BURLINGTON STORES, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

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The following discussion summarizes the significant factors affecting our
consolidated operating results, financial condition, liquidity and cash flows as
of and for the periods presented below. The following discussion and analysis
should be read in conjunction with the Condensed Consolidated Financial
Statements and notes thereto included elsewhere in this report and the
Consolidated Financial Statements and notes thereto in our Annual Report on Form
10-K for the fiscal year ended January 29, 2022 (Fiscal 2021 10-K).

In addition to historical information, this discussion and analysis contains
forward-looking statements based on current expectations that involve risks,
uncertainties and assumptions, such as our plans, objectives, expectations and
intentions. Our actual results or other events may differ materially from those
anticipated in these forward-looking statements due to various factors,
including those discussed under the section of this Item 2 entitled "Safe Harbor
Statement."

Executive Summary

Introduction

We are a nationally recognized off-price retailer of high-quality, branded
merchandise at everyday low prices. We opened our first store in Burlington, New
Jersey in 1972, selling primarily coats and outerwear. Since then, we have
expanded our store base to 866 stores as of April 30, 2022 in 46 states and
Puerto Rico. We have diversified our product categories by offering an extensive
selection of in-season, fashion-focused merchandise at up to 60% off other
retailers' prices, including: women's ready-to-wear apparel, menswear, youth
apparel, baby, beauty, footwear, accessories, home, toys, gifts and coats. We
sell a broad selection of desirable, first-quality, current-brand, labeled
merchandise acquired directly from nationally-recognized manufacturers and other
suppliers.

Fiscal Year

Fiscal year 2022 is defined as the 52-week year ending January 28, 2023. Fiscal year 2021 is defined as the 52-week year ended January 29, 2022.

Store openings, closings and relocations

During the three month period ended April 30, 2022, we opened 33 new stores,
inclusive of five relocations, and permanently closed two stores, exclusive of
the aforementioned relocations, bringing our store count as of April 30, 2022 to
866 stores.

Ongoing initiatives for fiscal year 2022

We continue to focus on a number of ongoing initiatives aimed at increasing our overall profitability. These initiatives include, but are not limited to:

Drive comparable store sales growth.

We intend to continue to grow comparable store sales through the following initiatives:

More Effectively Chasing the Sales Trend. We plan sales using conservative
comparable stores sales growth, holding and controlling liquidity, closely
analyzing the sales trend by business, and remaining ready to chase that trend.
We believe that these actions will also allow us to take more advantage of great
opportunistic buys.

Operating with Leaner Inventories. We are planning to carry less inventory in
our stores going forward compared to historical levels, which we believe should
result in the customer finding a higher mix of fresh receipts and great
merchandise values. We believe that this should drive faster turns and lower
markdowns, while simultaneously improving our customers' shopping experience.

Making a Greater Investment in Merchandising Capabilities. We intend to invest
in incremental headcount, especially in growing or under-developed businesses,
training and coaching, improved tools and reporting, and other forms of merchant
support. We believe that these investments should improve our ability to develop
vendor

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relationships, find great merchandise buys, more accurately assess value, and better predict and track sales trends.

Enhancing Existing Categories and Introducing New Categories. We have
opportunities to expand the depth and breadth of certain existing categories,
such as ladies' apparel, children's products, bath and cosmetic merchandise,
housewares, décor for the home and beauty as we continue to de-weather our
business, and maintain the flexibility to introduce new categories as we expand
our merchandising capabilities.

Expand and improve our retail store base.

We intend to expand and enhance our retail store base through the following initiatives:

Adhering to a Market Focused and Financially Disciplined Real Estate Strategy.
We have grown our store base consistently since our founding in 1972, developing
more than 99% of our stores organically. We believe there is significant
opportunity to expand our retail store base in the United States. As a result of
our smaller store prototype, we have identified numerous market opportunities
that we believe will allow us to operate 2,000 stores over the long term.

