Ladies and gentlemen, thank you for standing by and welcome to the Burlington Stores Inc. fourth quarter 2022 earnings webcast. I would now like to turn the call over to David Glick, Group Senior Vice President, Investor Relations and Treasurer. Please go ahead..

Thank you Operator, and good morning everyone. We appreciate everyone’s participation in today’s conference call to discuss Burlington’s fiscal 2022 fourth quarter operating results. Our presenters today are Michael O’Sullivan, our Chief Executive Officer, and Kristin Wolfe, our EVP and Chief Financial Officer.

Before I turn the call over to Michael, I would like to inform listeners that this call may not be transcribed, recorded or broadcast without our express permission. A replay of the call will be available until March 9, 2023. We take no responsibility for inaccuracies that may appear in transcripts of this call by third parties.

Our remarks and the Q&A that follows are copyrighted today by Burlington Stores. Remarks made on this call concerning future expectations, events, strategies, objectives, trends, or projected financial results are subject to certain risks and uncertainties.

Actual results 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 2021 and in other filings with the SEC, all of which are expressly incorporated herein by reference.

Please note that the financial results and expectations we discuss today are on a continuing operations basis. Reconciliations of the non-GAAP measures we discuss today to GAAP measures are included in today’s press release. Now here’s Michael..

we are working to transform ourselves into a stronger off-price retailer, so as we look beyond 2023, we are very excited.

We believe that the combination of these factors, firstly the potential dislocation and consolidation of traditional retail, and secondly the transformation of Burlington into a stronger off-price retailer could drive significant growth in sales, earnings and shareholder value over the next several years.

I would now like to turn the call over to Kristin to provide more details on our Q4 results and our 2023 guidance..

Thanks Michael and good morning everyone. Let me start with some additional financial details for the fourth quarter. Total sales in the quarter grew 5% while comp sales were down 2%. As Michael mentioned, our three-year geometric comp stack was a positive 4%. Comp sales and adjusted EPS came in above our guidance range.

For Q4, our adjusted EPS was $2.96, which was above our guidance range of $2.45 to $2.75. The gross margin rate was 40.7%, an increase of 90 basis points versus 2021’s fourth quarter rate of 39.8%. This was driven by a 130 basis point improvement in freight expense but was partially offset by a 40 basis point decline in merchandise margin.

The decline in merchandise margin was primarily driven by higher markdowns a we moved to sharpen our values, as Michael discussed earlier in the call. Product sourcing costs were $187 million compared to $159 million in the fourth quarter of 2021, increasing 70 basis points as a percentage of sales.

This deleverage was primarily driven by higher supply chain costs. We worked a higher mix of true close-out merchandise which is more labor intensive to process. In addition, the movement in and out of our reserve inventory to chase the trend was less efficient and drove higher supply chain expense.

Adjusted SG&A was $593 million versus $578 million in 2021, decreasing 50 basis points as a percentage of sales. This was driven by strong expense control and a lower bonus accrual. Adjusted EBIT margin was 10%, 80 basis points higher than the fourth quarter of 2021.

Relative to our Q4 2019 adjusted EBIT margin, 2022’s fourth quarter adjusted EBIT margin declined by 340 basis points, driven entirely by supply chain and freight deleverage. All of this resulted in diluted earnings per share of $2.83 versus $1.80 in Q4 of 2021. Adjusted diluted earnings per share were $2.96 versus $2.53 in the fourth quarter of 2021.

At the end of the quarter, our comparable store inventories were 32% above 2021. As a reminder, last year as we came into the spring season, our store inventories were too lean and this hurt our sales trend in Q1, so the significant increase in our comparable store inventories was by design.

I should also point out that this is still well below pre-pandemic levels. At the end of the quarter, our reserve inventory was 48% of our total inventory versus 50% last year. We are very happy with the quality of the merchandise and the values we have in reserve.

