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IPO Report: Burlington Holdings (BURL)

By  +Follow October 1, 2013 9:27AM
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Founded in 1972, Burlington Holdings ($BURL) is a national off-price retailer of high quality branded apparel, operating 503 stores, inclusive of an internet store, in 44 states and Puerto Rico.  BURL’s goal is to open 25 new stores annually

Six IPOs are scheduled for this week. The full IPO calendar can be found at IPOpremium.

Based in Burlington, NJ, FURL scheduled a $200 million IPO with a market capitalization of $1 billion at a price range mid-point of $15, for Wednesday, October 2, 2013.

S-1 filed September 19, 2013.  Manager, Joint Managers:  J.P. Morgan; Morgan Stanley; BofA Merrill;  Goldman; Wells Fargo Securities.  Co-Managers:  BMO Capital; Guggenheim; Telsey Advisory; Cowen; SunTrust Robinson Humphrey; Ramirez

Summary

Founded in 1972, BURL is a national off-price retailer of high quality branded apparel, operating 503 stores, inclusive of an internet store, in 44 states and Puerto Rico.

BURL’s goal is to open 25 new stores annually and BURL believes the U.S. market can support at least 1,000 stores, which is only a doubling from the current base of 503 stores.

BURL is highly leveraged: since February 2011 BURL paid out $636 million in cash dividends to its private equity owner, paid for by increased debt.

Valuation

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing june 6 mos

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Burlington Holdings

$1,074

0.3

42.5

-4.0

-0.7

19%

Seasonal business, p/e based on ’12 yr

 

 

 

 

 

P/E adjusted for interest savings from debt repayment

38.4

 

 

 

Glossary

BURL is highly leveraged (big debt burden), with a negative price-to-book value of -4.  It operates on razor then margins.  For the year ended December 2012, profit was only .6% of sales.

As demonstrated by J.C. Penny, the retail channel can be unforgiving when mistakes are made.

Conclusion

Neutral to positive because investors like the10% sales increase for the June six months.

Business

Founded in 1972, BURL is a national off-price retailer of high quality branded apparel, operating 503 stores, inclusive of an internet store, in 44 states and Puerto Rico.

BURL believes it is a market leader in the fast growing off-price retail channel.

Off-Price retail channel

BURL offers merchandise using an Every Day Low Price (“EDLP”) model with savings up to 60-70% off department and specialty store regular prices.  BURL features merchandise from over 3,500 vendors, with a focus on major nationally-recognized brands.

The average store size is 80,000 square feet, which is two to three times the size of the largest off-price competitors’ stores. BURL’s  larger store size has allowed the company to offer more categories and substantially more breadth in each product category than off-price competitors.

Growth history

BURL has opened an average of 23 new stores per year since 2006 and new stores have an average payback period of less than three years. Over 98% of the stores are profitable on a store-level cash flow basis, and BURL believes it has considerable room to grow profitability

Growth plan

By the end of Fiscal 2013 BURL anticipates that 66% of its stores will either be new, refreshed, remodeled or relocated since 2006.

Under BURL’s enhanced real estate selection process, BURL opened 15 new stores in Fall 2011 and 6 new stores in Spring 2012, which, on average, have performed in line with their initial sales projections during their first full year of operation.

BURL’s goal is to open 25 new stores annually and BURL believes the U.S. market can support at least 1,000 stores, which is only a doubling from the current base of 503 stores.

Competition

Competitors include national chains such as the following: JCPenney, Sears and Kohl’s.   BURL define national chains as retail stores with an average store size of 60,000 to 100,000 square feet that offer a range of moderately priced goods across multiple categories.

Department stores competition includes, among others, the following retailers: Macy’s, Neiman Marcus and Saks Fifth Avenue.  BURL defines department stores as retail stores with an average store size of 100,000 to 150,000 plus square feet that feature an array of nationally recognized, moderate and better priced goods.

