests of existing stockholders, as we will deliver shares of our common stock with respect to any excess over principal upon conversion of any of the Convertible Notes.
In addition, events that adversely affect our vendors could impair our 12 ability to obtain desired merchandise in sufficient quantities. Such events include difficulties or problems associated with our vendors’ businesses, finances, labor, importation of products, costs, production, insurance and reputation.
In addition, events that adversely affect our vendors could impair our ability to obtain desired merchandise in sufficient quantities. Such events include difficulties or problems associated with our vendors’ businesses, finances, labor, importation of products, costs, production, insurance and reputation. Our failure to attract, train and retain quality employees and temporary personnel in sufficient numbers could adversely affect our business.
Many of our store and distribution center employees are in entry level or part-time positions with historically high rates of turnover, which can lead to increased training and retention costs, particularly if employment opportunities increase including in light of the ongoing “great resignation” occurring throughout the U.S. economy.
Many of our store and distribution center employees are in entry level or part-time positions with historically high rates of turnover, which can lead to increased training and retention costs, particularly if employment opportunities increase.
In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, any successor rate to SOFR under our Term Loan Facility and ABL Line of Credit agreements may not have the same characteristics as SOFR or LIBOR, and each of the foregoing could have a material adverse effect on our business, financial condition and results of operations.
Additionally, any potential successor rate to SOFR under our Term Loan Facility and ABL Line of Credit agreements may not have the same characteristics as SOFR or LIBOR. Each of the foregoing risks could have a material adverse effect on our business, financial condition and results of operations.
The COVID-19 pandemic has had a sustained adverse impact on global economic activity and caused significant volatility and negative pressure in financial markets, labor markets and the global supply chain. The pandemic has disrupted our business and has had a significant adverse impact on our financial performance and condition, operating results, liquidity and cash flows.
The COVID-19 pandemic had a sustained adverse impact on global economic activity and caused significant volatility and negative pressure in financial markets, labor markets and the global supply chain.
In addition, risk of loss or theft of assets, including inventory shrinkage, is inherent in the retail business. Loss may be caused by error or misconduct of associates, customers, vendors or other third parties.
Risk of loss or theft of assets, including inventory shrinkage, is inherent in the retail business, and we experienced increased shrinkage, as well as increased loss prevention costs, in Fiscal 2022. Loss or theft may be caused by error or misconduct of associates, customers, vendors, organized retail theft, or other third parties.
We are primarily self-insured and we purchase insurance only for catastrophic types of events for such risks as workers’ compensation, employment practices liability, employee health benefits, product and other general liability claims, among others.
The insurance we carry may not always pay, or be sufficient to pay or reimburse us, for our losses. We are primarily self-insured and we purchase insurance only for catastrophic types of events for such risks as workers’ compensation, employment practices liability, employee health benefits, product and other general liability claims, among others.
Our debt obligations also include $43.9 million of finance lease obligations as of January 29, 2022. Estimated cash required to make interest payments for these debt obligations amounts to approximately $33.1 million in the aggregate for the fiscal year ending January 28, 2023.
Our debt obligations also include $33.4 million of finance lease obligations as of January 28, 2023. Estimated cash required to make interest payments for these debt obligations, net of the impact of our interest rate swap, amounts to approximately $63.5 million in the aggregate for the fiscal year ending February 3, 2024.
We need to purchase inventory sufficiently below conventional retail to maintain our pricing differential to regular department and specialty store prices, and to attract customers and sustain our margins, which we may not achieve at various times and which could adversely affect our results 11 In order to better serve our customers and maximize sales, we must properly execute our inventory management strategies by appropriately allocating merchandise among our stores, timely and efficiently distributing inventory to such locations, maintaining an appropriate mix and level of inventory in such locations, appropriately changing the allocation of floor space of stores among product categories to respond to customer demand, and effectively managing pricing and markdowns, and there is no assurance we will be able to do so.
In order to better serve our customers and maximize sales, we must properly execute our inventory management strategies by appropriately allocating merchandise among our stores, timely and efficiently distributing inventory to such locations, maintaining an appropriate mix and level of inventory in such locations, appropriately changing the allocation of floor space of stores among product categories to respond to customer demand, and effectively managing pricing and markdowns, and there is no assurance we will be able to do so.
The payment methods that we offer also subject us to potential fraud and theft by criminals, who are becoming increasingly more sophisticated, seeking to obtain unauthorized access to or exploit weaknesses that may exist in the payment systems.
If these companies become unable to provide these services to us, or if their systems are compromised, it could potentially disrupt our business. The payment methods that we offer also subject us to potential fraud and theft by criminals, who are becoming increasingly sophisticated, seeking to obtain unauthorized access to or exploit weaknesses that may exist in the payment systems.
In fact, as more business activities have shifted online due to COVID-19 restrictions and otherwise, and as many of our non-store associates are working remotely, we face an increased risk due to the potential interruptions to internal or external information technology infrastructure as well as increased threats and attempts to breach our security networks.
As many of our non-store associates continue to work remotely, we face an increased risk due to the potential interruptions to internal or external information technology infrastructure as well as ongoing threats and attempts to breach our security networks.
The increasing proliferation of local laws, some of which may be conflicting, further complicates our efforts to comply with all of the various laws, rules and regulations that apply to our business.
The increasing proliferation of local laws, some of which may be conflicting, further complicates our efforts to comply with all of the various laws, rules and regulations that apply to our business. We could also be negatively impacted by changes in government regulations in areas including taxes, healthcare and environmental protection.
Before making an investment decision, you should carefully consider the risks and uncertainties described below together with all of the other information included or incorporated by reference in this Annual Report. Macroeconomic, Industry and Business Risks The COVID-19 pandemic has significantly adversely impacted and is expected to continue to adversely impact our business.
Before making an investment decision, you should carefully consider the risks and uncertainties described below together with all of the other information included or incorporated by reference in this Annual Report. Macroeconomic, Industry and Business Risks A downturn in general economic conditions or consumer spending or inflationary conditions could adversely affect our business.
Future outbreaks of COVID-19 may continue to adversely impact and cause disruption to our business, financial performance and condition, operating results, liquidity and cash flows.
Future outbreaks of the COVID-19 pandemic, new COVID-19 variants or other public health-related concerns could adversely impact and cause disruption to our business, financial performance and condition, operating results, liquidity and cash flows.
Risks Related to Ownership of Our Common Stock Our stock price has been and may continue to be volatile. The market price of our common stock has fluctuated substantially in the past and may continue to fluctuate significantly. For example, in Fiscal 2021, our stock price fluctuated from a high of $357.34 to a low of $206.70.
The market price of our common stock has fluctuated substantially in the past and may continue to fluctuate significantly. For example, in Fiscal 2022, our stock price fluctuated from a high of $243.94 to a low of $106.47.
Our disclosure on these matters and our failure, or perceived failure, to meet our commitments and otherwise effectively address these matters, could harm our reputation, which could negatively impact our business, our relationship with our various stakeholders, and our results of operations. 10 Extreme and/or unseasonable weather conditions caused by climate change or otherwise, or natural disasters, could have a significant adverse effect on our business.
Our disclosure on these matters and our failure, or perceived failure, to meet our goals and otherwise effectively address these matters, could harm our reputation, which could negatively impact our business, our relationship with our various stakeholders, and our results of operations.
If one or more holders elect to convert their Convertible Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity.
If one or more holders elect to convert their Convertible Notes, we would be required to settle the principal portion of our conversion obligation in cash, which could adversely affect our liquidity.
Certain traditional, full-price retail chains have developed off-price concepts, which may directly compete with our business. Our competitors, including such retail chains, may seek to emulate facets of our business strategy, which could result in a reduction of any competitive advantage or special appeal that we might possess.
Our competitors, including such retail chains, may seek to emulate facets of our business strategy, which could result in a reduction of any competitive advantage or special appeal that we might possess. In addition, most of our products are sold to us on a non-exclusive basis.
Potential issues associated with implementing technology initiatives and the time and resources required to optimize the benefits of new elements of our systems and infrastructure could reduce the efficiency of our operations in the short term.
Potential issues associated with implementing technology initiatives and the time and resources required to optimize the benefits of new elements of our systems and infrastructure could reduce the efficiency of our operations in the short term. 14 We are subject to payment-related risks that could increase our operating costs, expose us to fraud or theft, subject us to potential liability and potentially disrupt our business.
If we do not continue to attract qualified individuals, train them in our business model, support their development and retain them, our performance could be adversely affected or our growth could be limited.
If we do not continue to attract qualified individuals, train them in our business model, support their development and retain them, our performance could be adversely affected or our growth could be limited. We are also dependent upon temporary personnel to adequately staff our distribution facilities, with heightened dependence during busy periods such as the holiday season.
We have also experienced inflationary pressure in our supply chain and with respect to raw materials and finished goods. There can be no assurance that we will be able to offset inflationary pressure in the future, or that our business will not be negatively affected by continued inflation in the future.
There can be no assurance that we will be able to offset inflationary pressure and other fluctuations in costs in the future, or that consumer behavior or our business, operations, liquidity, and/or financial results, will not be negatively affected by continued inflation in the future.
Our business is susceptible to risks associated with climate change, which may cause more frequent and extreme weather events.
Extreme and/or unseasonable weather conditions caused by climate change or otherwise, or natural disasters, could have a significant adverse effect on our business. Our business is susceptible to risks associated with climate change, which may cause more frequent and extreme weather events.
In recent years, there has been increasing regulatory enforcement and litigation activity in the area of privacy, data protection and information security in various states in which we operate.
A material failure on our part to comply could subject us to fines or other regulatory sanctions and potentially to lawsuits. In recent years, there has been increasing regulatory enforcement and litigation activity in the areas of privacy, data protection and information security in various states in which we operate.