In the fourth quarter, we opened 34 net new stores, bringing our store count at the end of the quarter to 927 stores. This included 39 new store openings, five relocations, and no closings. For the full year, we opened 113 new stores while relocating 22 stores and closing four stores, adding 87 net new stores to our fleet.

I will now move on to discuss our full year 2022 results. Total sales decreased 7% and comp store sales decreased 13%. Our three-year geometric comp stack was flat. Our operating margin for the full year contracted by 370 basis points.

Merchandise margin decreased by 110 basis points, freight de-levered by 10 basis points, product sourcing costs de-levered by 120 basis points, and adjusted SG&A de-levered by 110 basis points versus full year 2021. Let’s now move to 2023 guidance. For the 2023 fiscal year, we expect total sales growth in the range of 12% to 14%.

This includes an approximately 2% impact related to the 53rd week. We expect comp store sales to increase in the range of 3% to 5% for fiscal 2023, and our adjusted EBIT margin to increase 80 to 120 basis points versus last year. Capital expenditures net of landlord allowances is expected to be approximately $560 million.

This results in adjusted earnings per share guidance in the range of $5.50 to $6, an expected increase of 29% to 41%. This outlook includes an adjusted EPS contribution of $0.05 from the 53rd week. For the first quarter of 2023, we expect total sales growth in the range of 12% to 14%. Comp store sales are assumed to increase between 5% and 7%.

We are expecting adjusted EBIT margins to increase in the range of 120 to 150 basis points over the first quarter of 2022, which results in an adjusted EPS outlook in the range of $0.85 to $0.95. I will now turn the call back to Michael..

Thank you Kristin. Before we move to questions, let me recap some of the key points that we have covered this morning. We saw a significant and sequential improvement in our sales trend in Q4.

We believe that this was partly driven by better execution, specifically our focus on sharper value but also partly driven by an improvement in the external environment. We are optimistic about the outlook for 2023. We are planning and managing our business for positive 3% to 5% comp sales growth, but we are ready to chase if the trend is stronger.

Our number one priority in 2023 is to drive sales. On 3% to 5% comp sales growth, we expect to achieve 80 to 120 basis points of margin expansion. Longer term beyond 2023, we are excited about the prospects for our business. We anticipate that the next few years will see significant disruption and dislocation across retail.

We are pushing forward with the transformation of Burlington into a stronger off-price retailer, and this should help us to take advantage of the opportunities this disruption may present. With that, I would now like to turn the call over for your questions..

[Operator instructions] Our first question comes from the line of Matthew Boss from JP Morgan. Please proceed..

Thanks and congrats on a great quarter. Maybe first on your 2023 comp guidance, is there any additional commentary that you can provide on the 3% to 5% comp range, or how should we think about whether there’s potential upside to this range? Then I have a follow-up..

Good morning Matt. Thanks for the question. As we developed our 2023 comp guidance, I would say that there was three main reference points that we used. Firstly, we looked at our own multi-year comparisons.

I won’t drag you through all the numbers, but we looked at our business on a one-year, a two-year, a four-year basis and we then compared that data with the low single digit annual comp growth that we would historically have expected before the pandemic, so that was the first reference point. Secondly, we looked at our off-price peers.

Our comp performance last year was significantly inferior to theirs. Now, we recognize that that may have been partially driven by differences in customer demographics, but we believe it was also driven by significant differences in execution. We know that we made mistakes last year and in 2023, we certainly don’t intend to repeat those mistakes.

Thirdly, the third reference point, if you like, is that we looked at our most recent trend. Our Q4 comp sales were 4% ahead of 2019 levels. Our 2023 comp guide implies that comp sales this year will be 3% to 5% ahead of 2019 levels; in other words, our guide is consistent with Q4.

One other data point that I would offer up, though, is that our quarter-to-date trend is running ahead of our Q1 guidance, and that trend gives us additional confidence in our comp guidance.

Now, the various points of reference that I’ve just described suggest that our comp guidance for 2023 is achievable, but it’s important to add that there are unknowns out there. There’s a lot of economic uncertainty and we don’t know how that uncertainty will play out in 2023.

