Burlington Stores, Inc.
Q1 2015 Earnings Call Transcript

Published: 9 Jun 2015

[Operator:]

Greetings, and welcome to the Burlington Stores, First Quarter 2015 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bob LaPenta, Vice President and Treasurer for Burlington Stores. Mr. LaPenta, please go ahead.

[Bob LaPenta:]

Thank you, operator and good morning everyone. We appreciate everyone's participation in today's conference call to discuss Burlington's first quarter fiscal year 2015 operating results. Our presenters today are Tom Kingsbury, our Chairman and Chief Executive Officer; and Marc Katz, our Chief Financial Officer. Tom will begin with a brief overview of the quarter’s financial results, and update you on the progress towards the key initiatives that we believe position us to achieve our long term goals. Marc will then review our financial results and future outlook in more detail before we open the call for questions. Before I turn the call over to Tom, I'd like to inform listeners that this call may not be transcribed, recorded or broadcast without our expressed permission. A replay of the call will be available for seven days. Remarks made on this call concerning future expectations, events, strategies, objectives, trends or projected financial results are forward-looking statements and are subject to certain risks and certain uncertainties. Actual results or events may differ materially from those that are projected in such forward-looking statements. Such risks and uncertainties include those that are described in the company's 10-K for fiscal year 2014 and in other filings with the SEC, all of which are expressly incorporated herein by reference. Now, here's Tom.

[Tom Kingsbury:]

Thank you Bob and good morning everyone. We started the year by delivering earnings that exceeded our guidance despite reporting comparable store sales below our guidance. We believe this speaks to our ability to effectively manage receipts and expenses over the long term. Key highlights for the first quarter included net sales increase, 4.9%; gross margin expanded 160 basis points to 39.7% as we entered the year with significantly less aged inventory. Adjusted EBITDA increased 10% to $101 million with EBITDA margin expansion of 40 basis points and adjusted net income per share on a fully diluted basis rose to $0.41, up 64% from $0.25 per diluted share last year. Also at quarter end our comparable store inventories decreased by 11%, which contributed to an 18% faster comparable store inventory turnover and we ended the quarter with pack and hold inventory representing 26% of our total inventory versus 19% last year. I will now provide additional detail regarding our sales performance for the quarter. The first quarter marked our 9th consecutive period of positive comp sales and we have delivered comp sales increases in 18 of the last 21 quarters. With that said, we believe our Q1 comp store sales were negatively impacted by the following factors

[Marc Katz:]