In addition, as we execute inventory localization initiatives, there could be disruptions in inventory flow and placement. Failure to effectively execute our opportunistic inventory buying and inventory management strategies could adversely affect our performance and our reputation.
In addition, as we execute inventory localization initiatives, there could be disruptions in inventory flow and placement.
As a result, we are largely dependent upon cash dividends and distributions and other transfers from our subsidiaries to meet our obligations. The deterioration of income from, or other available assets of, our subsidiaries for any reason could limit or impair their ability to pay dividends or other distributions to us.
As a result, we are largely dependent upon cash dividends and distributions and other transfers from our subsidiaries to meet our obligations.
Many stakeholders, including investors, customers, consumers and others, have increasingly focused on environmental sustainability and corporate social responsibility matters, including climate change, packaging and waste reduction, energy consumption, and diversity and inclusion.
Many stakeholders, including investors, customers, employees, consumers and others, have increasingly focused on ESG topics, including environmental sustainability and corporate social responsibility matters such as climate change, packaging and waste reduction, energy consumption, and diversity, equity and inclusion. We face pressures from these constituencies to meet our goals related to, and to make significant advancements toward achievements in, these areas.
In order to increase traffic and drive consumer spending, competitors, including department stores, mass merchants and specialty apparel stores, have been offering brand-name merchandise at substantial markdowns. 9 Continuation of this trend, or the possible effect on consumer buying patterns that improving economic conditions could have, may cause consumer demand to shift from off-price retailers to other retailers, which could have a material adverse effect on our business and results of operations.
Continuation of this trend, or the possible effect on consumer buying patterns that improving economic conditions could have, may cause consumer demand to shift from off-price retailers to other retailers, which could have a material adverse effect on our business and results of operations. Certain traditional, full-price retail chains have developed off-price concepts, which may directly compete with our business.
We are subject to payment-related risks that could increase our operating costs, expose us to fraud or theft, subject us to potential liability and potentially disrupt our business. We accept payments using a variety of methods, including cash, checks, credit and debit cards, and gift cards, and we may offer new payment options over time.
We accept payments using a variety of methods, including cash, checks, credit and debit cards, and gift cards, and we may offer new payment options over time.
COVID-19 presents material uncertainty and risk with respect to our business, financial performance and condition, operating results, liquidity and cash flows. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described throughout this Annual Report.
To the extent that future outbreaks of the COVID-19 pandemic, new COVID-19 variants or other viruses adversely affect our business and financial results, they may also have the effect of heightening many of the other risks described throughout this Annual Report. We face increased competition from other retailers that could adversely affect our business.
Removed
While several of these measures have since eased, other restrictions such as vaccine and mask mandates and testing requirements have been newly imposed or proposed, and the recovery process is uncertain.
Added
We have also experienced inflationary pressure in our supply chain and with respect to raw materials and finished goods to a greater extent than we have in recent years due to current economic conditions.
Removed
A downturn in general economic conditions or consumer spending or inflationary conditions could adversely affect our business.
Added
The COVID-19 pandemic has significantly adversely impacted, and future outbreaks of COVID-19, new COVID-19 variants or other public health-related concerns could adversely impact, our business. The COVID-19 pandemic disrupted our business and had a significant adverse impact on our financial performance and condition, operating results, liquidity and cash flows.
Removed
Our failure to attract, train and retain quality employees and temporary personnel in appropriate numbers could adversely affect our business.
Added
While the impact of the COVID-19 pandemic on our business has largely abated at this time, and the U.S. has announced that the COVID-19 health emergency will expire in May 2023, the impact of COVID-19, including the impact of restrictions imposed to combat its spread, could adversely impact our business, in particular in the event that infection rates in the U.S. rise or new COVID-19 variants emerge.
Removed
We are also dependent upon temporary personnel to adequately staff our stores and distribution facilities, with heightened dependence during busy periods such as the holiday season and when multiple new stores are opening.
Added
In order to increase traffic and drive consumer spending, competitors, including department stores, mass merchants and specialty apparel stores, have been offering brand-name merchandise at substantial markdowns.
Removed
If we are unable to protect our information systems against service interruption, misappropriation of data, breaches of security, or other cyber-related attacks, our operations could be disrupted, we may suffer financial losses and our reputation may be damaged.
Added
We may be unable to meet our environmental, social or governance (“ESG”) goals or otherwise meet the expectations of our stakeholders with respect to ESG matters.
Removed
If these companies become unable to provide these services to us, or if their systems are compromised, it could potentially disrupt our business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe own approximately 43 acres of land in Edgewater Park, New Jersey on which we have constructed our Edgewater Park, New Jersey distribution center and an office facility.
Biggest changeWe own approximately 43 acres of land in Edgewater Park, New Jersey on which we have constructed our Edgewater Park, New Jersey distribution center and an office facility. We lease approximately 68,000 square feet of office space in New York City (east coast buying office), and 50,000 square feet of office space in Los Angeles, California (west coast buying office).
Store leases generally provide for fixed monthly rental payments, plus the payment, in most cases, of real estate taxes and other charges with escalation clauses. In many locations, our store leases contain formulas providing for the payment of additional rent based on sales.
Store leases generally provide for fixed monthly rental payments, plus the payment, in most cases, of real estate taxes and 20 other charges with escalation clauses. In many locations, our store leases contain formulas providing for the payment of additional rent based on sales.
Item 2. Pr operties We own the land and/or buildings for 30 of our stores and have leases for 810 of our stores. Our new stores are generally leased for an initial term of ten years, the majority of which are subject to our option to renew such leases for several additional five-year periods.
Item 2. Pr operties We own the land and/or buildings for 27 of our stores and have leases for 900 of our stores. Our new stores are generally leased for an initial term of ten years, the majority of which are subject to our option to renew such leases for several additional five-year periods.
Removed
During Fiscal 2021, we expanded our existing 35,000 square feet of leased space in our east coast buying office in New York City by an additional 33,000 square feet, and early in Fiscal 2022, we expanded our existing 25,000 square feet of leased space in our west coast buying office in Los Angeles, California by an additional 25,000 square feet.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn the normal course of business, we are also party to representative claims under the California Private Attorneys’ General Act and various other lawsuits and regulatory proceedings including, among others, commercial, product, product safety, employee, customer, intellectual property and other claims. Actions against us are in various procedural stages.
Biggest changeLegal Proceedings In the course of business, the Company is party to class or collective actions alleging violations of federal and state wage and hour and other labor statutes, representative claims under the California Private Attorneys’ General Act and various other lawsuits and regulatory proceedings from time to time including, among others, commercial, product, employee, customer, intellectual property, privacy and other claims.
Many of these proceedings raise factual and legal issues and are subject to uncertainties. Refer to Note 16 to our Consolidated Financial Statements, “Commitments and Contingencies,” for further detail. Item 4. Mine Saf ety Disclosures Not applicable. 23 PART II
Actions against us are in various procedural stages. Many of these proceedings raise factual and legal issues and are subject to uncertainties. Refer to Note 16, "Commitments and Contingencies," to our Consolidated Financial Statements for further detail. Item 4. Mine Saf ety Disclosures Not applicable. 21 PART II
Removed
Item 3. Legal Proceedings Like many retailers, the Company has been named in potential class or collective actions on behalf of groups alleging violations of federal and state wage and hour and other labor statutes, and alleged violation of state consumer and/or privacy protection and other statutes.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeBase Period Indexed Returns for Fiscal Years Ended Company / Index January 28, 2017 February 3, 2018 February 2, 2019 February 1, 2020 January 30, 2021 January 29, 2022 Burlington Stores, Inc. $ 100.00 $ 143.06 $ 212.42 $ 268.78 $ 307.63 $ 284.62 S&P 500 Index $ 100.00 $ 120.37 $ 117.95 $ 140.56 $ 161.86 $ 193.14 S&P Retailing Index $ 100.00 $ 139.89 $ 150.18 $ 179.48 $ 252.16 $ 265.45 Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table provides information regarding our purchases of common stock during the three fiscal months ended January 29, 2022: Month Total Number of Shares Purchased(1) Average Price Paid Per Share(2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(3) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) October 31, 2021 through November 27, 2021 155 $ 290.91 — $ 249,990 November 28, 2021 through January 1, 2022 344,776 $ 290.30 344,492 $ 149,984 January 2, 2022 through January 29, 2022 — $ — — $ 149,984 Total 344,931 344,492 25 (1) The number of shares purchased between October 31, 2021 and November 27, 2021, and between November 28, 2021 and January 1, 2022 include 155 shares and 284 shares, respectively, which were withheld for tax payments due upon the vesting of employee restricted stock awards, and do not reduce the dollar value that may yet be purchased under our publicly announced share repurchase programs.
Biggest changeApparel Retailers Index $ 100.00 $ 108.40 $ 120.16 $ 127.64 $ 137.91 $ 149.71 S&P Retailing Index $ 100.00 $ 107.35 $ 128.30 $ 180.26 $ 189.76 $ 155.80 23 Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table provides information regarding our purchases of common stock during the three fiscal months ended January 28, 2023: Month Total Number of Shares Purchased(1) Average Price Paid Per Share(2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(3) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) October 30, 2022 through November 26, 2022 68,023 $ 143.91 68,007 $ 388,985 November 27, 2022 through December 31, 2022 161,768 $ 195.99 161,561 $ 357,321 January 1, 2023 through January 28, 2023 45,461 $ 219.85 45,461 $ 347,326 Total 275,252 275,029 (1) The number of shares purchased between October 30, 2022 and November 26, 2022, and between November 27, 2022 and December 31, 2022 include 16 shares and 207 shares, respectively, which were withheld for tax payments due upon the vesting of employee restricted stock awards, and do not reduce the dollar value that may yet be purchased under our share repurchase program.
This graph assumes an initial investment of $100 and assumes the reinvestment of dividends, if any. Such returns are based on historical results and are not intended to suggest future performance.