Maintaining Focus on Unit Economics and Returns. We have adopted a market
focused approach to new store openings in more productive retail locations, with
a specific focus on maximizing sales while achieving attractive unit economics
and returns. Additionally, as we continue to execute our smaller store
prototype, we believe we can reduce occupancy and operating expenses.

Enhancing the Store Experience. We continue to invest in select store
relocations and downsizes to improve the customer experience, taking into
consideration the age, size, sales, and location of a store. Relocations provide
an opportunity, upon leases expiration, to right-size our stores, improve our
competitive positioning, incorporate our new prototype store designs and reduce
occupancy costs. Downsizes provide an opportunity to right-size our stores,
within our existing space, improve co-tenancy, incorporate all of our new store
designs and reduce occupancy costs.

Improved operating margins.

We intend to increase our operating margins through the following initiatives:

Improving Operational Flexibility. Our store and supply chain teams must
continue to respond to the challenge of becoming more responsive to the sales
chase, enhancing their ability at flexing up and down based on trends. Their
ability to appropriately flex based on the ongoing trends allows us to maximize
leverage on sales, regardless of the trend.

Optimizing Markdowns. We believe that our markdown system allows us to maximize
sales and gross margin dollars based on forward-looking sales forecasts,
sell-through targets and exit dates. Additionally, as we plan to carry less
inventory in our stores compared to historical levels, we expect to drive faster
turns, which in turn will reduce the amount of markdowns taken.

Enhancing Purchasing Power. We believe that increasing our store footprint and
expanding our east and west coast buying offices provides us with the
opportunity to capture incremental buying opportunities and realize economies of
scale in our merchandising and non-merchandising purchasing activities.

Challenging Expenses to Drive Operating Leverage. We believe that we will be
able to leverage our growing sales over the fixed costs of our business. In
addition, by more conservatively planning our comparable store sales growth, we
are forcing even tighter expense control throughout all areas of our business.
We believe that this should put us in a strong position to drive operating
leverage on any sales ahead of the plan. Additionally, we plan to continue
challenging the processes and operating norms throughout the organization with
the belief that this will lead to incremental efficiency improvements and
savings.

Uncertainties and challenges

As we strive to increase profitability, there are uncertainties and challenges
that we face that could have a material impact on our revenues or income. Some
of these uncertainties and challenges are summarized below. For a further
discussion, please refer to the description under the heading "Risk Factors" in
the Fiscal 2021 10-K.

COVID-19. The extent of the continuing impact of the COVID-19 pandemic on our
business will depend largely on future developments, including the production
and administration of effective medical treatments and vaccines, additional
costs and delays related to our supply chain, reduced workforces or labor
shortages and scarcity of raw materials, and any future required store closures

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because of COVID-19 resurgences. COVID-19 presents material uncertainty and risk
with respect to our business, financial performance and condition, operating
results, liquidity and cash flows.

General Economic Conditions. Consumer spending habits, including spending for
the merchandise that we sell, are affected by, among other things, prevailing
global economic conditions, inflation, including the costs of basic necessities
and other goods, levels of employment, salaries and wage rates, prevailing
interest rates, housing costs, energy costs, commodities pricing, income tax
rates and policies, consumer confidence and consumer perception of economic
conditions. In addition, consumer purchasing patterns may be influenced by
consumers' disposable income, credit availability and debt levels.

A broad, protracted slowdown in the U.S. economy, an extended period of high
unemployment rates, an uncertain global economic outlook or a credit crisis
could adversely affect consumer spending habits resulting in lower net sales and
profits than expected on a quarterly or annual basis. Consumer confidence is
also affected by the domestic and international political situation. Our
financial condition and operations could be impacted by changes in government
regulations in areas including, but not limited to, taxes and healthcare.
Ongoing international trade and tariff negotiations could have a direct impact
on our income and an indirect impact on consumer prices. The outbreak or
escalation of war, or the occurrence of terrorist acts or other hostilities in
or affecting the U.S., or public health issues such as pandemics or epidemics,
including the continuing COVID-19 pandemic, could lead to a decrease in spending
by consumers. In addition, natural disasters, public health issues, industrial
accidents and acts of war in various parts of the world, such as the current
conflict in Ukraine, could have the effect of disrupting supplies and raising
prices globally which, in turn, may have adverse effects on the world and U.S.
economies and lead to a downturn in consumer confidence and spending.