I think I’ve said before that setting comp guidance is not an exact science, but in our business that’s okay.

If we manage our business flexibly, then if the sales trend is stronger, we know that we can chase higher trend, so I guess I’d sum it up by saying we think our guidance is appropriate but we recognize there may be upside, and if there is, we’re ready to chase it..

Great, thanks. Then maybe just a follow-up on your margin guidance. In the prepared remarks, I think you cited 80 to 120 basis points of operating margin expansion on that 3% to 5% comp range.

What are the key drivers of expansion, and again, is there a way to think about potential upside to this forecast as well?.

merchandise margin, freight and leverage on store fixed expenses, but the contribution from each of these will really depend on how the retail and competitive environment unfolds this year..

Our next question comes from the line of Ike Boruchow from Wells Fargo. Please proceed..

Good morning everyone, this is Jesse Sobelson on for Ike. Congratulations on your improved trend in Q4. I just have a couple of questions. Firstly, I am wondering whether the improved trend means that the merchandising mistakes that you described back in November are now behind you, and I have a follow-up for Kristin..

Good morning Jesse. I think to answer that question, and as much as I hate to do this, let me start by describing the specific execution mistakes that contributed to our performance last year. If I was to share our internal post mortem, I would say that those mistakes fell into three main areas.

Firstly, given the uncertain environment as we came into 2022, we deliberately planned inventory levels conservatively - this is a year ago, and those conservative inventory levels backfired on us.

Like many other retailers certainly in the first quarter of last year and coming into the first quarter of last year, we experienced significant receipt volatility and delays, and those delays meant that we just ended up with too little on-hand inventory in our stores, and that really undermined our sales trend.

The second thing I would say is in 2021, going back to 2021, we were reluctant to push up prices. Many other retailers at the time were talking about raising retails.

We were reluctant to do that, but then as we came into 2022, I think we kind of questioned ourselves and said, well, maybe we’re wrong, maybe we should start pushing up prices, so we added higher retails into our 2022 plans to really happen in the summer and into to back half of the year.

Now in retrospect, with the impact of inflation on our core customer and with the higher promotional activity across retail, that was just not a good time to go raising prices. As we got into the full season, we realized that and we began to unwind those increases. Now, we should have done that sooner, but--anyway.

It hurt our sales, especially in Q3, I would say. Thirdly, in 2022 there was some huge shifts in the types of merchandise that the customer was interested in buying, and across our business, we didn’t do a good enough job reacting and responding to those trends and those shifts.

Those were the three big buckets of mistakes that we think we made last year, and to answer your question on a tactical level, I would say yes, we believe those issues are behind us.

We worked to correct the inventory and the receipt issues that we ran into last year, and we significantly sharpened our values and we shifted our assortment into the categories that we believe the customer is most interested in buying, and I think all of those changes paid off and really contributed to our stronger trend in the fourth quarter.

I do want to just go a little bit further, though, in answering your question and just take a step back and maybe put those mistakes, if you like, in a bigger strategic context. I talked a little bit about this on our call in November.

I think it’s important to understand that over the last few years, we’ve been doing a lot to transform our business, in particular we’ve invested heavily to strengthen our merchandising capabilities. Since 2019, we’ve hired or promoted tremendous talent and we’ve developed and we’re rolling out many, many new tools and processes for our merchants.

Our buying team is now about 50% bigger in terms of headcount than it was in 2019. We know that merchandising is how you win in off-price, so we’ve assembled all the key ingredients - very experienced off-price merchant leadership, tremendous buying talent, improved buying and planning processes and new tools, training and reports.

We’ve moved very fast - we had to, we’re playing catch-up. Now, as they gel, those investments in my view are going to drive our growth and success over the next few years, but I have to acknowledge the mistakes we made in 2022 demonstrate that this is a work in process.

I’m pleased that we corrected our mistakes and turned around our performance towards year-end, but we really need to be able to move faster and with greater consistency than we did last year..

