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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.

Results for burl
Andie Andrewson
17 Apr 14 02:52:36
$BURL Federal parties scramble to keep the peace as nomination battles heat up http://t.co/fTjNILp4NC
Andie Andrewson
17 Apr 14 02:16:37
$BURL Local author, artist to sign books http://t.co/HnosjREyhq
Andie Andrewson
17 Apr 14 00:18:32
$BURL A young artist portrays his 'ideal world' on canvas http://t.co/FuV95Dn3Hp
Andie Andrewson
16 Apr 14 23:39:33
$BURL Healthy living program offered http://t.co/kyITW4Si4b
MidNorl
16 Apr 14 14:51:18
$BURL Hamilton garbage plant: community seeks answers http://t.co/wJ44z1LzUn
MidNorl
16 Apr 14 12:52:34
$BURL Burlington waste transfer company says proposed hotel not compatible http://t.co/nQTI2RSezw
MidNorl
16 Apr 14 12:24:33
$BURL Inception Mining Announces Completion of a Surface Use Determination by the ... http://t.co/s85K0hCQfx
NASDAQ Star
16 Apr 14 05:03:45
$BURL BURLINGTON STORES, INC. Financials http://t.co/65ZaUOkR9c
MidNorl
16 Apr 14 01:15:10
$BURL Bridgeline Digital, Inc. To Present At Taglich Brothers 11th Annual Small Cap ... http://t.co/TloZBWTRWC
MidNorl
16 Apr 14 01:03:10
$BURL Eat local, or not? Debate starts with localvore question and veers afield http://t.co/3wmPDvCGvp
MidNorl
15 Apr 14 13:24:12
$BURL FlyeredUp: Win Two Tickets to Flyers Playoff Game http://t.co/QlwpyDMGLy
Jago Fisher
15 Apr 14 12:47:30
$BURL BURLINGTON STORES, INC. Financials http://t.co/9l8OrKYJnm
MidNorl
15 Apr 14 03:24:20
$BURL Use of antipsychotics soaring at Ontario nursing homes http://t.co/mzBIZYEgjs
MidNorl
15 Apr 14 03:24:19
$BURL Betty L. Campbell http://t.co/3DimoBKpVQ
Yuonne Fulton
15 Apr 14 01:34:11
$BURL BURLINGTON STORES, INC. Financials http://t.co/OnI5sXPCfS
MidNorl
15 Apr 14 00:12:06
$BURL Opponents of planned subdivision in north Spokane County file lawsuit http://t.co/ANGwhIypXO
MidNorl
14 Apr 14 22:15:10
$BURL Pezzettino Italian Deli & Market carrying on a family tradition http://t.co/AQr3ruBrTv
MidNorl
14 Apr 14 21:06:34
$BURL Valpo adopts plan for Ind. 49 corridor development http://t.co/PsKJ61nvdX
MidNorl
14 Apr 14 15:52:05
$BURL Warren Buffett, Berkshire Hathaway, And Dividend Growth Investing http://t.co/CQhLXrkmNV
MidNorl
14 Apr 14 15:46:35
$BURL Comtek Advanced Structures Celebrates 20 Years http://t.co/LjyOUwAvGr
MidNorl
14 Apr 14 15:24:33
$BURL Pa. man admits guilt in kickback scheme at joint base http://t.co/5Cv29QKguT
MidNorl
14 Apr 14 10:34:34
$BURL Nine Greater Lowell companies earn training grants http://t.co/SruuzAEhPk
RetailInvestorConf.
14 Apr 14 08:09:47
IPOs and Transactions: April 7 – 11 > http://t.co/Hg8PN2P1ru > $BURL $OPRX $LXU $CYMA $THLD $AGIO $ASTI $LIQD $DCT $PRKR $TICC $AR
MidNorl
14 Apr 14 07:58:33
$BURL Monroe County property transfers http://t.co/nvmd2oaE7u
MidNorl
13 Apr 14 07:39:34
$BURL John M. Bender http://t.co/gmdiOSVzgs
sunkist1212
12 Apr 14 14:14:54
RT @04051tj: #Burlington Coat Factory: Go fur-free to #help #animals http://t.co/hrkYh00jmL via #Change $BURL #ethics #bantrapping @burling…
TJ
12 Apr 14 09:01:48
#Burlington Coat Factory: Go fur-free to #help #animals http://t.co/hrkYh00jmL via #Change $BURL #ethics #bantrapping @burlington
MidNorl
11 Apr 14 19:14:07
$BURL Pig producers owed millions as processor seeks creditor protection #BURL http://t.co/vAalgUBOrr
MidNorl
11 Apr 14 12:54:23
$BURL Sun Bank hires CEO #BURL http://t.co/hB2tDD4K91
MidNorl
11 Apr 14 12:27:11
$BURL Changes coming to rural Burlington County road #BURL http://t.co/9R9ocDglHF
MidNorl
11 Apr 14 10:58:35
$BURL Vending machines that play with, recognize you #BURL http://t.co/6R8wtr9F9K
MidNorl
11 Apr 14 07:16:35
$BURL Editorial: H.552 — House plan unravels state's pro-business efforts #BURL http://t.co/SUIyU3VHkg
MidNorl
10 Apr 14 16:04:03
$BURL LeMaitre Vascular Will Announce First Quarter 2014 Earnings Results on April ... #BURL http://t.co/F2SmIRJJz6
Chi Amaya
10 Apr 14 11:36:48
$BURL BURLINGTON STORES, INC. Financials http://t.co/j33QyvIK6k
MidNorl
10 Apr 14 06:27:09
$BURL Homewood Suites by Hilton Opening Six New Hotels in Canada #BURL http://t.co/tn0ekwkYaz
MidNorl
10 Apr 14 03:22:37
$BURL On Berkshire Hathaway's Dividend Policy #BURL http://t.co/TjEJS70vKV
MidNorl
9 Apr 14 21:17:04
$BURL Schools funding ad riles some county board candidates #BURL http://t.co/lrOg7SRtwC
MidNorl
9 Apr 14 16:00:34
$BURL 99 Cents in El Centro #BURL http://t.co/gYVq5ze6ME
MidNorl
9 Apr 14 11:42:04
$BURL Voting for Penn State's alumni trustees starts Thursday: All you need to know #BURL http://t.co/xdCh0MmOd2
MidNorl
9 Apr 14 10:24:07
$BURL Home News Residents file OMB appeal against Burlington's... #BURL http://t.co/nXU3u8LxzE
				
				
By  +Follow October 1, 2013 9:27AM
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