This graph assumes an initial 22 investment of $100 and assumes the reinvestment of dividends, if any. Such returns are based on historical results and are not intended to suggest future performance.
Item 5. Market for Registrant’s Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the New York Stock Exchange under the symbol “BURL.” Holders As of February 26, 2022, we had 217 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the New York Stock Exchange under the symbol “BURL.” Holders As of February 25, 2023, we had six holders of record of our common stock.
This figure does not include the significantly greater number of beneficial holders of our common stock. Dividends During the past two fiscal years, we have not declared, and do not anticipate declaring in the near term, dividends on shares of our common stock.
This figure does not include the significantly greater number of beneficial holders of our common stock. Dividends We have not declared, and do not anticipate declaring in the near term, dividends on shares of our common stock.
The following graph compares the cumulative total stockholder return on our common stock from the closing prices as of the end of each fiscal year from January 28, 2017 through January 29, 2022, with the return on the Standard & Poor’s (S&P) 500 Index 24 and the S&P Retailing Index over the same period.
The following graph compares the cumulative total stockholder return on our common stock from the closing prices as of the end of each fiscal year from February 3, 2018 through January 28, 2023, with the return on the Standard & Poor’s (S&P) 500 Index, the Dow Jones United States Apparel Retailers Index, and the S&P Retailing Index over the same period.
There were no shares repurchased between January 2, 2022 and January 29, 2022. (2) Includes commissions for the shares repurchased under our publicly announced share repurchase programs. (3) On August 18, 2021, our Board of Directors authorized the repurchase of up to $400.0 million of common stock, which is authorized to be executed through August 2023.
There were no shares withheld for tax payments between January 1, 2023 and January 28, 2023. (2) Includes commissions for the shares repurchased under our publicly announced share repurchase programs. (3) On February 16, 2022, our Board of Directors authorized the repurchase of $500.0 million of common stock, which is authorized to be executed through February 2024.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Share Repurchase Programs.” Item 6. R e served 26
As of January 28, 2023, we had $347.3 million remaining under our share repurchase authorization. For a further discussion of our share repurchase program, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Share Repurchase Program.”
Removed
Subsequent to January 29, 2022 (February 16, 2022), our Board of Directors authorized the repurchase of up to $500.0 million of common stock, which is authorized to be executed through February 2024. For a further discussion of our share repurchase programs, see “Part II, Item 7.
Added
Beginning with Fiscal 2022, we added the Dow Jones United States Apparel Retailers Index due to the similarities of the companies in that index with our line of business, and we will no longer provide a comparison to the S&P Retailing Index in future years.
Added
Base Period Indexed Returns for Fiscal Years Ended Company / Index February 3, 2018 February 2, 2019 February 1, 2020 January 30, 2021 January 29, 2022 January 28, 2023 Burlington Stores, Inc. $ 100.00 $ 148.48 $ 187.88 $ 215.03 $ 198.95 $ 195.58 S&P 500 Index $ 100.00 $ 97.99 $ 116.78 $ 134.47 $ 160.45 $ 147.37 Dow Jones U.S.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe define Adjusted EBITDA as net income (loss), exclusive of the following items, if applicable: (i) interest expense; (ii) interest income; (iii) loss on extinguishment of debt; (iv) income tax expense (benefit); (v) depreciation and amortization; (vi) impairment charges; (vii) costs related to debt issuances and amendments; (viii) amounts related to certain litigation matters; (ix) costs related to closing the e-commerce store; and (x) other unusual, non-recurring or extraordinary expenses, losses, charges or gains.
Biggest changeWe define Adjusted EBITDA as net income (loss), exclusive of the following items, if applicable: (i) interest expense; (ii) interest income; (iii) loss on extinguishment of debt; (iv) income tax expense (benefit); (v) depreciation and amortization; (vi) impairment charges; (vii) costs related to debt issuances and amendments; (viii) amounts related to certain litigation matters; (ix) costs related to closing the e-commerce store; and (x) other unusual, non-recurring or extraordinary expenses, losses, charges or gains We define Adjusted EBIT as net income (loss), exclusive of the following items, if applicable: (i) interest expense; (ii) interest income; (iii) loss on extinguishment of debt; (iv) income tax expense(benefit); (v) impairment charges; (vi) net favorable lease costs; (vii) costs related to debt issuances and amendments; (viii) amounts related to certain litigation matters; (ix) costs related to closing the e-commerce store; and (x) other unusual, non-recurring or extraordinary expenses, losses, charges or gains.
Among other limitations, Adjusted Net Income (Loss) does not reflect the following items, net of their tax effect: • favorable lease costs; • costs related to debt issuances and amendments; • losses on extinguishment of debt; • amounts charged for certain litigation matters; • non-cash interest expense related to original issue discount on the Convertible Notes; • impairment charges on long-lived assets; • costs related to closing the e-commerce store; and • other unusual, non-recurring or extraordinary expenses, losses, charges or gains.
Among other limitations, Adjusted Net Income (Loss) does not reflect the following items, net of their tax effect: • net favorable lease costs; • costs related to debt issuances and amendments; • losses on extinguishment of debt; • amounts charged for certain litigation matters; • non-cash interest expense related to original issue discount on the Convertible Notes; • impairment charges on long-lived assets; • costs related to closing the e-commerce store; and • other unusual, non-recurring or extraordinary expenses, losses, charges or gains.
Gross margin is the difference between net sales and the cost of sales. Our cost of sales and gross margin may not be comparable to those of other entities, since some entities include all of the costs related to their buying and distribution functions, certain store-related costs and other costs, in cost of sales.
Gross margin is the difference between net sales and the cost of sales. Our cost of sales and gross margin may not be comparable to those of other entities, since some entities may include all of the costs related to their buying and distribution functions, certain store-related costs and other costs, in cost of sales.
In addition, natural disasters, public health issues, industrial accidents and acts of war in various parts of the world, such as the current conflict in Ukraine, could have the effect of disrupting supplies and raising prices globally which, in turn, may have adverse effects on the world and U.S. economies and lead to a downturn in consumer confidence and spending.
In addition, natural disasters, public health issues, industrial accidents and acts of war in various parts of the world, such as the current war in Ukraine, could have the effect of disrupting supplies and raising prices globally which, in turn, may have adverse effects on the world and U.S. economies and lead to a downturn in consumer confidence and spending.
The recoverability assessment related to these store-level assets requires various judgments and estimates, including estimates related to future revenues, gross margin rates, store expenses, market rent rates and other assumptions. We base these estimates upon our past and expected future performance. We believe our estimates are appropriate in light of current market conditions.
The recoverability assessment related to these store-level assets requires various judgments and estimates, including estimates related to future revenues, gross margin rates, store expenses and other assumptions. We base these estimates upon our past and expected future performance. We believe our estimates are appropriate in light of current market conditions.
(b) Represents costs incurred in connection with the review and execution of refinancing opportunities, as well as the issuance of the Secured Notes and the Convertible Notes. (c) Net favorable lease costs represents the non-cash expense associated with favorable and unfavorable leases that were recorded as a result of the Merger Transaction.
(b) Represents costs incurred in connection with the review and execution of refinancing opportunities, as well as the issuance of the Secured Notes and the Convertible Notes. (c) Net favorable lease costs represent the non-cash expense associated with favorable and unfavorable leases that were recorded as a result of the Merger Transaction.
(g) Tax effect is calculated based on the effective tax rates (before discrete items) for the respective periods, for the tax impact of items (a) through (f). The effective tax rate during Fiscal 2020 includes the benefit of loss carrybacks to prior years with higher statutory tax rates.
(g) Tax effect is calculated based on the effective tax rates (before discrete items) for the respective periods, adjusted for the tax effect for the impact of items (a) through (f). The effective tax rate during Fiscal 2020 includes the benefit of loss carrybacks to prior years with higher statutory tax rates.
Liquidity and Capital Resources Our ability to satisfy interest and principal payment obligations on our outstanding debt will depend largely on our future performance which, in turn, is subject to prevailing economic conditions and to financial, business and other factors beyond our control.
Liquidity and Capital Resources Our ability to satisfy interest and principal payment obligations on our outstanding debt will depend largely on our future performance which, in turn, is subject to prevailing economic conditions and to financial, business and other factors beyond our 34 control.
A critical accounting estimate meets two criteria: (1) it requires assumptions about highly uncertain matters and (2) there would be a material effect on the Consolidated Financial Statements from either using a different, although reasonable, amount within the range of the estimate in the current period or from reasonably likely period-to-period changes in the estimate. 42 While there are a number of accounting policies, methods and estimates affecting our Consolidated Financial Statements as addressed in Note 1 to our Consolidated Financial Statements, “Summary of Significant Accounting Policies,” areas that are particularly critical and significant include: Revenue Recognition .
A critical accounting estimate meets two criteria: (1) it requires assumptions about highly uncertain matters and (2) there would be a material effect on the Consolidated Financial Statements from either using a different, although reasonable, amount within the range of the estimate in the current period or from reasonably likely period-to-period changes in the estimate. 38 While there are a number of accounting policies, methods and estimates affecting our Consolidated Financial Statements as addressed in Note 1 to our Consolidated Financial Statements, “Summary of Significant Accounting Policies,” areas that are particularly critical and significant include: Revenue Recognition .
In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations and intentions set forth under the caption above entitled “Cautionary Statement Regarding Forward-Looking Statements.” Our actual results or other events and the timing of events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Item 1A, Risk Factors and elsewhere in this Annual Report.
In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations and intentions as further described under the caption above entitled “Cautionary Statement Regarding Forward-Looking Statements.” Our actual results or other events and the timing of events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Item 1A, Risk Factors and elsewhere in this Annual Report.
In the second half of the year, which includes the back-to-school and holiday seasons, we generally realize a higher level of sales and net income. Weather continues to be a contributing factor to the sale of our clothing. Generally, our sales are higher if the weather is cold during the Fall and warm during the early Spring.