Okay, great. Thanks for the detail there. My second question is for Kristin. Can you provide any more detail on the margin puts and takes for Q4, for example what impact did incentive comp have on the quarter? Thank you..

Good morning Jesse, thanks for the question. Overall, we’re pleased with our fourth quarter results, particularly the improvement in our comp store sales trend and that momentum that built during the quarter and continued into February.

But as you noted, the flow-through on those incremental sales was not as strong as is typical for us, and that was primarily due to higher supply chain expenses.

At a high level, our gross margin was pretty much where we expected as you look at the combination of 130 basis points of freight improvement more than offsetting slightly lower merchandise margins, which was driven by higher markdowns as we moved to sharpen values, as Michael noted.

Product sourcing cost did de-lever somewhat more than we expected, which was primarily due to 60 basis points of supply chain de-leverage.

Now on adjusted SG&A, that leverage - 50 basis points - and excluding the incentive comp adjustment, the adjusted SG&A rate would have been flat to the fourth quarter last year, which is still fairly strong expense control given the negative comp in the quarter. .

Great..

Our next question comes from the line of Lorraine Hutchinson from Bank of America. Please proceed..

Thanks, good morning. Kristin, in the prepared remarks, you called out supply chain expenses as unfavorable.

What drove this, and how should we think about these costs going forward?.

Good morning Lorraine, thanks for the question. I’d like to separate out two different factors that have contributed to higher supply chain costs at Burlington over the last few years.

The first is there’s a big piece of our higher supply chain costs that we should call externally driven, so over the last few years, there’s been significant inflation in distribution center wage costs and then of course delays and volatility in global supply chains which have caused DC operations to be less efficient.

This is not unique to Burlington.

Other retailers, particularly those with lower average unit retails, have faced similar pressures, and we believe some of these higher costs, especially the higher wage rates, are likely here to stay; but we expect as global supply chain conditions continue to normalize, we should be able to drive some efficiencies and savings here.

But the second factor on supply chain is really more specific to Burlington. Over the last few years, we’ve changed the mix of type of buy in our business. We now buy a much higher proportion of true off-price goods and this shift in that buy type mix in Q4 was even more extreme as we took advantage of fantastic opportunistic off-price buys.

These deals, these buys are much more complex to process and have a higher work content in our DCs. We also heavily utilized reserve inventory in the quarter as we took advantage of opportunistic buys and to chase the trend, so those are the factors that drove up our supply chain expenses in Q4.

As we look forward, we do expect to maintain a higher mix of true off-price merchandise than we have historically, though it may not be as extreme as it was in the fourth quarter. The final point to make here is we know we have opportunity in supply chain. We have work to do.

Our distribution centers, the systems, the processes were not originally designed and really were never optimized with off-price in mind, so in the last few years, we’re working hard to take actions to make our supply chain more flexible, more efficient and more off-price, but we have more work to do here, and there are some of these changes that are going to take time..

Thanks, and then Michael, it sounds like the buying environment has been very strong.

What do you think will happen to merchandise availability as we move further into the year, and how will that impact the business?.

Good morning Lorraine. I would say that the availability of off-price merchandise has been very strong over the last five, six months, and I think we’ve heard that reported elsewhere as well. I would also say that I think our merchants have done a really good job leaning into that availability.

We’ve made sure that we’ve controlled liquidity, so we’ve been able to take advantage of some really great deals. Now, it’s not difficult to understand why the off-price buying environment has been so strong in that period.

In early 2022, we started to see a surge in supply as transportation bottlenecks finally began to clear, and that surge in supply then coincided with a weakening in consumer demand across retail as the year went on. Not surprisingly, too much supply, too little demand equals off-price availability, and that’s what’s happened.

But there are a couple other points that I’d like to make about merchandise supply. Firstly, as the third largest off-price retailer, this supply environment has given us the opportunity to open up new vendors and resources and to deepen relationships with existing vendors.