Thanks Tom and good morning everyone. Thank you for joining us today. We delivered a total sales increase of 4.9% and a comp store sales increase of 0.8%. Our comparable store sales increase was driven by an increase in traffic and an increase in units per transaction. This was the third quarter in a row with an increase in traffic. Conversion and AUR both declined. Our gross margin rate was 39.7%, an increase of 160 basis points versus last year. This is directly correlated with the lower level of aged inventory that we began this year with versus last year. While the lower level of inventory contributed to a significant reduction in markdown sales, it also resulted in significantly fewer items of the floor that needed to markdown. Accordingly, we took fewer markdowns in the quarter, which was the primary driver of the reported margin increase. This improvement more than offset an 80 basis point increase in product sourcing costs, which include cost to process goods through our supply chain and buying costs, which are in selling and administrative expenses. Going forward, we expect reported margin improvements versus last year to slightly outpace product souring cost increases versus last year. As a percentage of net sales, selling and administrative expenses exclusive of product sourcing costs and advisory fees increased 40 basis points to 27.3%. The increase was due to a deleveraging of occupancy and marketing costs and increases in severance and stock based compensation expense. Adjusted EBITDA increased by 10% or $9 million to $101 million, representing a 40 basis point increase in rate for the quarter. Depreciation and amortization expense exclusive of net favorable lease amortization increased by $1.5 million to $36 million. Interest expense decreased $12 million to $15 million, driven by interest savings related to the debt refinancing in August 2014 and principal payments made during fiscal 2014. At the end of the quarter we converted $800 million of our $1.2 billion term loan outstanding to a fixed rate of 4.9% by executing an interest rate swap. The remaining outstanding term loan of $370 million remains at the floating rate of 4.25% tied to the LIBOR index with a floor of 1%. Although one can never predict when the fed will raise or lower interest rates, we believe that locking in the majority of our term loan at a historically low interest rate through May 2019 was in the best interest of the company and our shareholders. In terms of returning cash to shareholders, I’m happy to announce that our Board of Directors has authorized the company to repurchase up to $200 million for common stock over the next 24 months. The share repurchase will be funded through free cash flow the company will generate. We expect our debt leverage to be at or below 2.5 times at the end of 2015, which we believe will continue to decline in future years based on EBITDA growth alone. Through this repurchase authorization, we now have the ability to delever and return capital to shareholders at the same time. The adjusted effective tax rate was 37.9% versus 40.2% last year. The decrease in the rate is the result of realizing certain tax credits. Combined, this resulted in an increase in adjusted net income of $13 million or 69% to $31 million for the quarter. Diluted adjusted net income per share increased 64% to $0.41 versus $0.25 last year and our weighted average diluted shares outstanding were 76.5 million shares versus 75.5 million shares last year. Turning to our balance sheet; at the end of the quarter we had $35 million in cash, borrowings of $180 million on our ABL and have availability in excess of $380 million. At the end of the quarter we prepaid $50 million in term loan debt, resulting in total debt of $1.3 billion. Comparable store inventory decreased 11% compared with the end of first quarter last year. As Tom mentioned, our comparable store inventory turnover improved by 18%. Cash flow used from operation was $22 million primarily related to increased pack and hold purchases. The company anticipates generating free cash flow during the remainder of 2015 and beyond to fund all of the company’s capital expenditures, business initiatives and its recently announced share repurchase program. Capital expenditures net of landlord incentives were $32 million in the first quarter. As Tom mentioned earlier, we opened five stores in the quarter and we closed one existing location. We ended the quarter with 546 stores. We continue to expect to open 25 net new stores in fiscal year 2015. In appreciation of our Burlington Associates effective July 05, all full-time and part time associates with six months or more of service making less than $9 per hour will be raised to $9 per hour. This decision resulted in an incremental $5 million of store payroll, which has been completely offset by SG&A reductions across the company. Accordingly this decision will have no impact on our quarterly or annual guidance. Turning to our outlook, we are introducing second quarter guidance and reiterating our full year outlook. For the second quarter of fiscal 2015 we expect net sales to increase in the range of 7% to 8%, comparable store sales to increase between 3% and 4% on top of last year’s 4.7% increase. Adjusted diluted net income per share is expected to be in the range of $0.10 to $0.13 versus a $0.001 loss per share last year, utilizing a share count of 76.6 million shares. Turning to our guidance for full year 2015, consistent with the long term growth objectives we shared during our IPO, for fiscal 2015 we continue to expect net sales growth in the range of 6% to 7%; comparable store sales to increase 2% to 3% or on top of last year’s 4.9% increase; EBITDA margin expansion of 10 to 20 basis points on top of the 60 basis points of expansion we achieved in 2014. In addition, we expect interest expense to approximate $61 million, a tax rate of approximately 39% and a share count of approximately 77 million shares. Net capital expenditures are expected to be in the range of $150 million to $160 million and depreciation and amortization of approximately $150 million. The springs are adjusted. Net income per share guidance to a range of $2.15 to $2.25. And now I would like to turn the call back over to Tom for concluding remarks.

[Tom Kingsbury:]

In summary, I’d like to thank our store and corporate teams for delivering a 64% increase in adjusted diluted EPS. With a strong and talented team and significant runway to further optimize our off-price mode, we are confident in our ability to continue our success in 2015and well into the future. Operator, we are ready for questions.

[Operator:]

Thank you. [Operator Instructions] Our first question today is coming from David Glick from Buckingham. Please proceed with your question.

[David Glick:]

Thank you. Good morning.

[Tom Kingsbury:]

Hi David.

[David Glick:]

Tom, you guys have been very, very consistent in terms of top line performance over the last couple of years and I think investors have come to rely on that consistency of at least a two to three comp. Some of the factors you talked about today, generally I’d like to get a better handle on specifically how they impacted their comp, but obviously some of them you were aware of in mid March when you gave your guidance, some obviously impacted your business after. But if you could walk us through and the list of what appear to be transitory factors and help us better quantify the impact that had on your business, number one. And number two, obviously there’s some signs that your sales are improving in the second quarter, which is very encouraging. Obviously you need a three to four comp to get back to your two to three guidance, but if you can give us as specific as you can be around your confidence that your guidance represents, the past conservatives and that you’ve outperformed over the last few years, that would be really helpful.

