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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
Financial Headlines
1 Sep 14 13:08:28
$BURL: Signet Jewelers (SIG) Jumps: Stock Rises 7.7% http://t.co/oCObcdiKhY http://t.co/Q0juyA28zL
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1 Sep 14 12:14:16
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Stock Signaling
1 Sep 14 12:01:05
All-Time Highs: $ANDE $ECHO $SRE $HCA $AVGO $PCRX $CHE $MAR $BURL $MOH $GPRO $CAVM $LYB $ITMN $UGI http://t.co/Vtx6dLy0Nw #stockmarket #nyse
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Market News Desk
31 Aug 14 10:08:23
$BURL: Burlington Stores Now Covered by Sterne Agee (BURL) http://t.co/E2o3YtzYQi http://t.co/JKykiHzgD9
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31 Aug 14 08:40:39
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30 Aug 14 18:40:02
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30 Aug 14 14:12:56
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30 Aug 14 11:50:24
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30 Aug 14 05:58:33
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Stocks in News
29 Aug 14 23:08:22
$BURL: Fast Moving Stocks: Cerner Corporation (NASDAQ:CERN), Marvell Technology ... http://t.co/heVxhFXizG http://t.co/OSAhSGyNZP
Wall Street News
29 Aug 14 22:08:28
$BURL: Zacks Rank #1 Additions for Wednesday http://t.co/a6NwDWGbQJ http://t.co/vPeEp6BNKK
PennyStock Zone
29 Aug 14 21:50:33
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PennyStock Zone
29 Aug 14 16:41:47
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PennyStock Zone
29 Aug 14 09:42:48
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PennyStock Zone
29 Aug 14 09:01:25
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PennyStock Zone
27 Aug 14 18:32:05
Best day trading DVD by Fous Alerts check it out! http://t.co/HJ6WDp65fM #stocks #trading #nasdaq #nyse $XRS $MCHP $GS $BURL $VOD $IRF
Stock News Headlines
27 Aug 14 12:08:27
$BURL: Burlington Stores, Inc. Announces Second Quarter 2014 Earnings Release Date ... http://t.co/Q6Q8F3jjwe http://t.co/jgHNHJ3upi
PennyStock Zone
27 Aug 14 10:59:24
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27 Aug 14 08:24:46
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27 Aug 14 04:53:40
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CPB24
26 Aug 14 20:02:25
@DavidSchawel still own, yes. Look at $BURL action post refi. People aware, but at same time aren't. Highest conviction is $CLD. See my post
PennyStock Zone
26 Aug 14 10:38:58
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Market News
26 Aug 14 07:08:36
$BURL: Student Debt Threatens the Safety Net for Elderly Americans http://t.co/vr8B6RqWCf http://t.co/BFF4WFfDsN
Wall Street News
26 Aug 14 06:08:24
$BURL: Is Burlington Stores (BURL) a Great Growth Stock? http://t.co/3iXWy0hyG5 http://t.co/FKkKB6XXwq
PennyStock Zone
26 Aug 14 05:37:29
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PennyStock Zone
25 Aug 14 15:00:03
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25 Aug 14 12:49:49
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By  +Follow October 1, 2013 9:27AM
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