In the second half of the year, which includes the back-to-school and holiday seasons, we generally realize a higher level of sales and net income. Weather continues to be a contributing factor to the sale of our merchandise. Generally, our sales are higher if the weather is cold during the Fall and warm during the early Spring.
Our store and supply chain teams must continue to respond to the challenge of becoming more responsive to the sales chase, enhancing their ability at flexing up and down based on trends. Their ability to appropriately flex based on the ongoing trends allows us to maximize leverage on sales, regardless of the trend. • Optimizing Markdowns.
Our store and supply chain teams must continue to respond to the challenge of becoming more responsive to the sales chase, enhancing their ability at flexing up and down based on trends. Their ability to appropriately flex based on the ongoing trends allows us to maximize leverage on sales. • Optimizing Markdowns.
Dividends We currently do, and intend to continue to, retain all available funds and any future earnings to fund all of our capital expenditures, business initiatives, and to support any potential opportunistic capital structure initiatives. Therefore, at this time, we do not anticipate paying cash dividends in the near term.
Dividends We currently do, and intend to continue to, retain all available funds and any future earnings to fund all of the Company's capital expenditures, business initiatives, and to support any potential opportunistic capital structure initiatives. Therefore, at this time, we do not anticipate paying cash dividends in the near term.
We do not believe that our operating results were materially affected by inflation during Fiscal 2020 or Fiscal 2019. Historically, as the costs of merchandising and related operating expenses have increased, we have been able to mitigate the effect of such impact on our operations.
We do not believe that our operating results were materially affected by inflation during Fiscal 2020. Historically, as the costs of merchandising and related operating expenses have increased, we have been able to mitigate the effect of such impact on our operations.
We believe that these investments should improve our ability to develop vendor relationships, source great merchandise buys, more accurately assess value, and better forecast and chase the sales trend. • Enhancing Existing Categories and Introducing New Categories.
We believe that these investments should improve our ability to strengthen vendor relationships, source great merchandise buys, more accurately assess value, and better forecast and chase the sales trend. • Enhancing Existing Categories and Introducing New Categories.
We believe that these actions will also allow us to take more advantage of great opportunistic buys. • Operating with Leaner Inventories. We are planning to carry less inventory in our stores going forward, which we believe should result in the customer finding a higher mix of fresh receipts and great merchandise values.
We believe that these actions will also allow us to take more advantage of great opportunistic buys. • Operating with Leaner Inventories. We are planning to carry less inventory in our stores going forward compared to historical levels, which we believe should result in the customer finding a higher mix of fresh receipts and great merchandise values.
Cash Flows for Fiscal 2020 Compared with Fiscal 2019 For a discussion of our cash flows for Fiscal 2020 compared to Fiscal 2019, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Fiscal 2020 10-K.
Cash Flows for Fiscal 2021 Compared with Fiscal 2020 For a discussion of our cash flows for Fiscal 2021 compared to Fiscal 2020, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Fiscal 2021 10-K.
We define Adjusted Net Income (Loss) as net income (loss), exclusive of the following items, if applicable: (i) net favorable lease costs; (ii) costs related to debt issuances and amendments; (iii) loss on extinguishment of debt; (iv) impairment charges; (v) amounts related to certain litigation matters; (vi) non-cash interest on the Convertible Notes; (vii) costs related to closing the e-commerce store; and (viii) other unusual, non-recurring or extraordinary expenses, losses, charges or gains, all of which are tax effected to arrive at Adjusted Net Income (Loss).
We define Adjusted Net Income (Loss) as net income (loss), exclusive of the following items, if applicable: (i) net favorable lease costs; (ii) costs related to debt issuances and amendments; (iii) loss on extinguishment of debt; (iv) impairment charges; (v) amounts related to certain litigation matters; (vi) non-cash interest on the 2.25% Convertible Senior Notes due 2025 (Convertible Notes); (vii) costs related to closing the e-commerce store; and (viii) other unusual, non-recurring or extraordinary expenses, losses, charges or gains, all of which are tax effected to arrive at Adjusted Net Income (Loss).
A 1% change in the dollar amount of retail markdowns would have resulted in an increase in markdown dollars, at cost, of approximately $2.3 million for Fiscal 2021. Estimates are used to record inventory shortage at retail stores between physical inventories. Actual physical inventories are conducted at least annually to calculate actual shortage.
A 1% change in the dollar amount of retail markdowns would have resulted in an increase in markdown dollars, at cost, of approximately $3.0 million for Fiscal 2022. Estimates are used to record inventory shortage at retail stores between physical inventories. Actual physical inventories are conducted at least annually to calculate actual shortage.
We continue to invest in select store relocations and downsizes to improve the customer experience, taking into consideration the age, size, sales, and location of a store. Relocations provide an opportunity, upon leases expiration, to right-size our stores, improve our competitive positioning, incorporate our new prototype store designs and reduce occupancy costs.
We continue to invest in select store relocations and downsizes to improve the customer experience, taking into consideration the age, size, sales, and location of a store. Relocations provide an opportunity, upon lease expirations, to right-size our stores, improve our competitive positioning, incorporate our new prototype store designs and reduce occupancy costs.
We believe that our markdown system allows us to maximize sales and gross margin dollars based on forward-looking sales forecasts, sell-through targets and exit dates. Additionally, as we plan to carry less inventory in our stores, we expect to drive faster turns, which in turn will reduce the amount of markdowns taken. • Enhancing Purchasing Power.
We believe that our markdown system allows us to maximize sales and gross margin dollars based on forward-looking sales forecasts, sell-through targets and exit dates. Additionally, as we plan to carry less inventory in our stores compared to historical levels, we expect to drive faster turns, which in turn should reduce the amount of markdowns taken. • Enhancing Purchasing Power.
Performance for Fiscal Year Ended January 30, 2021 (Fiscal 2020) Compared with Fiscal Year Ended February 1, 2020 (Fiscal 2019) For a discussion related to Fiscal 2020 performance compared to Fiscal 2019 performance, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the fiscal year ended January 30, 2021 (Fiscal 2020 10-K).
Performance for Fiscal Year Ended January 29, 2022 (Fiscal 2021) Compared with Fiscal Year Ended January 30, 2021 (Fiscal 2020) For a discussion related to Fiscal 2021 performance compared to Fiscal 2020 performance, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the fiscal year ended January 29, 2022 (Fiscal 2021 10-K).
The total Topic No. 740 liability was $13.9 million, inclusive of $9.1 million of interest and penalties included in our total Topic No. 740 liability neither of which is presented in the table above as we are not certain if and when these payments would be required.
The total Topic No. 740 liability was $11.9 million, inclusive of $8.0 million of interest and penalties included in our total Topic No. 740 liability neither of which is presented in the table above as we are not certain if and when these payments would be required.
The Secured Notes were senior, secured obligations of BCFWC, and interest was payable semiannually in cash at a rate of 6.25% per annum on April 15 and October 15 of each year, beginning on October 15, 2020.
Secured Notes On April 16, 2020, BCFWC, issued $300.0 million of Secured Notes. The Secured Notes were senior, secured obligations of BCFWC, and interest was payable semiannually in cash at a rate of 6.25% per annum on April 15 and October 15 of each year, beginning on October 15, 2020.
General We are a nationally recognized off-price retailer of high-quality, branded merchandise at everyday low prices. We opened our first store in Burlington, New Jersey in 1972, selling primarily coats and outerwear. Since then, we have expanded our store base to 840 stores as of January 29, 2022 in 45 states and Puerto Rico.
General We are a nationally recognized off-price retailer of high-quality, branded merchandise at everyday low prices. We opened our first store in Burlington, New Jersey in 1972, selling primarily coats and outerwear. Since then, we have expanded our store base to 927 stores as of January 28, 2023 in 46 states and Puerto Rico.
(e) Includes $21.9 million, $23.9 million, and $35.4 million of favorable lease costs included in the line item “Selling, general and administrative expenses” in our Consolidated Statements of Income (Loss) for Fiscal 2021, Fiscal 2020 and Fiscal 2019, respectively.
(e) Includes $18.6 million, $21.9 million, and $23.9 million of favorable lease costs included in the line item “Selling, general and administrative expenses” in our Consolidated Statements of Income (Loss) for Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively.
We estimate that we will spend approximately $725 million, net of approximately $10 million of landlord allowances, in capital expenditures during Fiscal 2022, including approximately $250 million, net of the previously mentioned landlord allowances, for store expenditures (new stores, remodels and other store expenditures).
We estimate that we will spend approximately $560 million, net of approximately $10 million of landlord allowances, in capital expenditures during Fiscal 2023, including approximately $300 million, net of the previously mentioned landlord allowances, for store expenditures (new stores, remodels and other store expenditures).
We believe that this should drive faster turns and lower markdowns, while simultaneously improving our customers’ shopping experience. • Making a Greater Investment in Merchandising Capabilities. We intend to invest in incremental headcount, especially in growing or under-developed businesses, training and coaching, improved tools and reporting, and other forms of merchant support.
We believe that this should drive faster turns and lower markdowns, while simultaneously improving our customers’ shopping experience. • Investment in Merchandising Capabilities. We plan to continue investing in training and coaching, improved tools and reporting, incremental headcount, especially in growing or under-developed businesses, and other forms of 25 merchant support.
Our financial condition and operations could be impacted by changes in government regulations in areas including, but not limited to, taxes and healthcare. Ongoing international trade and tariff negotiations could have a direct impact on our income and an indirect impact on consumer prices.
Consumer confidence is also affected by the domestic and international political situation. Our financial condition and operations could be impacted by changes in government regulations in areas including, but not limited to, taxes and healthcare. Ongoing international trade and tariff negotiations could have a direct impact on our income and an indirect impact on consumer prices.
During the third quarter of Fiscal 2021, we entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes.
During the second half of Fiscal 2021, we entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes.