We’ve worked very hard to partner with vendors to help them move excess inventory over the last few months. Our buyers have been very, very focused on that - we’ve been very responsive to vendors, and I think those new and expanded relationships are going to be very valuable to us strategically over the longer term.

The second point to make is our expectation is that the buying environment is likely to remain fairly strong well into 2023, especially if the economy slows down and demand continues to soften. When you look at off-price availability over a longer time period, I think the real aberration is not how strong supply has been over the last six months.

There have been plenty of times like this in the past. The real aberration is how constrained supply was between mid-2020 and early to mid 2022. Those constraints during that two-year period were driven by global supply chain issues coming out of the pandemic - we really hadn’t seen those before.

We think it’s possible that the strong merchandise availability that we’ve seen over the last six months, it may just herald a return to normal..

Thank you..

Our next question comes from the line of John Kernan from TD Cowen. Please proceed..

Good morning Michael, Kristin, David. First question is just on long term operating margin. Previously, you’ve said that you thought you’d get back to the 2019 operating margin of 9.4% within the next few years. Can you just talk to the path for getting back to those levels? I just have a follow-up after that..

number one, a focus on higher sales, especially in 2023, higher sales drive leverage; number two, lower freight expenses as external rates normalize in the next couple of years, and we’re starting to see that happen; number three, higher merchant margin as the highly promotional environment of last year begins to recede; number four, supply chain efficiencies but, for the reasons we’ve outlined, some of those may take a little bit of time.

Let me sort of finish up with just one final point. The question you asked was how will we get back to 2019 margins. Now, we feel good about the levers I’ve just outlined, but we don’t regard 2019 margins as our final destination. We still believe that we can drive operating margin beyond 2019 levels.

The key premise of Burlington 2.0 is that we can drive stronger sales productivity with lower inventory levels and in a smaller store format. By doing all those things, we believe we can drive our operating margin above historic levels and thereby start to close the gap versus our off-price peers..

That’s a lot of detail and great color, Michael. Thank you. I guess Kristin, inventory levels at the end of January were up a decent amount versus last year, but you may have been under-inventoried last spring.

Is there any additional commentary you can provide on inventory, and how should we think about inventory levels as we get further into 2023?.

Good morning John, thanks for the question. Yes, you’re right - our comp store inventories were up 32% at the end of January, and as you noted and I think Michael responded to Jesse’s question, last year we were under-inventoried at this time at the end of Q4.

At the end of Q4 last year, we were down 30% versus 2019, and so when you adjust these numbers for compounding, this means our comparable store inventories are still well below pre-pandemic levels.

Last year, the combination of conservative sales and inventory plans plus significant receipt disruptions and delays meant that our in-store inventories in February and March were well below where they needed to be, but by April they had recovered, but this situation undermined our sales in Q1 as Michael described earlier.

This year, we deliberately increased inventory levels coming into the quarter - that’s what’s driving that 32% increase, and as we get into April, our comparable store inventories should be more in line with 2022, and as we move through the rest of this year, there may be variations by month but inventories will be similar to last year.

That was store inventories, but let me shift quickly to talk about reserve inventories. A moment ago, Michael described how over the last couple of years, we’ve become more off-price in terms of the type of merchandise we buy, and a key enabler of this is how we use and expanded our reserve inventory.

This provides us with the ability to take advantage of great opportunistic deals, even on merchandise that does not make sense to flow to stores right away. At the end of 2022, our reserve inventory was significantly higher in dollar terms than it as last year, and this reflects the great buys our buyers have found.

We feel very good about the values and the branded content we have in reserve, and this should help us deal our sales trend this year..

Got it..

Our next question comes from the line of Mark Altschwager from Baird. Please proceed..

Good morning. Appreciate the question, and great to see the improvement. Are there any particular categories that drove the upside that you delivered in the fourth quarter, and as the sales trends have continued into January and February, just any underlying shifts you’re seeing in consumer behavior? Thanks, and then I have a quick follow-up. .