[Tom Kingsbury:]

Okay. First of all to address the comp for the first quarter, as I mentioned in the prepared remarks, we did have a shift of sales into January from February from the accelerated federal income tax returns. As you know we had a very strong performance in the fourth quarter. We picked up 6.7%. Our comp sales and mark down product were significantly below last year and we finished 2014 in the best shape in age product in our history. Our 90 day and older experienced the largest dollar drop in the last five years, approximately $120 million. Obviously that’s helped and contributed to our 160 basis points in gross margin and then we talked about some store closures due to weather. And lastly I think and most importantly, maybe to answer your question about things that will not transfer into the second quarter was we had some receipt flow issues in three key business, ladies shoes, handbags, dresses and suits, which we felt were really self inflicted due to under calibrating the timing of receipts that skipped the stores prior to Easter. So to answer your question, relative to when we gave our guidance in early March, we were still three weeks out from Easter. We felt we were still going to get the goods into the stores. Obviously that didn’t happen and also we felt that other businesses could make up the deficiency if in fact we did experience declines in these businesses, but that clearly didn’t happen, because of the obvious importance of these businesses prior to Easter, but it was really issues that we had in terms of just calibrating the receipts coming into the store. Easter was a little bit earlier, a couple of weeks earlier than last year, which compounded the issue. But in terms of confidence about our guidance in the second quarter, obviously our second quarter performance to-date, we’re very encouraged. Obviously there’s less weather dependency in the second quarter versus the first quarter. The timelines are clear with no meaningful calendar shifts. Obviously Easter, we are highly penetrated in Easter in general based on our history and our customer, so that obviously impacts us a lot. Ladies shoes, now that we have receipts in is now outperforming and obviously the shoe business, ladies shoe business is very important in the second quarter where obviously we saw a lot of sandals. And dresses and suits are less important in the second quarter. The second quarter is more casual. So that’s why we feel confident in our guidance of three to four.

[David Glick:]

Any specifics you can put around some of those. I don’t know if Marc can, but some of the deficiencies in the first quarter, what it costs you in comp and are you running ahead of your plan in the second quarter; that will be helpful to know.

[Tom Kingsbury:]

Why, I really think that’s a lot of detail to get into in terms of identifying by issue in terms of how it impacted our comps, but let me put some color around that, because that’s a good question. If we would have made our plan in the three Easter businesses that I described, we would have been in the high end of our range.

[David Glick:]

The high end of two to three?

[Tom Kingsbury:]

Yes.

[David Glick:]

Okay, thank you.

[Operator:]

Thank you. Our next question today is coming from Lorraine Hutchinson from Bank of America/Merrill Lynch. Please proceed with your question.

[Lorraine Hutchinson:]

Thank you. Good morning.

[Tom Kingsbury:]

Hello Lorraine.

[Lorraine Hutchinson:]

Hi. I wanted to follow up on those three women’s categories. It sounds like in addition to delays you may have some product issues as well that will take some time to get through. Can you talk a little bit about particularly ladies dresses and suits and handbags? I know some new buyers in the handbag business, but maybe if you can give us some clarity on how long do you think it will take those categories to perform and also if you could quantify how big those three categories are as a percentage of your total sales?

[Tom Kingsbury:]

Let me just address the ladies dress and suit business. As I mentioned, we feel very good about our team there and obviously where less dresses and suits sell better as we enter into the second half of the year. So we really feel we have really some good things in place to capitalize on that business in the second half of the year. The second quarter is more casual, so they are less important, but I feel we’re on track there. We have a very good team as I mentioned and we’re going to obviously move that business forward. We do have some issues in our handbag assortments and we have a new DMM running that business and two new buyers running that business. So it’s going to take a while to improve the assortments, but we feel that we have a lot of good things in place and we should see some positive momentum in the second half of the year. In terms of size of the three businesses we’re in, not sure if you heard Tom’s comment to David, but if we would have hit plan in Q1 for those three businesses, we would have ended up at the high end of our guidance.

[Lorraine Hutchinson:]

Thank you.

[Operator:]

Thank you. Our next question today is coming from Mathew Boss from JPMorgan.

[Mathew Boss:]

Hey, good morning guys.

