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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. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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Results for burl
Capital Market Labs
25 Apr 15 16:45:51
$BURL Revenue is Increasing. #CML_BURL #CML_Revenue http://t.co/sykCcHQGn6 http://t.co/IX0PB5svnL
danrocks
25 Apr 15 00:12:38
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24 Apr 15 16:14:38
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24 Apr 15 16:12:27
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24 Apr 15 14:49:10
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clayton
24 Apr 15 14:37:21
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24 Apr 15 14:34:16
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John TenBrock
24 Apr 15 13:18:14
huge trender $BURL looks like it wants to the 100 test... around 52 and change...
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24 Apr 15 12:36:14
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$FDO vs. $DLTR vs. $BURL vs. $BIG Compared Across 9 Critical Measures http://t.co/zH8u0QAo56 http://t.co/VLJ7MXc8sK
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24 Apr 15 07:55:13
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24 Apr 15 05:15:24
Burlington Stores: Tough To Justify The Current Price http://t.co/laAJab7gcN $BURL
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24 Apr 15 05:15:23
Burlington Stores: Tough To Justify The Current Price http://t.co/z4QUVF2FOg $BURL
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$burl Burlington Stores Inc (NYSE:BURL)'s director Joshua Bekenstein Unloaded ... http://t.co/wXkfuf1C2S
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Academic Algorithms:(Volatility of Volatility) $CW, $INFI, $FL, $BURL, $FNSR http://t.co/cOQ616gshA
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Academic Algorithms:(Volatility of Volatility) $CW, $INFI, $FL, $BURL, $FNSR http://t.co/yK49lX9Osm
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$DDS vs. $JCP vs. $BURL vs. $BONT Compared Across 9 Critical Measures http://t.co/sUpV7zGLME http://t.co/s8NmOrJYYe
DennyT
23 Apr 15 23:50:56
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Capital Market Labs
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$DLTR vs. $BURL vs. $BIG Compared Across 9 Critical Measures http://t.co/VbQ5PoHEem http://t.co/xYkAai6otP
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23 Apr 15 21:46:12
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BreakingStocksNews
23 Apr 15 15:45:02
$BURL: Robust Expected Growth Earns Burlington A Bullish Thesis: http://t.co/tz6GPvhd42
Long & Short Ideas
23 Apr 15 15:38:12
Robust Expected Growth Earns Burlington A Bullish Thesis http://t.co/fPuDnyUyHd $BBY $TJX $BURL
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23 Apr 15 15:38:11
Robust Expected Growth Earns Burlington A Bullish Thesis http://t.co/i1LRQMSNCz $BBY $TJX $BURL
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23 Apr 15 14:10:30
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23 Apr 15 14:00:37
RT @SeekingAlpha: My Top Multiline Retail Stocks For 2015 http://t.co/yiFQitHzvv $BURL $DDS $M
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23 Apr 15 13:57:04
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23 Apr 15 13:57:04
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Capital Market Labs
23 Apr 15 11:09:28
$DDS vs. $BLKI.B vs. $JCP vs. $BURL Compared Across 9 Critical Measures http://t.co/XUkKqwGubt http://t.co/gNMJCUggh0
Capital Market Labs
23 Apr 15 10:02:01
$BURL vs. $FDO vs. $BIG vs. $GMAN Compared Across 9 Critical Measures http://t.co/B4u9DMbdQM http://t.co/LylC2q6dBO
Jack Trader
23 Apr 15 09:06:02
$burl Burlington Stores Inc (NYSE:BURL)'s director Joshua Bekenstein Unloaded ... http://t.co/Vi1dXohno1
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$TUES vs. $FRED vs. $BIG vs. $BURL Compared Across 9 Critical Measures http://t.co/O83F3qr93d http://t.co/xYfjGtzlKu
Capital Market Labs
22 Apr 15 16:26:10
$BURL EPS is Accelerating. #CML_BURL #CML_EPS http://t.co/wTDb5g0QYs http://t.co/or76IHoz8l
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22 Apr 15 13:34:47
$burl Analyst Consensus Price Target on Burlington Stores, Inc. (NYSE:BURL) http://t.co/AydLkNMktq
Capital Market Labs
22 Apr 15 12:12:12
$BURL vs. $FDO vs. $FRED vs. $BIG Compared Across 9 Critical Measures http://t.co/5VVbAS57Sb http://t.co/vzKKzmfpmZ
Capital Market Labs
22 Apr 15 08:04:10
$FRED vs. $BONT vs. $BIG vs. $BURL Compared Across 9 Critical Measures http://t.co/QeSTi4wCE0 http://t.co/qcWtplgr0V
				
				
By  +Follow October 1, 2013 9:27AM
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