Good morning Mark. Yes, in terms of categories, I would say for the fourth quarter as a whole, our footwear and our accessories businesses were our strongest performers.

But I think it’s important to call out that the improvement, the month-to-month sequential improvement that we saw through Q4 actually was fairly broad-based and happened across all of our major businesses.

Everything got better, and I think that’s mainly because--you know, when I go back and think about the key merchandising strategies that we really turned towards in the back half of last year, in particular the focus on value, we did that across all businesses, so that’s why I think we saw the improvement across all businesses..

Thank you. Then with respect to the store opening plans, a bit lower than you had signaled previously. How quickly do you think you can ramp new stores as availability increases, and are you seeing or hearing any indications that availability could increase more than you’re currently expecting through 2023? Thank you. .

Sure. Our real estate process is fairly rigorous. We have a very strong real estate team and we have, like I say, a fairly rigorous process for identifying and evaluating new store locations.

We look at hundreds of potential sites to build up our pipeline for the year ahead, and as we look to the sites that are available to open in the next 12 months, we believe that there are 70 to 80 net new store locations that meet or beat our hurdles, and our hurdles in terms of being EBIT accretive and having a strong return on investment are pretty high.

As I said in the remarks, that 70 to 70 net new stores is a little lower than we would like, but obviously we’re not going to compromise our hurdles to hit a number. Ideally, we’d like to open another 20 or 30, or even more if we had the locations, but I would say that’s the outlook for the next 12 months.

But with new store openings, it’s important to look further out, and that’s where we see significant opportunity. As I mentioned in my remarks, we think that over the next few years, there could be a wave of retail consolidation among bricks and mortar retailers.

That wave was kind of happening pre-pandemic and then I think in the last three years, it’s been slightly dampened by the rollercoaster that’s happened in terms of retailer sales and margins going up and then down. I think as things normalize, we may get back to additional retail consolidation.

Now, the reason why I’m focusing on retail consolidation, and I think most investors probably realize this, but for us, the biggest source of new store locations comes from other retailers closing stores.

Many of our most productive locations were formerly Circuit City or Toys R Us or Sports Authority or Linens and Things; in other words, if there’s an increase in retail bankruptcies, then that’s going to drive real estate opportunities and new store opening opportunities for us..

Thanks for all the color..

Thank you..

Our next question comes from the line of Adrienne Yih from Barclays. Please proceed..

Great. Let me add my congratulations. It’s great to see the progress. Michael, most of my questions have been asked, but I did notice a return to pretty aggressive prime time television in January and then February quarter-to-date.

I’m wondering what the advertising strategy is within the outlook for 2023, and clearly it seems like it is converting and driving traffic to the stores, so just a quick thought there.

Then for Kristin on the reserve inventory, is that more short stay that can be deployed intra-season - Q1, Q2, or is that more long stay winter-to-winter? Thank you so much..

Adrienne, on the marketing question, we’re very excited about our marketing programs. In the last few years, I would say, we’ve been moving to a much harder hitting value message with our advertising, and we think that that value message is going to really resonate in 2023.

If we’re right that the economy is going to slow down and that the consumer is going to be more value conscious, then I think our marketing is really going to speak to them and is really going to help to further enhance the traffic coming into our stores.

Now, I do think that the most important thing in our business is when the customer comes into the store, we can’t disappoint them. We have to have the value in the store, and if you asked me last summer, I would have said I’m less confident about that.

As we move into 2023, I feel like what we have to offer in the store is much more compelling, and I think our marketing, if we’re able to drive more traffic into the store, is really going to work well for us in 2023..

And then on your question on reserve inventory, as I noted, we feel really good about the values and the content in our reserve. It’s certainly a mix of short stay and pack-and-hold, and we also measure it in terms of the percent of wow values and branded penetration, so we feel really good about the content of the reserve from all those measures..

Very helpful, thanks so much and best of luck..

Our final question comes from Chuck Grom from Gordon Haskett. Please proceed..