5% stockholders pre-IPO

Bain Capital and related funds, 93.3%

Dividends

No future dividends anticipated.

In February 2013, BURL declared a cash dividend of $336 million, paid for by borrowings.  In February 2011, BURL  paid a $300 million cash dividend, paid for by borrowings.

Use of proceeds

BURL  expects to net $181.5 million from its IPO.

BURL intends to use the proceeds, together with cash on hand, to redeem $170.6 million aggregate principal amount of 9.00%/9.75% Senior Notes due 2018, to pay an advisory  termination fee with an affiliate of Bain Capital of $11.0 million, and for other general corporate purposes.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for burl
Samuel Brown
24 Oct 14 08:02:02
$burl UPDATE: Credit Suisse Initiates Coverage On Burlington Stores Inc http://t.co/0LFF1WocIM
rolly
23 Oct 14 21:10:48
new leading bases for $SPX, $ACHN, $AMRI, $AMED, $ABC, $ATHM, $ANNR, $BURL, $CMGE, $DEPO, $LOCO, $EPAM, $FARM, $FRGI, $ICLR, $KANG, $INSY
John Ablemann
23 Oct 14 15:31:13
$burl UPDATE: Credit Suisse Initiates Coverage On Burlington Stores Inc http://t.co/t5BK21S7lV
John Turner
23 Oct 14 15:31:12
$burl Burlington Stores Inc.: Burlington Stores, Inc. Announces Secondary Offering ... http://t.co/AKp3Nhyiv7
IPODave
23 Oct 14 11:44:47
Any updates on if $BURL will SPO? Or did they already do a stealth equity and I missed it?
Matt McCall
23 Oct 14 05:46:52
2 Retail Ideas For The Holiday Season | Seeking Alpha http://t.co/BEV3VAD0VA via @salphatrending $BURL $FL
PVETrader
22 Oct 14 11:50:21
Making some progress in select long probes, which is encouraging and a change from my probes in weeks passed. $BABA $XENT $BURL
Traffic Generator
22 Oct 14 11:20:27
RT @SeekingAlpha: 2 Retail Ideas For The Holiday Season http://t.co/20uuxDXfOD $BURL $FL $XRT
Matt McCall
22 Oct 14 11:17:26
My latest article: 2 Retail Ideas For The Holiday Season | Seeking Alpha http://t.co/BEV3VAD0VA via @salphatrending $NKE $FL $BURL $XRT
Seeking Alpha
22 Oct 14 11:14:59
2 Retail Ideas For The Holiday Season http://t.co/20uuxDXfOD $BURL $FL $XRT
Grant Beasley
21 Oct 14 17:48:33
Best set ups for me $ZOES $AGIO $BURL
Lucretia
21 Oct 14 11:02:45
$burl Stocks Alert-Kosmos Energy Ltd (NYSE:KOS), Burlington Stores Inc (NYSE ... http://t.co/hI60WHzAMe
John Turner
21 Oct 14 11:02:44
$burl UPDATE: Credit Suisse Initiates Coverage On Burlington Stores Inc http://t.co/dbiT8sh9bm
Peter Bardens
20 Oct 14 07:31:21
$burl UPDATE: Credit Suisse Initiates Coverage On Burlington Stores Inc http://t.co/WQLvPC7BJw
John Turner
20 Oct 14 07:31:18
$burl Stocks Alert-Kosmos Energy Ltd (NYSE:KOS), Burlington Stores Inc (NYSE ... http://t.co/WhbQIf6STO
IPODave
19 Oct 14 06:58:56
After excellent gains, we are now facing a market near resistance with no solid $IPOs on schedule. $SPO - $BURL? Lookin for ideas...
US Banking News
17 Oct 14 06:11:42
Burlington Stores Gets Average Rating of Buy from Analysts $BURL http://t.co/hlGmTUnWXl
				
				
By  +Follow October 1, 2013 9:27AM
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