Under the terms of the exchange agreements, the holders exchanged $160.4 million in aggregate principal amount of Convertible Notes held by them for a combination of an aggregate of $90.8 million in cash and 513,991 shares of our common stock.
Under the terms of the exchange agreements, the holders exchanged $232.7 million in aggregate principal amount of Convertible Notes held by them for a combination of an aggregate of $199.8 million in cash and 513,991 shares of common stock.
An increase in workers’ compensation claims by employees, health insurance claims by employees or general liability claims may result in a corresponding increase in our costs related to these claims. Insurance reserves amounted to $81.6 million and $80.9 million at January 29, 2022 and January 30, 2021, respectively.
An increase in workers’ compensation claims by employees, health insurance claims by employees or general liability claims may result in a corresponding increase in our costs related to these claims. Insurance reserves amounted to $86.2 million and $81.6 million at January 28, 2023 and January 29, 2022, respectively.
Refer to the section below entitled “Results of Operations” for further explanation. 31 The following table shows our reconciliation of net income (loss) to Adjusted Net Income (Loss) for Fiscal 2021, Fiscal 2020 and Fiscal 2019: (unaudited) (in t housands) Fiscal Year Ended January 29, January 30, February 1, 2022 2021 2020 Reconciliation of net income (loss) to Adjusted Net Income (Loss): Net income (loss) $ 408,839 $ (216,499 ) $ 465,116 Net favorable lease costs (a) 21,914 24,078 35,761 Non-cash interest expense on convertible notes (b) — 23,988 — Costs related to debt issuances and amendments (c) 3,419 3,633 (375 ) Loss on extinguishment of debt (d) 156,020 202 — Impairment charges 7,748 6,012 4,315 Litigation matters (e) — 22,788 — E-commerce closure (f) — 1,549 — Tax effect (g) (24,741 ) (35,273 ) (10,083 ) Adjusted Net Income (Loss) $ 573,199 $ (169,522 ) $ 494,734 (a) Net favorable lease costs represents the non-cash expense associated with favorable and unfavorable leases that were recorded as a result of purchase accounting related to the April 13, 2006 Bain Capital acquisition of Burlington Coat Factory Warehouse Corporation (the Merger Transaction).
Refer to the section below entitled “Results of Operations” for further explanation. 28 The following table shows our reconciliation of net income (loss) to Adjusted Net Income (Loss) for Fiscal 2022, Fiscal 2021 and Fiscal 2020: (unaudited) (in t housands) Fiscal Year Ended January 28, January 29, January 30, 2023 2022 2021 Reconciliation of net income (loss) to Adjusted Net Income (Loss): Net income (loss) $ 230,123 $ 408,839 $ (216,499 ) Net favorable lease costs (a) 18,591 21,914 24,078 Non-cash interest expense on convertible notes (b) — — 23,988 Costs related to debt issuances and amendments (c) — 3,419 3,633 Loss on extinguishment of debt (d) 14,657 156,020 202 Impairment charges - long-lived assets 21,402 7,748 6,012 Litigation matters (e) 10,500 — 22,788 E-commerce closure (f) — — 1,549 Tax effect (g) (14,503 ) (24,741 ) (35,273 ) Adjusted Net Income (Loss) $ 280,770 $ 573,199 $ (169,522 ) (a) Net favorable lease costs represent the non-cash expense associated with favorable and unfavorable leases that were recorded as a result of purchase accounting related to the April 13, 2006 Bain Capital acquisition of Burlington Coat Factory Warehouse Corporation (the Merger Transaction).
Hedging On June 24, 2021, we terminated its previous interest rate swap and entered into a new interest rate swap. The new interest rate swap, which hedges $450 million of variable rate exposure under our Term Loan Facility, is designated as a cash flow hedge and expires on June 24, 2028.
The new interest rate swap, which hedges $450 million of variable rate exposure under our Term Loan Facility, is designated as a cash flow hedge and expires on June 24, 2028.
Our average interest rates and average balances related to our variable rate debt for Fiscal 2021 compared with Fiscal 2020 are summarized in the table below: Fiscal Year Ended January 29, January 30, 2022 2021 Average balance – ABL Line of Credit (in millions) $ — $ 256.6 Average interest rate – ABL Line of Credit — 1.9% Average balance – Term Loan Facility (in millions) (a) $ 960.4 $ 961.4 Average interest rate – Term Loan Facility 2.0% 2.2% (a) Excludes original issue discount Income tax expense (benefit) Income tax expense (benefit) was an expense of $136.5 million for Fiscal 2021 compared with a benefit of $221.1 million for Fiscal 2020.
Our average interest rates and average balances related to our variable rate debt for Fiscal 2022 compared with Fiscal 2021 are summarized in the table below: Fiscal Year Ended January 28, January 29, 2023 2022 Average balance – ABL Line of Credit (in millions) $ — $ — Average interest rate – ABL Line of Credit — — Average balance – Term Loan Facility (in millions) (a) $ 952.2 $ 960.4 Average interest rate – Term Loan Facility 4.0% 2.0% (a) Excludes original issue discount Income tax expense Income tax expense was $77.4 million for Fiscal 2022 compared with $136.5 million for Fiscal 2021.
In order to better serve our customers and maximize sales, we continue to refine our merchandising mix and inventory levels within our stores. By appropriately managing our inventories, we believe we will be better able to deliver a continual flow of fresh merchandise to our customers. Store Payroll . The method of calculating store payroll varies across the retail industry.
In order to better serve our customers and maximize sales, we continue to refine our merchandising mix and inventory levels within our stores. By appropriately managing our inventories, we believe we will be better able to deliver a continual flow of fresh merchandise to our customers. Store Payroll as a Percentage of Net Sales .
There can be no assurance that we will be able to offset inflationary pressure in the future, or that our business will not be negatively affected by continued inflation in the future. 30 Key Performance Measures We consider numerous factors in assessing our performance.
There can be no assurance that we will be able to offset inflationary pressure in the future by increasing prices or through other means, or that our business will not be negatively affected by continued inflation in the future. Key Performance and Non-GAAP Measures We consider numerous factors in assessing our performance.
Loss on Extinguishment of Debt During Fiscal 2021, we incurred debt extinguishment charges of $124.6 million related to the partial repurchases of the Convertible Notes, $30.2 million related to the premium paid on redemption of the Secured Notes, as well as $1.2 million related to the refinancing of our Term Loan Facility.
These exchanges resulted in aggregate pre-tax debt extinguishment charges of $14.7 million. During Fiscal 2021, we incurred debt extinguishment charges of $124.6 million related to the partial repurchases of the Convertible Notes, $30.2 million related to the premium paid on redemption of the Secured Notes, as well as $1.2 million related to the refinancing of our Term Loan Facility.
In addition, we estimate that we will spend approximately $290 million to support our supply chain initiatives, with the remaining capital used to support our information technology and other business initiatives. 39 Share Repurchase Program On August 18, 2021, our Board of Directors authorized the repurchase of up to $400.0 million of common stock, which is authorized to be executed through August 2023.This repurchase program was funded using our available cash and borrowings on our ABL Line of Credit.
In addition, we estimate that we will spend approximately $115 million to support our supply chain initiatives, with the remaining capital used to support our information technology and other business initiatives. 35 Share Repurchase Program On August 18, 2021, our Board of Directors authorized the repurchase of up to $400.0 million of common stock, which was authorized to be executed through August 2023.
(d) Amounts relate to the partial repurchase of the Convertible Notes, the full redemption of the Secured Notes, as well as the refinancing of the Term Loan Credit Agreement governing our senior secured credit term loan facility (Term Loan Facility). (e) Represents amounts charged for certain litigation matters. (f) Represents costs related to the closure of our e-commerce store.
(d) Relates to the partial repurchases of the Convertible Notes, the redemption of the Secured Notes, as well as the refinancing of the Term Loan Facility. (e) Represents amounts charged for certain litigation matters. (f) Represents costs related to the closure of our e-commerce store.
Key performance measures used by management include net income (loss), Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBIT, comparable store sales, gross margin, inventory, store payroll and liquidity. Net income (loss) . We earned net income of $408.8 million during Fiscal 2021 compared with a net loss of $216.5 million during Fiscal 2020.
Key performance and non-GAAP measures used by management include net income (loss), Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBIT, comparable store sales, gross margin, inventory, store payroll and liquidity. 27 Net income (loss) . We earned net income of $230.1 million during Fiscal 2022 compared with of $408.8 million during Fiscal 2021.
Downsizes provide an opportunity to right-size our stores, within our existing space, improve co-tenancy, incorporate all of our new store designs and reduce occupancy costs During Fiscal 2021, we relocated or downsized a total of 20 stores. • Enhancing Operating Margins. We intend to increase our operating margins through the following initiatives: • Improving Operational Flexibility.
Downsizes provide an opportunity to right-size our stores, within our existing space, improve co-tenancy, incorporate our new store designs and reduce occupancy costs. • Enhancing Operating Margins. We intend to increase our operating margins through the following initiatives: • Improving Operational Flexibility.
Our borrowings contain floating rate obligations and are subject to interest rate fluctuations. The objective of our financial risk management is to minimize the negative impact of interest rate fluctuations on our earnings and cash flows. We manage interest rate risk through the use of our interest rate cap contracts.
The objective of our financial risk management is to minimize the negative impact of interest rate fluctuations on our earnings and cash flows. We manage interest rate risk through the use of our interest rate swap contracts.
We intend to continue to increase comparable store sales through the following initiatives: • More Effectively Chasing the Sales Trend. We plan sales using conservative comparable stores sales growth, holding and controlling liquidity, closely analyzing the sales trend by business, and remaining ready to chase that trend.
These initiatives include, but are not limited to: • Driving Comparable Store Sales Growth. We strive to increase comparable store sales through the following initiatives: • More Effectively Chasing the Sales Trend. We plan sales using conservative comparable store sales growth, holding and controlling liquidity, closely analyzing the sales trend by business, and remaining ready to chase that trend.