We closely monitor our net sales, gross margin and expenses. We have performed
scenario planning such that if our net sales decline for an extended period of
time, we have identified variable costs that could be reduced to partially
mitigate the impact of these declines. If we were to experience adverse economic
trends and/or if our efforts to counteract the impacts of these trends are not
sufficiently effective, there could be a negative impact on our financial
performance and position in future fiscal periods.

Seasonality of Sales and Weather Conditions. Our business, like that of most
retailers, is subject to seasonal influences. In the second half of the year,
which includes the back-to-school and holiday seasons, we generally realize a
higher level of sales and net income.

Weather continues to be a contributing factor to the sale of our merchandise.
Generally, our sales are higher if the weather is cold during the Fall and warm
during the early Spring. Sales of cold weather clothing are increased by early
cold weather during the Fall, while sales of warm weather clothing are improved
by early warm weather conditions in the Spring. Although we have diversified our
product offerings, we believe traffic to our stores is still driven, in part, by
weather patterns.

Competition and Margin Pressure. We believe that in order to remain competitive
with retailers, including off-price retailers and discount stores, we must
continue to offer brand-name merchandise at a discount to prices offered by
other retailers as well as an assortment of merchandise that is appealing to our
customers.

The U.S. retail apparel and home furnishings markets are highly fragmented and
competitive. We compete for business with department stores, off-price
retailers, internet retailers, specialty stores, discount stores, wholesale
clubs, and outlet stores as well as with certain traditional, full-price retail
chains that have developed off-price concepts. At various times throughout the
year, traditional full-price department store chains and specialty shops offer
brand-name merchandise at substantial markdowns, which can result in prices
approximating those offered by us at our Burlington Stores. We anticipate that
competition will increase in the future. Therefore, we will continue to look for
ways to differentiate our stores from those of our competitors.

The U.S. retail industry continues to face increased pressure on margins as
overall challenging retail conditions have led consumers to be more value
conscious. Our strategy to chase the sales trend allows us the flexibility to
purchase less pre-season merchandise with the balance purchased in-season and
opportunistically. It also provides us with the flexibility to shift purchases
between suppliers and categories. This enables us to obtain better terms with
our suppliers, which we expect to help offset any rising costs of goods.

Industry-wide supply chain issues led to increased freight and labor costs
during Fiscal 2021 and continue to add pressure on margins in Fiscal 2022. These
costs significantly impacted results in Fiscal 2021 and the first quarter of
Fiscal 2022, and there remains significant uncertainty around when and if
freight costs will return to pre-pandemic levels. Additionally, the higher our
sales volume is, and the more sales we chase above our initial plans, the more
these increased supply chain costs will impact our margins.

We have also experienced inflationary pressure in our supply chain and with
respect to raw materials and finished goods, as well as in occupancy and other
operating costs. There can be no assurance that we will be able to offset
inflationary pressure in the future by increasing prices or through other means,
or that our business will not be negatively affected by continued inflation in
the future.

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Key Performance Measures and Non-GAAP Measures

We consider numerous factors in assessing our performance. Key performance and
non-GAAP measures used by management include net income, Adjusted Net Income,
Adjusted EBITDA, Adjusted EBIT, comparable store sales, gross margin, inventory,
store payroll and liquidity.

Net income. We earned net income of $16.2 million during the three month period
ended April 30, 2022 compared with net income of $171.0 million during the three
month period ended May 1, 2021. This decrease was primarily driven by lower
sales, as well as decreased gross margin rate due to industry wide supply chain
issues. Refer to the section below entitled "Results of Operations" for further
explanation.