[Tom Kingsbury:]

Good morning.

[Mathew Boss:]

So your outlook for the year is unchanged despite the embedded wage increase. Can you just talk through some of the offsets that you were able to find in the P&L. How do we think about the comp needed to leverage fixed cost expenses this year and next and I guess alternately any change to your multi-year 20% plus bottom line algorithm.

[Tom Kingsbury:]

Okay, so first let me take the wages here first. It was $5 million of incremental store payroll Matt and really what we did is we challenged every pyramid head at the company to find offsets for that and every pyramid head came through. So there were efficiency gains literally across the board in our company that helped offset the $5 million. I will tell you without getting into details. On those Matt what I can say is that we did not take hours off the selling floor. They are all efficiency gains from other areas of the company, so that’s number one. Number two, we are still sticking with our 10 to 20 basis points of EBITDA margin expansion for the year. As you know, we are planning and guiding for it conservatively and we do that because we got a conservative comp plan and guidance. What comes with that is a lower expense base and lower receipt plan and we are confident that our team can – merchandizing and planning teams really adapt to chasing business when it’s out there to chase. The last thing I’d add is in terms of our full year for this year, we did mention on our last call that we had $9.4 million of incremental expenses related to stock based comp and new building costs and now we’ve got the $5 million on top of that and we’re absorbing all of those and sticking with our 10 to 20 basis points of expansion. No change to future year outlooks in terms of what we provided during our IPO.

[Mathew Boss:]

Great, and then just a quick follow-up. On new store productivity, second quarter in a row up almost 150% in the quarter. Can you just walk through what you’re seeing from the smaller store format and really how should we think about the opportunity to right size the fleet and there’s a material number of leases that come up for renewal over the next three years; just the best way to think about that.

[Tom Kingsbury:]

Yes, really happy with our new stores in terms of how they are executing versus our underwriting models. Our stores that are less than 60,000 square feet Matt are still producing a sales per square foot about 22% higher than the chain and as you think about the stores that we’re opening in 2015, we have 17 of them; they are 55,000 square feet or less. So we’re really happy with how they are performing and how they are doing in line, both on the top line and from an EBIT margin contribution as well.

[Marc Katz:]

Yes, we only have one store Matt in 2015, that’s about 60,000 square feet that we’re opening; its 62,000 square feet. So the average is around 55,000 square feet for this year and just in the last couple of years, ’13 and ’14, they are around 60,000 square feet. So we’re working hard and we’re working very, very hard on opening stores that are smaller and we have a team working on even a smaller format just because we feel that based on the inventory reductions that we’ve had over time, that we can definitely operate the entire assortment of Burlington in a smaller square footage store.

[Mathew Boss:]

Great. Best of luck.

[Tom Kingsbury:]

Thank you.

[Operator:]

Thank you. Our next question today is coming from Ike Boruchow from Sterne Agee. Please proceed with your question.

[Ike Boruchow:]

Hi everyone. Thanks for taking my question. Just a quick question, either Marc or Tom around the product sourcing cost comment you guys had in your prepared remarks. I’m just curious, I think you commented that for the rest of the year gross margin expansion should offset the product cost increases that you’ll see and I’m just kind of curious, are we at a point in the supply chain where that’s a sustainable factor in the model and basically just how should we think about those two line items over the next – the rest of this year and into the future.

[Tom Kingsbury:]

Yes, I think I’ll give the same answer that I gave last quarter Ike and we’re not in the ninth inning of executing our off-price model. So as we continue to go to more opportunistic, more packable, more closed out buys and our distribution center has to touch those goods more often than an upfront buy, we believe that the product sourcing costs are going to continue to increase. With that said, as we’ve proven for the last two years and as we certainly proved in Q1, the reported margin increases that come with those buy types more than offset our product sourcing costs. So we see it continuing through this year and we see reported margin offsetting it.

[Ike Boruchow:]

Got it, great. Good luck.

[Operator:]

Thank you. Our next question today is coming from Kimberly Greenberger from Morgan Stanley. Please proceed with your question.

[Kimberly Greenberger:]

Great, thank you soo much.

[Tom Kingsbury:]

Hi Kimberly.

[Kimberly Greenberger:]

I wanted to just start on the wages. Is the $5 million the 2015 increase or is that an annualized number?

[Marc Katz:]

That is just from July 5 through the end of the year Kimberly.

