Burlington Stores, Inc. (NYSE:BURL) Q4 2022 Earnings Call Transcript

As we move into 2023, I feel like what we have to offer in the store is much more compelling, and I think our marketing, if we’re able to drive more traffic into the store, is really going to work well for us in 2023.

Kristin Wolfe: And then on your question on reserve inventory, as I noted, we feel really good about the values and the content in our reserve. It’s certainly a mix of short stay and pack-and-hold, and we also measure it in terms of the percent of wow values and branded penetration, so we feel really good about the content of the reserve from all those measures.

Adrienne Yih: Very helpful, thanks so much and best of luck.

Operator: Our final question comes from Chuck Grom from Gordon Haskett. Please proceed.

Chuck Grom: Hey, thanks very much. Great execution. My one question is on the buying team. I know you’ve increased the organization a lot over the past few years, and I’m curious if the team now is in a good place or are you still upgrading talent and new capabilities. As a follow-up, given there’s a natural learning curve to adding so many new employees to the team, how should we think about the benefits of improved sales and profitability from that facet over the next couple of years? Thank you.

Michael O’Sullivan: Sure, good morning Chuck. Thanks for the question. Yes, as I mentioned in the earlier comments, we’ve really ramped up investment in our merchandising organization over the last three years. Just the raw numbers are that our headcount, our merchandising headcount is about 50% bigger now than it was in 2019. Now actually, if you peel back the onion on that, it’s not 50% higher in every business. There are some businesses, especially our fastest growing opportunity businesses where the headcount growth was higher than 50%, and obviously some business where it’s less, so that’s a lot of newness, that’s a lot of newness, a lot of investment in the organization. Now I should add that it’s actually pretty consistent with what we had said three years ago.

I think on a similar call like this three years ago, I probably would have said that we would have increased merchant headcount by about 15% a year for the next three years, and that’s kind of the way it’s worked out. To just pivot to being forward-looking for a minute, I would say that most of the heavy lifting in terms of expanding our merchant team is now behind us. That’s not to say that we won’t add talent opportunistically – we will, and there’s certainly some areas of our business where we see some opportunity for that, but the big increase, the big expansion has already happened. Let me move away from headcount and just talk about how our merchandising organization operates, because I feel like in the last few years, we’ve added headcount and we’ve definitely leaned into the main principles of off-price more so than we ever had in the past.