Adjusted EBITDA zoomed 23.8% year-on-year at off-price retailer of high-quality branded apparel and NYSE-listed Burlington Stores, Inc. in the second quarter ended August 2, 2014.
Burlington Stores said its adjusted EBITDA increased 23.8% or $11.2 million in second quarter of 2014 from $58.1 million in second quarter of 2013.
Sales growth, SG&A leverage and gross margin expansion led to a 70 basis point expansion in adjusted EBITDA as a percentage of net sales in second quarter of 2014, as compared to the second quarter of 2013.
Burlington was also able to reduce steeply its adjusted net loss to $0.9 million or a negative $0.01 per share in the period under review against net loss of $13.6 million last year or negative $0.19 in the same quarter last year.
Net sales increased 8.3% year-on-year to $1,043.6 million, which includes a 4.7% hike in comparable store sales which follows a comparable store sales increase of 7.8% in the 2013 second quarter driven by improved execution of the retailer's off-price business model.
Gross margin expanded by 50 basis points to 38.2% in the second quarter of 2014 from 37.7% in the second quarter of 2013, which Burlington noted, more than offset 40 basis point rise in product sourcing costs included in SG&A expenses.
SG&A expenses without considering product sourcing costs and advisory fees, as a percentage of net sales was 29.0% against 29.7% in the second quarter of 2013 driven by improved leverage in store payroll, store expenses and other SG&A expenses.
Depreciation and amortization expense, exclusive of net favourable lease amortization too decreased $0.4 million to $34.0 million in the thirteen weeks to August 2, 2014.
Interest expense decreased $7.8 million to $25.5 million from last year from interest savings related to principal payments made over the last twelve months on its Holdco Notes and term loan.
Burlington was also able to reduce merchandise inventories at the end of second quarter of 2014 to $711.5 million versus $748.3 million at end of second quarter of last year.
According to Burlington, the decrease was primarily driven by a comparable store inventory decrease of 18% as a part of the ongoing initiative to reduce inventory levels, increase inventory turnover and ultimately drive incremental sales through continually improved product offerings.
This decrease, the retailer added, was partially offset by a $41 million increase in pack and hold purchases and inventory related to the opening of 20 net new stores since August 3, 2012.
For the third quarter of 2014, Burlington expects net sales to increase in the range of 6.4% to 7.4% and adjusted net income per diluted share in the range of $0.09 to $0.12 compared to an adjusted loss per pro forma share of $0.05 in the third quarter of 2013.
The apparel retailer also announced that it will open 17 new stores and close one existing store resulting in a total store count of 539 at the end of the third quarter.