Adjusted net income, Adjusted EBITDA and Adjusted EBIT: Adjusted net income, Adjusted EBITDA and Adjusted EBIT are non-GAAP financial measures of our performance.

We define Adjusted Net Income as net income, exclusive of the following items,
if applicable: (i) net favorable lease costs; (ii) loss on extinguishment of
debt; (iii) impairment charges; (iv) amounts related to certain litigation
matters; and (v) other unusual, non-recurring or extraordinary expenses, losses,
charges or gains, all of which are tax effected to arrive at Adjusted Net
Income.

We define Adjusted EBITDA as net income, exclusive of the following items, if
applicable: (i) interest expense; (ii) interest income; (iii) loss on
extinguishment of debt; (iv) income tax expense; (v) depreciation and
amortization; (vi) impairment charges; (vii) amounts related to certain
litigation matters; and (viii) other unusual, non-recurring or extraordinary
expenses, losses, charges or gains.

We define Adjusted EBIT as net income, exclusive of the following items, if
applicable: (i) interest expense; (ii) interest income; (iii) loss on
extinguishment of debt; (iv) income tax expense; (v) impairment charges; (vi)
net favorable lease costs; (vii) amounts related to certain litigation matters;
and (viii) other unusual, non-recurring or extraordinary expenses, losses,
charges or gains.

We present Adjusted Net Income, Adjusted EBITDA and Adjusted EBIT, because we
believe they are useful supplemental measures in evaluating the performance of
our business and provide greater transparency into our results of operations. In
particular, we believe that excluding certain items that may vary substantially
in frequency and magnitude from what we consider to be our core operating
results are useful supplemental measures that assist investors and management in
evaluating our ability to generate earnings and leverage sales, and to more
readily compare core operating results between past and future periods.

We believe that these non-GAAP measures provide investors helpful information
with respect to our operations and financial condition. Other companies in the
retail industry may calculate these non-GAAP measures differently such that our
calculation may not be directly comparable.

Adjusted Net Income has limitations as an analytical tool, and should not be
considered either in isolation or as a substitute for net income or other data
prepared in accordance with GAAP. Among other limitations, Adjusted Net Income
does not reflect the following items, net of their tax effect:

favorable net rental charges;

losses on extinguishment of debt;

amounts billed for certain disputes;

impairment charges on long-lived assets; and

other unusual, non-recurring or extraordinary expenses, losses, charges or gains.

During the three months ended April 30, 2022, Adjusted Net Income decreased
$139.9 million to $36.1 million compared to the same period in the prior year.
This decrease was primarily driven by lower sales, as well as decreased gross
margin rate due to industry wide supply chain issues. Refer to the section below
entitled "Results of Operations" for further explanation.

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The following table shows our reconciliation of net income to Adjusted Net
Income for the three months ended April 30, 2022 compared with the three months
ended May 1, 2021:
                                                            (unaudited)
                                                           (in thousands)
                                                          Three Months Ended
                                                       April 30,       May 1,
                                                          2022          2021

Reconciliation of net income to adjusted net income: Net income

                                             $   16,174     $ 

171,030

Net favorable lease costs (a)                               4,702         

5,911

Loss on extinguishment of debt (b)                         14,657             -
Impairment charges                                          2,543           777
Litigation matters (c)                                      5,000             -
Tax effect (d)                                             (7,017 )      (1,771 )
Adjusted Net Income                                    $   36,059     $ 175,947




(a)
Net favorable lease cost represents the non-cash expense associated with
favorable and unfavorable leases that were recorded as a result of purchase
accounting related to the April 13, 2006 Bain Capital acquisition of Burlington
Coat Factory Warehouse Corporation (the Merger Transaction). These expenses are
recorded in the line item "Selling, general and administrative expenses" in our
Condensed Consolidated Statements of Income.