Hey, thanks very much. Great execution. My one question is on the buying team. I know you’ve increased the organization a lot over the past few years, and I’m curious if the team now is in a good place or are you still upgrading talent and new capabilities.

As a follow-up, given there’s a natural learning curve to adding so many new employees to the team, how should we think about the benefits of improved sales and profitability from that facet over the next couple of years? Thank you..

Sure, good morning Chuck. Thanks for the question. Yes, as I mentioned in the earlier comments, we’ve really ramped up investment in our merchandising organization over the last three years. Just the raw numbers are that our headcount, our merchandising headcount is about 50% bigger now than it was in 2019.

Now actually, if you peel back the onion on that, it’s not 50% higher in every business.

There are some businesses, especially our fastest growing opportunity businesses where the headcount growth was higher than 50%, and obviously some business where it’s less, so that’s a lot of newness, that’s a lot of newness, a lot of investment in the organization.

Now I should add that it’s actually pretty consistent with what we had said three years ago. I think on a similar call like this three years ago, I probably would have said that we would have increased merchant headcount by about 15% a year for the next three years, and that’s kind of the way it’s worked out.

To just pivot to being forward-looking for a minute, I would say that most of the heavy lifting in terms of expanding our merchant team is now behind us.

That’s not to say that we won’t add talent opportunistically - we will, and there’s certainly some areas of our business where we see some opportunity for that, but the big increase, the big expansion has already happened.

Let me move away from headcount and just talk about how our merchandising organization operates, because I feel like in the last few years, we’ve added headcount and we’ve definitely leaned into the main principles of off-price more so than we ever had in the past.

We’re turning inventory much faster, we’re chasing sales much more aggressively, we’re controlling liquidity much more tightly, we’re buying opportunistically - things that maybe we did historically but we’re doing them to a much greater extent now.

But I would say that we’ve leaned into being off-price without necessarily having all the tools and the processes that our peers have, and we’ve been addressing that over the past couple of years. We’ve been developing a lot of those off-price tools, reports, capabilities, and we’re rolling out many of those.

We’ve started rolling them out and over the next 12, 18 months, we’ll roll more of them out, so I do think that there’s a dividend that’s yet to come in terms of the investment we’ve made in merchandising. I feel like we should be able to drive sales growth and margin growth over the next two years.

I’m very confident that this strategic asset that we’ve built in merchandising is going to pay dividends for us..

Michael, just as a quick follow-up, can you touch on the technology investments - I guess, what have you done and what’s left, because I think that’s a key part of the ingredient, being able to leverage the buying team that you’ve added over the past couple of years..

Yes, it’s absolutely right, Chuck. When I joined Burlington, I was very nervous that I was going to walk in and find lots of antiquated systems at Burlington, and actually that wasn’t the case. What I found was systems that were pretty up-to-date. What I did find, though, that those systems hadn’t necessarily been configured with off-price in mind.

They’d been configured with a much more department store sort of pre-planned approach to buying.

What we’ve really done over the last three years is change how we configure those systems, but also that drives our planning processes and our buying processes and it drives the need for those systems to generate different reports, that look at different aspects of the business, so that’s really the path we’ve been on.

Thankfully, as I say, we haven’t had to sort of tear out the old systems and bring in new systems. It’s been more about reconfiguring the systems that we have.

Now obviously to do that right, you have to take a step back and you have to sort of say, well, let’s understand our business needs, what are we trying to do, so there was a lot of user requirements, business requirements work that was required, but that’s all behind us now.

We’re at the stage where we are actually rolling out new tools, new processes across the buying and planning organization..

I would now like to turn the call over to Michael O’Sullivan for closing remarks..

Let me close by thanking everyone on this call for your interest in Burlington Stores. We really look forward to talking to you again in May to discuss our first quarter fiscal results. Thank you for your time today. .

Thank you ladies and gentlemen. This does conclude today’s call. Thank you for your participation. You may now disconnect..