Burlington Stores, Inc. (NYSE:BURL) Q3 2022 Earnings Call Transcript

We have a lot of great merchants who’ve been around off-price for a long time, and they know off-price. So it’s more to do with the merchant’s background. I do think that it’s two things. I think the improved processes, tools that I described a little bit earlier, I think will help us. But I also think that realistically, when you grow an organization very rapidly like that, you do get some misssteps. And I think we have to acknowledge that and learn from it. So I think it’s a combination of those things.

Adrienne Yih: Okay. And then my just final wrap up would be how do you make sure that you now don’t overbuy, your stores are still markedly larger than your peers in the space, but just what are the guardrails to make sure that we don’t over-index the other way?

Michael O’Sullivan: Yes. That’s a good question. We — the key thing to understand, and this is something we’ve put a lot of focus on this over the last three years is that the amount of inventory that we buy, the amount — the volume of receipts that we buy has absolutely nothing to do with the size of the store. It’s driven by the sales volume. So we look very closely at our inventory turn and if we think sales are trending up, we give the store more inventory. If the store happens to be an 80,000 square foot store versus a 25,000 square foot store, that doesn’t mean it gets more inventory. It’s only if its sales volume justifies that. Now the implication of that, and I’m sure many analysts and investors have noticed this is if you go to some of our older stores, our older, less productive stores, you’re going to see a lot of empty space.

And it may be space that we’ve tried to manage by putting in temporary walls. But you’re going to see some of that. Because as I say, we’re very careful the amount of inventory we put in the store is not driven by the physical square footage of the store. It’s driven by the sales volume and sales trend in that store.

Adrienne Yih: That’s very helpful. Best of luck. Happy Thanksgiving.

Michael O’Sullivan: You too, thank you.

Operator: We are out of time for questions today. I’d like to turn the call back over to Michael O’Sullivan for closing remarks.

Michael O’Sullivan: Let me close by thanking everyone on this call for your interest in Burlington Stores. We look forward to talking to you again in March to discuss our fourth quarter and full year 2022 fiscal results. Thank you for your time today.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.