(b)

The amounts relate to partial redemptions of $805.0 million2.25% Senior Convertible Bonds due 2025 (Convertible Bonds).

(vs)

Represents amounts billed for certain disputes.

(D)

The tax effect is calculated based on the effective tax rates (before discrete items) for the respective periods, adjusted for the tax effect for the impact of items (a) through (c).

Adjusted EBITDA has limitations as an analytical tool, and should not be
considered either in isolation or as a substitute for net income or other data
prepared in accordance with GAAP. Among other limitations, Adjusted EBITDA does
not reflect:

•
interest expense on our debt;

•
interest income;

•

losses on extinguishment of debt;

cash requirements for asset replacement. Although depreciation and amortization are non-cash charges, depreciated assets will likely need to be replaced in the future;

amounts billed for certain disputes;

impairment charges on long-lived assets;

income tax expense; and

other unusual, non-recurring or extraordinary expenses, losses, charges or gains.

During the three months ended April 30, 2022, Adjusted EBITDA decreased $168.1
million to $125.4 million compared to the same period in the prior year. This
decrease was primarily driven by lower sales, as well as decreased gross margin
rate due to industry wide supply chain issues. Refer to the section below
entitled "Results of Operations" for further explanation.

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The following table shows our reconciliation of net income to Adjusted EBITDA
for the three months ended April 30, 2022 compared with the three months ended
May 1, 2021:
                                                         (unaudited)
                                                        (in thousands)
                                                      Three Months Ended
                                                   April 30,       May 1,
                                                      2022          2021
Reconciliation of net income to Adjusted EBITDA:
Net income                                         $   16,174     $ 171,030
Interest expense                                       14,606        19,599
Interest income                                          (119 )         (74 )
Loss on extinguishment of debt (a)                     14,657             -
Litigation matters (b)                                  5,000             -
Depreciation and amortization (c)                      71,006        61,521
Impairment charges                                      2,543           777
Income tax expense                                      1,533        40,637
Adjusted EBITDA                                    $  125,400     $ 293,490




(a)

Amounts relate to partial redemptions of convertible notes.

(b)

Represents amounts billed for certain disputes.

(vs)

Includes $4.7 million and $5.9 million of favorable lease cost included in the
line item "Selling, general and administrative expenses" in our Condensed
Consolidated Statements of Income for the three months ended April 30, 2022 and
three months ended May 1, 2021, respectively. Net favorable lease cost
represents the non-cash expense associated with favorable and unfavorable leases
that were recorded as a result of the Merger Transaction.

Adjusted EBIT has limitations as an analytical tool, and should not be
considered either in isolation or as a substitute for net income or other data
prepared in accordance with GAAP. Among other limitations, Adjusted EBIT does
not reflect:

•
interest expense on our debt;

•
interest income;

•

losses on extinguishment of debt;

favorable net rental cost;

amounts billed for certain disputes;

impairment charges on long-lived assets;

income tax expense; and

other unusual, non-recurring or extraordinary expenses, losses, charges or gains.

During the three months ended April 30, 2022, Adjusted EBIT decreased $178.8
million to $59.1 million compared to the same period in the prior year. This
decrease was primarily driven by lower sales, as well as decreased gross margin
rate due to industry wide supply chain issues. Refer to the section below
entitled "Results of Operations" for further explanation.

The following table shows our reconciliation of net income to Adjusted EBIT for
the three months ended April 30, 2022 compared with the three months ended May
1, 2021:

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                                                       (unaudited)
                                                      (in thousands)
                                                    Three Months Ended
                                                 April 30,       May 1,
                                                    2022          2021
Reconciliation of net income to Adjusted EBIT:
Net income                                       $   16,174     $ 171,030
Interest expense                                     14,606        19,599
Interest income                                        (119 )         (74 )
Loss on extinguishment of debt (a)                   14,657             -
Net favorable lease costs (b)                         4,702         5,911
Impairment charges                                    2,543           777
Litigation matters (c)                                5,000             -
Income tax expense                                    1,533        40,637
Adjusted EBIT                                    $   59,096     $ 237,880




(a)

Amounts relate to partial redemptions of convertible notes.

