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Burlington Coat YTD gross margin improves over last year
21
Jan '09
Burlington Coat Factory Investments Holdings, Inc. and its operating subsidiaries (the “Company”) announced its results for the second quarter ended November 29, 2008 and subsequent events.

Net sales were $1,002.4 million for the three months ended November 29, 2008 compared with $946.6 million for the three months ended December 1, 2007, a 5.9% increase. The increase is primarily the result of 33 new stores, net of store closures, which were opened subsequent to December 2, 2007. Comparative store sales decreased by 2.1% versus the same period last year.

Net income was $18.2 million for the three month period ended November 29, 2008 compared with net income of $23.2 million for the three month period ended December 1, 2007. Results for the three months ended November 29, 2008 include $11.5 million of incremental markdowns that were reserved for Fall seasonal product that in previous years were taken in later periods and a $1.7 million write off of our investment in The Reserve Primary Fund.

The gross margin rate for the three month period ended November 29, 2008 was negatively impacted by the incremental markdowns reserved for Fall seasonal product and 0.4% for a barter transaction.

Net sales were $1,709.4 million for the six months ended November 29, 2008 compared with $1,625.3 million for the six months ended December 1, 2007, a 5.2% increase. Similar to the quarter, the increase is primarily the result of 33 new stores, net of closures, which were opened subsequent to December 2, 2007. Comparative store sales decreased 1.1% versus the same period last year.

Net loss was $14.3 million for the six month period ended November 29, 2008 compared with a net loss of $27.2 million for the six month period ended December 1, 2007. Results for the six months ended November 29, 2008 include the same items mentioned for the quarter. Results for the six months ended December 1, 2007 include markdowns of $16.9 million that were not taken in the first six months of Fiscal 2009. As previously disclosed, these markdowns were accelerated into the fourth quarter of Fiscal 2008.

The Company's total sales for the month of December increased 4.0% versus last year. Comparative store sales decreased 4.2%. The Company had no outstanding borrowings on its $800 million revolving line of credit and over $90 million of invested cash at the end of December.

Tom Kingsbury, Chief Executive Officer, stated, “We are pleased to report a total sales and market share increase in a difficult economic and retail sales environment. In addition, by remaining focused on receipt management and staying current on seasonal product we are well positioned to take advantage of opportunistic buys which we believe will help us sustain our planned gross margin rate for the fiscal year.”

In an effort to better align the Company's resources with its business objectives, the Company reviewed all areas of the business to identify efficiency opportunities to enhance the organization's productivity. The Company has implemented several initiatives, including some that have resulted in the elimination of certain positions and the restructuring of certain other jobs and functions. As a result of these various initiatives, the Company plans to reduce its cost structure by more than $45 million in total during the last two quarters of the fiscal year ending May 30, 2009. The Company believes this will allow management to run the business more efficiently without sacrificing the Company's ability to serve its customers.

Burlington Coat Factory


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