Burlington Coat Hurt by Leveraging
By Don Hogsett -- Home Textiles Today, 1/29/2007 12:00:00 AM
Burlington, N.J. —
Hit by soaring interest expense since its takeover a year ago, and recording a sharp jump in stockpiles, Burlington Coat Factory Investments Holdings recorded a 74.1% slide in second quarter profits, to $11.7 million from $45.4 million during the same period a year ago.
Sales at the off-price retailer, the parent of Luxury Linens, grew by 4.2%, to $984.8 million from $945.4 million last year. Same-store sales declined by 2.4%.
Taking a bite out of the bottom line, interest expense rocketed higher, jumping 23-fold, to $35.2 million from just $1.5 million last year. For the six months, interest costs climbed to $70.6 million from $3.3 million during the same period a year ago.
Inventories climbed by 29.0%, pulling $205.1 million away from the bottom line. Stockpiles climbed to $913.3 million by Dec. 2 from a mid-year level of $708.2 million.
Average gross margin rose by 230 basis points, or 2.3 percentage points, to 39.0% from 37.7 % a year ago, helped by higher initial markups and lower freight costs. But operating costs as a percentage of sales rose by 130 basis points, or 1.3 percentage points, to 29.2% from 27.9% last year. Measured in absolute dollars, costs jumped up by 8.9%, to $287.6 million from $264.2 million, pulling $23.4 million away from the bottom line.
BURLINGTON COAT FACTORY
| Qtr. 12/2 (x000) | 2006 | 2005 | % change |
| (loss) a. Net sales. Total sales, including miscellaneous revenue of $12.1 million during the second quarter and $8.5 million during the same period a year ago, were $996.9 million, up 4.5% from $953.9 million last year. For the six months, total sales, including miscellaneous revenue of $19.6 million vs. $15.8 million a year ago, were $1.7 billion, up 3.0% from $1.6 billion last year. b. Second quarter results include $682,000 in miscellaneous income, compared with a $2.6 million loss a year ago. Six-month results include $1.7 million in miscellaneous income, compared with a $2.5 million year-before loss; and an income tax benefit of $24.8 million, compared with a year-before tax provision of $18.6 million. c. Since its acquisition by Bain Capital Partners last year, Burlington is no longer a public company, but is required to record operating results with the federal Securities and Exchange Commission because of its publicly held debt.shares outstanding during the last nine months of the year, down 80.2, to 101.4 million diluted shares from 522.7 million last year. |
|||
| Sales | $984,767a | $945,409 | 4.2 |
| Oper. income (EBIT) | 108,851 | 101,052 | 7.7 |
| Interest expense | 35,216 | 1,531 | -- |
| Net income | 11,747b | 45,371b | -74.1 |
| Per share (diluted) | ---c | ---c | -- |
| Average gross margin | 39.0% | 37.7% | -- |
| SG&A expenses | 29.2% | 27.9% | -- |
| Six months | |||
| Sales | $1,641,613a | $1,596,257a | 2.8 |
| Oper. income (EBIT) | 99,143 | 99,449 | -0.3 |
| Interest expense | 70,630 | 3,344 | -- |
| Net income | (40,061)b | 29,464b | -- |
| Per share (diluted) | ---c | ---c | -- |
| Average gross margin | 37.4% | 36.5% | -- |
| SG&A expenses | 32.6% | 31.2% | -- |
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