(b)

Net favorable lease cost represents the non-cash expense associated with
favorable and unfavorable leases that were recorded as a result of the Merger
Transaction. These expenses are recorded in the line item "Selling, general and
administrative expenses" in our Condensed Consolidated Statements of Income.

(vs)

Represents amounts billed for certain disputes.

Comparable Store Sales. Comparable store sales measure performance of a store
during the current reporting period against the performance of the same store in
the corresponding period of a prior year. Due to the impact of the COVID-19
pandemic, including the temporary closing of all stores during Fiscal 2020, we
are using Fiscal 2019 as the comparable previous year period when calculating
comparable store sales for Fiscal 2021. The method of calculating comparable
store sales varies across the retail industry. As a result, our definition of
comparable store sales may differ from other retailers.

For Fiscal 2022, we define comparable store sales as merchandise sales of those
stores commencing on the first day of the fiscal month one year after the end of
their grand opening activities, which normally conclude within the first two
months of operations. If a store is closed for seven or more days during a
month, our policy is to remove that store from our calculation of comparable
stores sales for any such month, as well as during the month(s) of their grand
re-opening activities. The change in our comparable store sales was as follows:
                 Three Months Ended
April 30, 2022          -18%
May 1, 2021             20%


Various factors affect comparable store sales, including, but not limited to,
weather conditions, current economic conditions, the timing of our releases of
new merchandise and promotional events, the general retail sales environment,
consumer preferences and buying trends, changes in sales mix among distribution
channels, competition, and the success of marketing programs.

Gross Margin. Gross margin is the difference between net sales and the cost of
sales. Our cost of sales and gross margin may not be comparable to those of
other entities, since some entities may include all of the costs related to
their buying and distribution functions, certain store-related costs and other
costs, in cost of sales. We include certain of these costs in the line items
"Selling, general and administrative expenses" and "Depreciation and
amortization" in our Condensed Consolidated Statements of Income. We include in
our "Cost of sales" line item all costs of merchandise (net of purchase
discounts and certain vendor allowances), inbound freight, distribution center
outbound freight and certain merchandise acquisition costs, primarily
commissions and import fees.

Gross margin as a percentage of net sales decreased to 41.0% during the three
month period ended April 30, 2022, compared with 43.3% during the three month
period ended May 1, 2021, driven primarily by industry-wide supply chain issues
that have led to increased freight and labor costs. Product sourcing costs,
which are included in selling, general and administrative expenses, increased
approximately 180 basis points as a percentage of net sales.

Inventory. Inventory at April 30, 2022 increased to $1,257.1 million compared
with $767.6 million at May 1, 2021. The increase was attributable primarily to
increased reserve inventory, which was 50% of total inventory as of April 30,
2022, compared with 35% as of May 1, 2021 (a 128% increase on a dollar basis),
as well as 82 net new stores opened since the end of the first quarter of Fiscal
2021 and a 2% increase in comparable store inventory.

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Reserve inventory includes all inventory that is being stored for release either
later in the season, or in a subsequent season. We intend to use our reserve
merchandise to effectively chase sales trends. Inventory at January 29, 2022 was
$1,021.0 million.

In order to better serve our customers and maximize sales, we continue to refine
our merchandising mix and inventory levels within our stores. By appropriately
managing our inventories, we believe we will be better able to deliver a
continual flow of fresh merchandise to our customers.

Store Payroll as a Percentage of Net Sales. Store payroll as a percentage of net
sales measures our ability to manage our payroll in accordance with increases or
decreases in net sales. The method of calculating store payroll varies across
the retail industry. As a result, our store payroll as a percentage of net sales
may differ from other retailers. We define store payroll as regular and overtime
payroll for all store personnel as well as regional and territory personnel,
exclusive of payroll charges related to corporate and warehouse employees. Store
payroll as a percentage of net sales was 8.1% during the three month period
ended April 30, 2022, compared with 7.8% during the three month period ended May
1, 2021.