[Kimberly Greenberger:]

Okay. And then as you look out into 2016, would we then expect an additional roughly $5 million number?

[Marc Katz:]

Yes, I mean the anniversary. I think that you’re looking at seven months up to 12, but yes, so there would be more certainly that would happen through June of next year and then if any other decisions come as part of our 2016 financial planning process in terms of if any other steps are made, we will go through that as part of our 2016 plans and obviously try and do the exact same thing we just did, which is offset it.

[Kimberly Greenberger:]

Great. And then just bigger picture; when you think about returning capital to shareholders you’ve obviously just authorized a $200 million share repurchase program. How would you weight the benefits of paying down debt and reducing interest expense versus share buybacks and how should we expect the combination of that sort of capital return to play out over time. Thanks.

[Bob LaPenta:]

Yes. So Kimberly, this is Bob; I’ll take that one. So as Marc mentioned earlier, we expect our debt leverage at the end of this year to be at 2.5 times or below. We expect our debt leverage to continue to decline meaningfully in future years based on EBITDA growth alone. So we’re very pleased with being able to initiate the share repurchase program. It’s a great way to return cash to the shareholders and delever. We don’t have a target, but we certainly feel comfortable at this range of leverage on the balance sheet now and we’ll continue to evaluate over time as we quantify the free cash flow that will generate, what we think the best use of the cash will be for the company and for the shareholders.

[Kimberly Greenberger:]

Thanks so much.

[Operator:]

Thank you. And our next question today is coming from John Morris from BMO Capital Markets. Please proceed with your question.

[John Morris:]

Hi thanks. A quick question and then a quick follow-up. I think one of the other areas that you talked about Marc in terms of the short fall was the low level of clearance inventory you had. I’m just wondering with your inventory in such great shape as it is at the end of the quarter, down 11%, is there anything you can do, not that you necessarily want a lot of clearance inventory, but anything you can do to help that, so that it would help the comp as well. And then my follow-up is, is the buyback included in the full year guidance thanks.

[Tom Kingsbury:]

I’ll take the first piece and then Marc can take the second. Really, we are trying to minimize how many markdowns that we are taking in general in terms of markdown product, because obviously our goal is to sell full priced goods as much as possible. Historically, we’ve always had a high penetration of markdowns, vis-à-vis some of the other people in our space. We are now getting more normalized in terms of our level of mark down sales overall, so. And the other thing I just want to emphasize is our markdown optimization system really dictates systematically what markdowns we have to take, and we really utilize that diligently so that we are talking the markdowns at the right time. So there is nothing really we would want to do to increase our markdowns. Overall we let the system do it and we are trying to reduce the amount of markdowns we have in our system, just because the fresh product we have on the floor, the goods that we receive within the first 30 days sells faster, so…

[Marc Katz:]

And John I’ll take the second quarter about the guidance. So we did not change our share account in our 2015 guidance and going forward what we’ll do is on each earnings call we’ll report how many shares and the dollar amount we spend each quarter on what we actually spend in the program.

[John Morris:]

Thanks Bob.

[Marc Katz:]

You bet.

[Operator:]

Thank you. Our next question today is coming from Stephen Grambling from Goldman Sachs. Please proceed with your questions.

[Stephen Grambling:]

Hey, good morning. Thanks for taking the questions. I guess to start to follow up on Kim’s questions, the wage issue. With TJ actually now talking about a move to $10 next year, I realized it’s still early, but would it increase if you elected to follow that be similar to what your saw this year or bigger.

[Tom Kingsbury:]

Steve, we are going to go through all that when we go through our 2016 financial planning process. I need to try to start guessing at that right now. Once we go through it and probably on our year end call when we start giving guidance for next year, we’ll let you know exactly how much things cost us and hopefully that we are able to offset them.

[Stephen Grambling:]

Okay, fair enough. And then on the delayed receipts, just to be clear, was that primarily planning related or is there a port issue there and then as we look forward, is there now some of that excess product coming in and is that product typically at a potentially lower margin rate? Thanks.

[Tom Kingsbury:]

Well, first of all it wasn’t a planning issue. We have the right plan. It was an executional issue in terms of hitting our planned receipts, bringing it in. There was some West Coast port issues. I mean that obviously contributed to it, but I would really more characterize it as our execution in terms of getting the receipts in. As I mentioned before, I think we probably timed it too close to Easter to bring the receipts in and obviously that was a mix up on our part overall. So what’s the second part of that question please?