Cash Flows Cash Flows for Fiscal 2021 Compared with Fiscal 2020 We used $289.2 million of cash flows during Fiscal 2021 compared with net proceeds of $977.2 million during Fiscal 2020. Net cash provided by operating activities amounted to $833.2 million and $219.2 million during Fiscal 2021 and Fiscal 2020, respectively.
Cash Flows Cash Flows for Fiscal 2022 Compared with Fiscal 2021 We used $218.5 million of cash flows during Fiscal 2022 compared with $289.2 million during Fiscal 2021. Net cash provided by operating activities amounted to $596.4 million and $833.2 million during Fiscal 2022 and Fiscal 2021, respectively.
We have opportunities to expand the depth and breadth of certain existing categories, such as ladies’ apparel, children’s products, bath and cosmetic merchandise, 28 housewares, décor for the home and beauty as we continue to de-weather our business, and maintain the flexibility to introduce new categories as we expand our merchandising capabilities. • Expanding and Enhancing Our Retail Store Base.
We have opportunities to expand our offerings in certain existing categories, such as ladies’ apparel, bath and cosmetic merchandise, housewares, and décor for the home, and maintain the flexibility to introduce new categories as we expand our merchandising capabilities. • Expanding and Enhancing Our Retail Store Base.
Store Openings, Closings and Relocations During Fiscal 2021, we opened 101 new stores, inclusive of 17 relocations, and closed five stores, exclusive of the aforementioned relocations, bringing our store count as of January 29, 2022 to 840 stores. We continue to pursue our growth plans and invest in capital projects that meet our financial requirements.
Executive Summary Store Openings, Closings and Relocations During Fiscal 2022, we opened 113 new stores, inclusive of 22 relocations, and closed four stores, exclusive of the aforementioned relocations, bringing our store count as of January 28, 2023 to 927 stores. We continue to pursue our growth plans and invest in capital projects that meet our financial requirements.
If a store is closed for seven or more days during a month, our policy is to remove that store from our calculation of comparable stores sales for any such month, as well as during the month(s) of their grand re-opening activities. Comparable store sales increased 15% and 3% in full year periods for Fiscal 2021 and Fiscal 2019, respectively.
If a store is closed for seven or more days during a month, our policy is to remove that store from our calculation of comparable store sales for any such month, as well as during the month(s) of their grand re-opening activities.
The table above excludes our irrevocable letters of credit guaranteeing payment and performance under certain leases, insurance contracts, debt agreements, merchandising agreements and utility agreements in the amount of $55.4 million as of January 29, 2022. As of January 29, 2022, insurance reserves amounted to $81.6 million.
The table above excludes our irrevocable letters of credit guaranteeing payment and performance under certain leases, insurance contracts, debt agreements, merchandising agreements and utility agreements in the amount of $51.1 million as of January 28, 2023. As of January 28, 2023, insurance reserves amounted to $86.2 million.
In addition, we made capital expenditures of $109.8 million to support our supply chain initiatives, with the remaining capital to support information technology and other business initiatives. We incurred cash spend on capital expenditures of $232.4 million, net of approximately $40.7 million of landlord allowances, during Fiscal 2020.
In addition, we made capital expenditures of $145.1 million to support our supply chain initiatives, with the remaining capital to support information technology and other business initiatives. We incurred cash spend on capital expenditures of $319.0 million, net of approximately $34.1 million of landlord allowances, during Fiscal 2021.
Refer to the section below entitled “Results of Operations” for further explanation. 33 The following table shows our reconciliation of net income (loss) to Adjusted EBIT for Fiscal 2021, Fiscal 2020 and Fiscal 2019: (unaudited) (in thousands) Fiscal Year Ended January 29, January 30, February 1, 2022 2021 2020 Reconciliation of net income (loss) to Adjusted EBIT: Net income (loss) $ 408,839 $ (216,499 ) $ 465,116 Interest expense 67,502 97,767 50,826 Interest income (189 ) (1,253 ) (1,720 ) Loss on extinguishment of debt (a) 156,020 202 — Costs related to debt issuances and amendments (b) 3,419 3,633 (375 ) Net favorable lease costs (c) 21,914 24,078 35,761 Impairment charges 7,748 6,012 4,315 Litigation matters (d) — 22,788 — E-commerce closure (e) — 1,549 — Income tax expense (benefit) 136,459 (221,124 ) 115,409 Adjusted EBIT $ 801,712 $ (282,847 ) $ 669,332 (a) Amounts relate to the partial repurchase of the Convertible Notes, the full redemption of the Secured Notes, as well as the refinancing of the Term Loan Facility.
Refer to the section below entitled “Results of Operations” for further explanation. 30 The following table shows our reconciliation of net income (loss) to Adjusted EBIT for Fiscal 2022, Fiscal 2021 and Fiscal 2020: (unaudited) (in thousands) Fiscal Year Ended January 28, January 29, January 30, 2023 2022 2021 Reconciliation of net income (loss) to Adjusted EBIT: Net income (loss) $ 230,123 $ 408,839 $ (216,499 ) Interest expense 66,474 67,502 97,767 Interest income (8,799 ) (189 ) (1,253 ) Loss on extinguishment of debt (a) 14,657 156,020 202 Costs related to debt issuances and amendments (b) — 3,419 3,633 Net favorable lease costs (c) 18,591 21,914 24,078 Impairment charges - long-lived assets 21,402 7,748 6,012 Litigation matters (d) 10,500 — 22,788 E-commerce closure (e) — — 1,549 Income tax expense (benefit) 77,386 136,459 (221,124 ) Adjusted EBIT $ 430,334 $ 801,712 $ (282,847 ) (a) Relates to the partial repurchases of the Convertible Notes, the redemption of the Secured Notes, as well as the refinancing of the Term Loan Facility.
Refer to the section below entitled “Results of Operations” for further explanation. 32 The following table shows our reconciliation of net income (loss) to Adjusted EBITDA for Fiscal 2021, Fiscal 2020 and Fiscal 2019: (unaudited) (in thousands) Fiscal Year Ended January 29, January 30, February 1, 2022 2021 2020 Reconciliation of net income (loss) to Adjusted EBITDA: Net income (loss) $ 408,839 $ (216,499 ) $ 465,116 Interest expense 67,502 97,767 50,826 Interest income (189 ) (1,253 ) (1,720 ) Loss on extinguishment of debt (a) 156,020 202 — Costs related to debt issuances and amendments (b) 3,419 3,633 (375 ) Litigation matters (c) — 22,788 — E-commerce closure (d) — 1,549 — Depreciation and amortization (e) 271,132 244,273 246,109 Impairment charges 7,748 6,012 4,315 Income tax expense (benefit) 136,459 (221,124 ) 115,409 Adjusted EBITDA $ 1,050,930 $ (62,652 ) $ 879,680 (a) Amounts relate to the partial repurchase of the Convertible Notes, the full redemption of the Secured Notes, as well as the refinancing of the Term Loan Facility.
Refer to the section below entitled “Results of Operations” for further explanation. 29 The following table shows our reconciliation of net income (loss) to Adjusted EBITDA for Fiscal 2022, Fiscal 2021 and Fiscal 2020: (unaudited) (in thousands) Fiscal Year Ended January 28, January 29, January 30, 2023 2022 2021 Reconciliation of net income (loss) to Adjusted EBITDA: Net income (loss) $ 230,123 $ 408,839 $ (216,499 ) Interest expense 66,474 67,502 97,767 Interest income (8,799 ) (189 ) (1,253 ) Loss on extinguishment of debt (a) 14,657 156,020 202 Costs related to debt issuances and amendments (b) — 3,419 3,633 Litigation matters (c) 10,500 — 22,788 E-commerce closure (d) — — 1,549 Depreciation and amortization (e) 288,990 271,132 244,273 Impairment charges - long-lived assets 21,402 7,748 6,012 Income tax expense (benefit) 77,386 136,459 (221,124 ) Adjusted EBITDA $ 700,733 $ 1,050,930 $ (62,652 ) (a) Relates to the partial repurchases of the Convertible Notes, the redemption of the Secured Notes, as well as the refinancing of the Term Loan Facility.
It also provides us the flexibility to shift purchases between suppliers and categories. This enables us to obtain better terms with our suppliers, which we expect to help offset the expected rising costs of goods. Market Risk We are exposed to market risks relating to fluctuations in interest rates.
This enables us to obtain better terms with our suppliers, which we expect to help offset the expected rising costs of goods. Market Risk We are exposed to market risks relating to fluctuations in interest rates. Our borrowings contain floating rate obligations and are subject to interest rate fluctuations.
Percentage of Net Sales Fiscal Year Ended January 29, January 30, February 1, 2022 2021 2020 Net sales 100.0 % 100.0 % 100.0 % Other revenue 0.2 0.2 0.4 Total revenue 100.2 100.2 100.4 Cost of sales 58.4 61.8 58.2 Selling, general and administrative expenses 30.8 40.5 30.7 Costs related to debt issuances and amendments 0.0 0.1 (0.0 ) Depreciation and amortization 2.7 3.8 2.9 Impairment charges - long-lived assets 0.1 0.1 0.1 Other income - net (0.1 ) (0.1 ) (0.2 ) Loss on extinguishment of debt 1.7 0.0 - Interest expense 0.7 1.7 0.7 Total costs and expenses 94.3 107.9 92.4 Income (loss) before income tax expense (benefit) 5.9 (7.7 ) 8.0 Income tax expense (benefit) 1.5 (3.8 ) 1.6 Net income (loss) 4.4 % (3.9 )% 6.4 % Performance for Fiscal Year Ended January 29, 2022 (Fiscal 2021) Compared with Fiscal Year Ended January 30, 2021 (Fiscal 2020) Net sales Net sales improved $3,555.0 million, or 61.8%, to $9,306.5 million, primarily due to the temporary closure of all our stores during Fiscal 2020.