Liquidity. Liquidity measures our ability to generate cash. Management measures
liquidity through cash flow, which is the measure of cash generated from or used
in operating, financing, and investing activities. Cash and cash equivalents,
including restricted cash and cash equivalents, decreased $464.0 million during
the three months ended April 30, 2022, compared with an increase of $150.3
million during the three months ended May 1, 2021. Refer to the section below
entitled "Liquidity and Capital Resources" for further explanation.

Operating results

The following table sets forth certain items of the Condensed Consolidated Statements of Earnings as a percentage of net sales for the three months ended
April 30, 2022 and the three months ended May 1, 2021.

                                                   Percentage of Net Sales
                                                     Three Months Ended
                                                April 30,            May 1,
                                                   2022               2021
Net sales                                             100.0 %            100.0 %
Other revenue                                           0.2                0.1
Total revenue                                         100.2              100.1
Cost of sales                                          59.0               56.7
Selling, general and administrative expenses           35.3               

30.3

Depreciation and amortization                           3.4                

2.6

Impairment charges - long-lived assets                  0.1                

0.0

Other income - net                                     (0.2 )             (0.1 )
Loss on extinguishment of debt                          0.8                  -
Interest expense                                        0.8                0.9
Total costs and expenses                               99.2               90.4
Income before income tax expense                        1.0                9.7
Income tax expense                                      0.1                1.9
Net income                                              0.9 %              7.8 %

Three-month period ended April 30, 2022 Compared to the three-month period ended May 1, 2021

Net sales

Net sales decreased approximately $265.0 million, or 12.1%, to $1,925.6 million
during the first quarter of Fiscal 2022, primarily driven by a decrease of 18%
in comparable stores sales during the first quarter of Fiscal 2022, primarily
due to government stimulus payments during the first quarter of Fiscal 2021, as
well as lower than optimal inventory levels early in the first quarter of Fiscal
2022.

Cost of sales

Cost of sales as a percentage of net sales increased to 59.0% during the first
quarter of Fiscal 2022, compared to 56.7% during the first quarter of Fiscal
2021. This increase is related to industry-wide supply chain issues that have
led to increased freight and labor costs. On a dollar basis, cost of sales
decreased $105.2 million, or 8.5%, primarily driven by our overall decrease in
sales. Product sourcing costs, which are included in selling, general and
administrative expenses, increased approximately 180 basis points as a
percentage of net sales.

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Selling, general and administrative expenses

The following table details selling, general and administrative expenses for the
three month period ended April 30, 2022 compared with the three month period
ended May 1, 2021.
                                                                  (in millions)
                                                                Three Months Ended
                                              Percentage                  Percentage
                               April 30,          of          May 1,          of
                                 2022          Net Sales       2021        Net Sales      $ Variance       % Change
Store related costs           $     407.1            21.1 %   $ 411.4            18.8 %   $      (4.3 )         (1.0 )%
Product sourcing costs              157.3             8.2       140.5             6.4            16.8           12.0
Corporate costs                      78.0             4.1        75.9             3.5             2.1            2.8
Marketing and strategy
costs                                14.0             0.7        12.3             0.6             1.7           13.8
Other selling, general and
administrative expenses              23.9             1.2        24.7             1.0            (0.8 )         (3.2 )
Selling, general and
administrative expenses       $     680.3            35.3 %   $ 664.8            30.3 %   $      15.5            2.3 %



The increase in selling, general and administrative expenses as a percentage of
net sales was primarily driven by deleverage on store related costs and
increased product sourcing costs. On a dollar basis, the increase in selling,
general and administrative expenses was primarily driven by increases in product
sourcing costs and occupancy costs, partially offset by a decrease in incentive
compensation and store payroll costs.