[Stephen Grambling:]

It was just, as some of the product I guess is now coming in, is there any difference in terms of the merch margin there as it hits in the next couple of quarters.

[Tom Kingsbury:]

No, not really. I mean all the markdowns we’d have to take in these areas are in our guidance.

[Stephen Grambling:]

Great, thanks. Best of luck.

[Tom Kingsbury:]

Thank you.

[Operator:]

Thank you. Our next question today is coming from John Kernan from Cowen and Company. Please proceed with your question.

[John Kernan:]

Hey, good morning everyone.

[Tom Kingsbury:]

Good morning.

[John Kernan:]

I’m trying to balance the comments around UPT [ph] and traffic driving the comp. It seems like markdown and clearance were lower sort of – I guess you would have thought AUR would have been a little bit higher. As you lower markdowns and push some of this pack way through it at full price as the year goes on, can it you ought to be a bigger drive for the comp?

[Marc Katz:]

Yes John, I’ll take that. Just to go through it one more time. Again our proxy for traffic is traffic. So our traffic was up for the third consecutive quarter. In terms of transactions we were down, because conversion offset our traffic increase and our average basket was up driven by units per transaction. AUR was down slightly. I certainly understand your point about less markdown goods. I think you just also got to think about the mix of the business and the fact that what we are doing with bath-and-body, what we are doing in terms of growing home and the fact that we are planning baby down and coats being less of the penetration, all those things kind of play in. So I think it’s more a mix of business that’s driven that.

[John Kernan:]

Okay and just a quick follow up to that. Do you have any idea what comps would have been if you had moved away from some of that markdown clearance inventory?

[Marc Katz:]

No. The only thing we said in terms of our comps sort of for Q1 was that the three businesses that Tom spoke to, would it hit the plan we would have been at the upper end of guidance.

[John Kernan:]

Okay, thank you.

[Operator:]

Thank you. The next question today is coming from Dutch Fox from FBR Capital Markets. Please proceed with your question.

[Dutch Fox:]

Hey, good morning. So I wanted to ask you about the pack away inventory really quickly. Was that the result of opportunistic buying? Did you happen across a lot of good deals, perhaps maybe related to the port strike or was it kind of a distribution logistics backup that you seem to have on with a couple of your business lines. And also can you talk a little bit, how you are planning on pack away inventory to evolve over the course of 2Q and 3Q? Do you expect to reverse out a lot of this or are you planning to carrying that for the balance of the year. Thank you.

[Tom Kingsbury:]

Well, the pack and hold really is any disruption in the market place, we were able to – because of the West Coast disruption, we were able to pick up some pack and holds, but we were able to pickup pack and hold really in a lot of different ways. Overall things that came out of the fall season from the manufacturing community, we also took advantage of that. Obviously we are pleased with our level of pack and hold as it stands today. A lot of these goods will be released within the next six months. Overall we really don’t hold it for a long period of time. It depends on obviously the seasonality of the product in terms of how long we would hold it, but we would try to release a lot of these goods into the third and fourth quarter, obviously to support our fall sales overall. We really don’t target the level of pack and hold inventory, we really never have, we really let the deals speak for themselves. We have obviously our merchants really compete to bring and pack and hold into the system overall. We haven’t really done that, but candidly we’ve seen a lot of great deals and we keep saying that we don’t target it, but it keeps getting bigger and bigger just based on the fact that there’s more and more deals out there all the time and obviously it’s the most productive and that’s in turning products that we have.

[Dutch Fox:]

So it’s fair to say based on the surge in pack away inventories that there was so much good buying out there of good quality product, perhaps maybe at a better margin rate than you’ve seen historically. Is that fair?

[Tom Kingsbury:]

Yes, there’s a lot of great deals out there and we took advantage of it.

[Dutch Fox:]

Okay, great. Thank you.

[Operator:]

Thank you. We’ve reached the end of our question-and-answer session. I would like to turn the floor back over to Mr. Kingsbury for any further or closing comments.

[Tom Kingsbury:]

I just want to thank everyone again for joining us this morning and your interest in Burlington Stores. We look forward to speaking to you when we report our second quarter results in September. Have a good day everybody.

[Operator:]

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.