Percentage of Net Sales Fiscal Year Ended January 28, January 29, January 30, 2023 2022 2021 Net sales 100.0 % 100.0 % 100.0 % Other revenue 0.2 0.2 0.2 Total revenue 100.2 100.2 100.2 Cost of sales 59.6 58.4 61.8 Selling, general and administrative expenses 33.1 30.8 40.5 Costs related to debt issuances and amendments — 0.0 0.1 Depreciation and amortization 3.1 2.7 3.8 Impairment charges - long-lived assets 0.2 0.1 0.1 Other income - net (0.3 ) (0.1 ) (0.1 ) Loss on extinguishment of debt 0.2 1.7 0.0 Interest expense 0.8 0.7 1.7 Total costs and expenses 96.7 94.3 107.9 Income (loss) before income tax expense (benefit) 3.5 5.9 (7.7 ) Income tax expense (benefit) 0.9 1.5 (3.8 ) Net income (loss) 2.6 % 4.4 % (3.9 )% 32 Performance for Fiscal Year Ended January 28, 2023 (Fiscal 2022) Compared with Fiscal Year Ended January 29, 2022 (Fiscal 2021) Net sales Net sales decreased $622.0 million, or 6.7%, to $8,684.5 million, primarily driven by a decrease of 13% in comparable store sales during Fiscal 2022.
Various factors affect comparable store sales, including weather conditions, current economic conditions, the timing of our releases of new merchandise and promotional events, the general retail sales environment, consumer preferences and buying trends, changes in sales mix among distribution channels, competition and the success of marketing programs. Gross Margin .
The change in our comparable store sales was as follows: Fiscal Year Ended January 28, 2023 -13% January 29, 2022 15% Various factors affect comparable store sales, including, but not limited to, weather conditions, current economic conditions, the timing of our releases of new merchandise and promotional events, the general retail sales environment, consumer preferences and buying trends, changes in sales mix among distribution channels, competition, and the success of marketing programs Gross Margin .
As a result, our definition of comparable store sales may differ from other retailers. For Fiscal 2021, we define comparable store sales as merchandise sales of those stores, commencing on the first day of the fiscal month two years after the end of their grand opening activities, which normally conclude within the first two months of operations.
For Fiscal 2022, we define comparable store sales as merchandise sales of those stores commencing on the first day of the fiscal month one year after the end of their grand opening activities, which normally conclude within the first two months of operations.
Debt and Hedging As of January 29, 2022, our obligations, inclusive of original issue discount, include $950.7 million under our Term Loan Facility, $572.3 million of Convertible Notes and no outstanding borrowings on our ABL Line of Credit. Our debt obligations also include $43.9 million of finance lease obligations as of January 29, 2022.
Debt and Hedging As of January 28, 2023, our obligations, inclusive of original issue discount, include $942.0 million under our Term Loan Facility, $507.7 million of Convertible Notes and no outstanding borrowings on our ABL Line of Credit. Our debt obligations also include $33.4 million of finance lease obligations as of January 28, 2023.
Capital Expenditures For Fiscal 2021, cash spend for capital expenditures, net of $34.1 million of landlord allowances, amounted to $318.4 million. These capital expenditures include approximately $140.8 million, net of the previously mentioned landlord allowances, for store expenditures (new stores, remodels and other store expenditures).
Capital Expenditures For Fiscal 2022, cash spend for capital expenditures, net of $23.1 million of landlord allowances, amounted to $428.0 million. These capital expenditures include approximately $190.5 million, net of the previously mentioned landlord allowances, for store expenditures (new stores, remodels and other store expenditures).
Depreciation and amortization Depreciation and amortization expense amounted to $249.2 million during Fiscal 2021, compared with $220.4 million during Fiscal 2020. The increase in depreciation and amortization expense was primarily driven by capital expenditures related to our new and non-comparable stores.
The dollar basis increase was primarily due to the same drivers listed above. Depreciation and amortization Depreciation and amortization expense amounted to $270.4 million during Fiscal 2022, compared with $249.2 million during Fiscal 2021. The increase in depreciation and amortization expense was primarily driven by capital expenditures related to our supply chain, as well as new and non-comparable stores.
(5) Represents commitments to purchase goods that have not been received as of January 29, 2022. The table above excludes estimated commitments for services used in our business of up to approximately $105 million over the next five years.
(4) Represents minimum rent payments for operating leases under the current terms. (5) Represents commitments to purchase goods that have not been received as of January 28, 2023. The table above excludes estimated commitments for services to be used in our business of up to approximately $185 million over the next five years.
A broad, protracted slowdown in the U.S. economy, an extended period of high unemployment rates, an uncertain global economic outlook or a credit crisis could adversely affect consumer spending habits resulting in lower net sales and profits than expected on a quarterly or annual basis. Consumer confidence is also affected by the domestic and international political situation.
In addition, consumer purchasing patterns may be influenced by consumers’ disposable income, credit availability and debt levels. 26 A broad, protracted slowdown in the U.S. economy, an extended period of high unemployment rates, inflation rates, an uncertain global economic outlook or a credit crisis could adversely affect consumer spending habits resulting in lower net sales and profits than expected on a quarterly or annual basis.
Due to the impact of the COVID-19 pandemic, including the temporary closing of all stores during Fiscal 2020, we are using Fiscal 2019 as the comparable previous year period when calculating comparable store sales for Fiscal 2021. The method of calculating comparable store sales varies across the retail industry.
Additionally, due to the impact of the COVID-19 pandemic in Fiscal 2020, we are using Fiscal 2019 as the comparable previous year period when calculating comparable store sales for Fiscal 2021. The method of calculating comparable store sales varies across the retail industry. As a result, our definition of comparable store sales may differ from other retailers.
During the fourth quarter of Fiscal 2021, we entered into additional separate, privately negotiated exchange agreements with certain holders of the Convertible Notes. Under the terms of the exchange agreements, the holders exchanged $72.3 million in aggregate principal amount of Convertible Notes held by them for $109.0 million in cash.
Loss on Extinguishment of Debt During Fiscal 2022, we entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes. Under the terms of the exchange agreements, the holders exchanged $64.6 million in aggregate principal amount of Convertible Notes held by them for $78.2 million in cash.
Product sourcing costs, which are included in the line item “Selling, general and administrative expenses” in our Consolidated Statements of Income (Loss), were $618.3 million during Fiscal 2021, compared to $433.8 million during Fiscal 2020. 36 Selling, general and administrative expenses The following table details selling, general and administrative expenses for Fiscal 2021 compared with Fiscal 2020.
Product sourcing costs, which are included in the line item “Selling, general and administrative expenses” in our Consolidated Statements of Income (Loss), were $677.6 million during Fiscal 2022, compared to $618.3 million during Fiscal 2021, primarily driven by increased supply chain costs.
The following discussion summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements, including the notes thereto, appearing elsewhere in this Annual Report.
The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements, including the notes thereto, appearing elsewhere in this Annual Report.
The redemption price of the Secured Notes was $323.7 million, plus accrued and unpaid interest to, but not including, the date of redemption. This redemption resulted in a pre-tax debt extinguishment charge of $30.2 million. Refer to Note 7, “Long Term Debt,” for further discussion regarding our debt transactions.
The redemption price of the Secured Notes was $323.7 million, plus accrued and unpaid interest to, but not including, the date of redemption. Refer to Note 7, “Long Term Debt,” for further discussion regarding our debt transactions. Hedging On June 24, 2021, the Company terminated its previous interest rate swap and entered into a new interest rate swap.
Refer to Note 7, “Long Term Debt,” for further discussion regarding our debt transactions. At January 29, 2022, our borrowing rate related to the Term Loan Facility was 2.1%. ABL Line of Credit At January 29, 2022, we had $594.6 million available under the ABL Line of Credit.
Refer to Note 7, “Long Term Debt,” for further discussion regarding our debt transactions. At January 28, 2023, our borrowing rate related to the Term Loan Facility was 6.4%.
Refer to Note 7 to our Consolidated Financial Statements, “Long Term Debt,” for an overview of the terms and conditions of these instruments. Term Loan Facility On June 24, 2021, BCFWC entered into Amendment No. 9 (the Ninth Amendment) to the Term Loan Credit Agreement governing the Term Loan Facility.
Refer to Note 7 to our Consolidated Financial Statements, “Long Term Debt,” for an overview of the terms and conditions of these instruments.
The effective tax rate was 25.0% related to pretax income of $545.3 million for Fiscal 2021, and 50.5% related to pretax loss of $437.6 million for Fiscal 2020.
The effective tax rate was 25.2% related to pretax income of $307.5 million for Fiscal 2022, and 25.0% related to pretax income of $545.3 million for Fiscal 2021. The decrease in tax expense is primarily driven by the decrease in pretax income.
(in millions) Fiscal Year Ended January 29, 2022 Percentage of Net Sales January 30, 2021 Percentage of Net Sales $ Variance % Change Store related costs $ 1,766.7 19.0 % $ 1,494.4 26.0 % $ 272.3 18.2 % Product sourcing costs 618.3 6.6 433.8 7.5 184.5 42.5 Corporate costs 311.6 3.3 265.4 4.6 46.2 17.4 Marketing and strategy costs 61.1 0.7 53.8 0.9 7.3 13.6 Other selling, general and administrative expenses 110.8 1.2 79.5 1.5 31.3 39.4 Selling, general and administrative expenses $ 2,868.5 30.8 % $ 2,326.9 40.5 % $ 541.7 23.3 % The decrease in selling, general and administrative expenses as a percentage of net sales was primarily driven by the overall increase in sales .
(in millions) Fiscal Year Ended January 28, 2023 Percentage of Net Sales January 29, 2022 Percentage of Net Sales $ Variance % Change Store related costs $ 1,739.0 20.0 % $ 1,766.7 19.0 % $ (27.7 ) (1.6 )% Product sourcing costs 677.6 7.8 618.3 6.6 59.3 9.6 Corporate costs 301.8 3.5 311.6 3.3 (9.8 ) (3.1 ) Marketing and strategy costs 47.0 0.5 61.1 0.7 (14.1 ) (23.1 ) Other selling, general and administrative expenses 112.0 1.3 110.8 1.2 1.2 1.1 Selling, general and administrative expenses $ 2,877.4 33.1 % $ 2,868.5 30.8 % $ 8.9 0.3 % The increase in selling, general and administrative expenses as a percentage of net sales was primarily driven by deleverage in occupancy and increased product sourcing costs, partially offset by decreased incentive compensation, store payroll costs, and advertising costs.
This change was primarily the result of an increase in capital expenditures related to our stores (new stores, remodels and other store expenditures), reflective of our cash management decisions due to COVID-19. Net cash used in financing activities was $778.0 million during Fiscal 2021 compared to proceeds of $1,032.2 million during Fiscal 2020.
Net cash used in investing activities was $423.1 million and $344.4 million during Fiscal 2022 and Fiscal 2021, respectively. This change was primarily the result of an increase in capital expenditures related to our stores (new stores, remodels and other store expenditures) and supply chain growth initiatives.
We may not be able to adequately increase our prices over time to offset increased costs, whether due to inflation or otherwise.
There can be no assurance that we will be able to offset inflationary pressure in the future, or that our business will not be negatively affected by continued inflation in the future. We may not be able to adequately increase our prices over time to offset increased costs, whether due to inflation or otherwise.
Recent Accounting Pronouncements Refer to Note 2 to our Consolidated Financial Statements, “Recent Accounting Pronouncements,” for a discussion of recent accounting pronouncements and their impact in our Consolidated Financial Statements. Fluctuations in Operating Results We expect that our revenues and operating results may fluctuate from fiscal quarter to fiscal quarter or over the longer term.
Fluctuations in Operating Results We expect that our revenues and operating results may fluctuate from fiscal quarter to fiscal quarter or over the longer term.
The decrease in working capital was primarily driven by the decreased cash balance due to the Convertible Notes repurchases during the third quarter and fourth quarter of Fiscal 2021 and redemption of the Secured Notes, as well as an increased accounts payable balance, partially offset by increased merchandise inventory balance.
The decrease in working capital was primarily due to a decrease in cash and cash equivalents, primarily driven by payments on the Convertible Notes and share repurchases, partially offset by decreased accounts payable and increased inventory.
(2) Represents interest payments on (i) the outstanding balance of the Term Loan Facility, with an average interest rate of 2.0% during Fiscal 2021; and (ii) the outstanding balance of the Convertible Notes, with an interest rate of 2.25%. (3) Finance lease obligations include future interest payments. (4) Represents minimum rent payments for operating leases under the current terms.
(2) Represents interest payments on (i) the outstanding balance of the Term Loan Facility, with an interest rate of 6.4% as of January 28, 2023; (ii) $450.0 million interest rate swap with a fixed LIBOR of 2.2%; and (iii) the outstanding balance of the Convertible Notes, with an interest rate of 2.25%. (3) Finance lease obligations include future interest payments.
We did not have any borrowings during Fiscal 2021. 40 Convertible Notes On April 16, 2020, we issued $805.0 million of Convertible Notes.
At January 28, 2023, we had $795.7 million available under the ABL Line of Credit. We did not have any borrowings during Fiscal 2022. Convertible Notes On April 16, 2020, we issued $805.0 million of Convertible Notes.
At various times throughout the year, traditional full-price department store chains and specialty shops offer brand-name merchandise at substantial markdowns, which can result in prices approximating those offered by us at our Burlington Stores. We anticipate that competition will increase in the future. Therefore, we will continue to look for ways to differentiate our stores from those of our competitors.
At various times throughout the year, traditional full-price department store chains and specialty shops offer brand-name merchandise at substantial markdowns, which can result in prices approximating those offered by us at our Burlington Stores. Recently, an overhang of inventory across the retail industry has driven a surge in promotional activity at other retailers.
Comparable store sales were not meaningful for Fiscal 2020 due to the temporary store closures resulting from the COVID-19 pandemic.
Comparable store sales measure performance of a store during the current reporting period against the performance of the same store in the corresponding period of a prior year. Comparable store sales were not meaningful for Fiscal 2020 due to the extended store closures resulting from the COVID-19 pandemic.
This increase was primarily driven by the temporary closure of all our stores during Fiscal 2020, caused by the COVID-19 pandemic, as well as our sales growth during Fiscal 2021, partially offset by debt extinguishment charges during Fiscal 2021. Refer to the section below entitled “Results of Operations” for further explanation.
This decrease was primarily driven by lower sales, as well as decreased gross margin rate, partially offset by decreased loss on debt extinguishment charges. Refer to the section below entitled “Results of Operations” for further explanation.
Impairment charges—long-lived assets Impairment charges related to long-lived assets were $7.7 million and $6.0 million during Fiscal 2021 and Fiscal 2020, respectively, related to store-level assets and lease assets at 9 stores and 14 stores during Fiscal 2021 and Fiscal 2020, respectively.
Impairment charges—long-lived assets Impairment charges related to long-lived assets were $21.4 million and $7.7 million during Fiscal 2022 and Fiscal 2021, respectively, related to four stores sold below carrying value as well as impairment of store-level assets and lease assets at twelve stores during Fiscal 2022, compared to impairment of store-level assets and lease assets at nine stores during Fiscal 2021.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe interest rate of our Term Loan Facility is also dependent on the prime rate, and the federal funds rate as further discussed in Note 7 to our Consolidated Financial Statements, “Long Term Debt.” To address the transition away from LIBOR, the Term Loan Facility and ABL Line of Credit agreements each provide for an agreed upon methodology to amend such agreements to substitute LIBOR with an agreed replacement rate, subject to our consent and the applicable administrative agent, and in each case subject to a short lender negative consent period.
Biggest changeThe interest rate of our Term Loan Facility is also dependent on the prime rate, and the federal funds rate as further discussed in Note 7 to our Consolidated Financial Statements, “Long Term Debt.” During Fiscal 2022, an amendment to the ABL Line of Credit replaced the LIBOR-based interest rate benchmark provisions with interest rate benchmark provisions based on a term secured overnight financing rate (SOFR) or a daily SOFR rate (in the case of daily SOFR, available for borrowings up to $100 million, or up to the full amount of the commitments if the term SOFR rate is not available).
Primary exposures include changes in interest rates, as borrowings under our ABL Line of Credit and Term Loan Facility bear interest at floating rates based on LIBOR or the base rate, in each case plus an applicable borrowing margin.
Primary exposures include changes in interest rates, as borrowings under our ABL Line of Credit bear interest based on SOFR and borrowings under our Term Loan Facility bear interest at floating rates based on LIBOR or the base rate, in each case plus an applicable borrowing margin.
This sensitivity analysis assumes our mix of financial instruments and all other variables will remain constant in future periods. These assumptions are made in order to facilitate the analysis and are not necessarily indicative of our future intentions.
This sensitivity analysis assumes our mix of financial instruments and all other 40 variables will remain constant in future periods. These assumptions are made in order to facilitate the analysis and are not necessarily indicative of our future intentions.
If we do not have sufficient cash flow to service our interest payment obligations on our outstanding indebtedness and if we cannot borrow or obtain equity financing to satisfy those obligations, our business and results of operations will be materially adversely affected. We cannot be assured that any replacement borrowing or equity financing could be successfully completed. 45
If we do not have sufficient cash flow to service our interest payment obligations on our outstanding indebtedness and if we cannot borrow or obtain equity financing to satisfy those obligations, our business and results of operations will be materially adversely affected. We cannot be assured that any replacement borrowing or equity financing could be successfully completed. 41
We have unlimited interest rate risk related to borrowings on our variable rate debt in excess of the notional principal amount of our interest rate swap contract. At January 29, 2022, we had $956.6 million of floating-rate debt, exclusive of original issue discount.
We have unlimited interest rate risk related to borrowings on our variable rate debt in excess of the notional principal amount of our interest rate swap contract. At January 28, 2023, we had $947.0 million of floating-rate debt, exclusive of original issue discount.
Based on $956.6 million outstanding as floating-rate debt, a one percentage point interest rate increase as of January 29, 2022 ( after considering our interest rate swap contract and assuming current borrowing level remains constant), would cause an increase to cash interest expense of $5.1 million per year.
Based on $947.0 million outstanding as floating-rate debt, a one percentage point interest rate increase or decrease as of January 28, 2023 ( after considering our interest rate swap contract and assuming current borrowing level remains constant), would cause an increase or decrease, respectively, to cash interest expense of $4.8 million per year.
The new interest rate swap, which hedges $450.0 million of variable rate exposure under our Term Loan Facility, is designated as a cash flow hedge and expires on June 24, 2028.
The new interest rate swap, which hedges $450.0 million of variable rate exposure under our Term Loan Facility, is designated as a cash flow hedge and expires on June 24, 2028. Refer to Note 8, “Derivative Instruments and Hedging Activities,” for further discussion regarding our derivative transactions.
Removed
Refer to Note 8, “Derivative Instruments and Hedging Activities,” for further discussion regarding our derivative transactions. 44 On June 24, 2021, we entered into Amendment No. 9 (the Ninth Amendment) to the Term Loan Credit Agreement governing the Term Loan Facility.
Removed
The Ninth Amendment, among other things, extended the maturity date from November 17, 2024 to June 24, 2028, and changed the interest rate margins applicable to the Term Loan Facility from 0.75% to 1.00%, in the case of prime rate loans, and from 1.75% to 2.00%, in the case of LIBOR loans, with a 0.00% LIBOR floor.

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