Depreciation and amortization

Depreciation and amortization expense amounted to $66.3 million during the first
quarter of Fiscal 2022 compared with $55.6 million during the first quarter of
Fiscal 2021. The increase in depreciation and amortization expense was primarily
driven by capital expenditures related to our new and non-comparable stores.

Impairment charges – long-lived assets

Impairment charges for long-lived assets have been $2.5 million in the first quarter of fiscal 2022, related to one owned store that is expected to be sold below its net book value, and to uncollectible fixed assets at two relocating stores. Impairment charges for long-lived assets have been $0.8 million during the first quarter of fiscal 2021, related to store-level assets in a store.

The recoverability assessment related to these store-level assets requires
various judgments and estimates, including estimates related to future revenues,
gross margin rates, store expenses and other assumptions. We base these
estimates upon our past and expected future performance. We believe our
estimates are appropriate in light of current market conditions. However, future
impairment charges could be required if we do not achieve our current revenue or
cash flow projections for each store. Refer to Note 6, "Fair Value
Measurements," for further discussion regarding impairment charges.

Loss on extinguishment of debt

During the first quarter of Fiscal 2022, we entered into separate, privately
negotiated exchange agreements (Exchange Agreements) with certain holders of the
Convertible Notes. Under the terms of the Exchange Agreements, the holders
exchanged $64.6 million in aggregate principal amount of Convertible Notes held
by them for $78.2 million in cash. These exchanges resulted in aggregate pre-tax
debt extinguishment charges of $14.7 million.

Interest expense

Interest expense improved $5.0 million during the first quarter of Fiscal 2022
to $14.6 million, compared to the same period in the prior year. The decrease
was driven by the redemption in full of the $300.0 million 6.25% Senior Secured
Notes due 2025 (Secured Notes) and repurchase of $297.3 million of Convertible
Notes since the end of the first quarter of Fiscal 2021, partially offset by the
increase in LIBOR rates on our Term Loan Facility.

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The average interest rates and average balances related to our variable rate
debt for the first quarter of Fiscal 2022 compared with the first quarter of
Fiscal 2021, are summarized in the table below:
                                                            Three Months Ended
                                                           April 30,      May 1,
                                                              2022         2021

Average Balance – ABL Line of Credit (in millions) $ ?? $?? Average interest rate – ABL line of credit

                     ??           

??

Average balance – Term Loan Facility (in millions) (a) $955.8 $961.4
Average Interest Rate – Term Loan Facility

                    2.3%         

1.9%

(a) Excluding initial issue discount.

income tax expense

Income tax expense was $1.5 million during the first quarter of Fiscal 2022
compared with income tax expense of $40.6 million during the first quarter of
Fiscal 2021. The effective tax rate for the first quarter of Fiscal 2022 was
8.7% compared with 19.2% during the first quarter of Fiscal 2021. The decrease
in income tax expense in the first quarter of Fiscal 2022 was a result of lower
pre-tax income. The decrease in effective tax rate is due to favorable permanent
items having a greater impact as a result of the lower pretax income compared to
the prior year.

At the end of each interim period we are required to determine the best estimate
of our annual effective tax rate and then apply that rate in providing for
income taxes on a current year-to-date (interim period) basis. Use of this
methodology during the first quarter of Fiscal 2022 resulted in an annual
effective income tax rate of approximately 27% (before discrete items) as our
best estimate.

Net income

We earned net income of $16.2 million for the first quarter of Fiscal 2022
compared with $171.0 million for the first quarter of Fiscal 2021. This decrease
was primarily driven by lower sales, as well as decreased gross margin rate due
to industry wide supply chain issues.

Cash and capital resources

Our ability to satisfy interest payment and future principal payment obligations
on our outstanding debt will depend largely on our future performance which, in
turn, is subject to prevailing economic conditions and to financial, business
and other factors beyond our control. If we do not have sufficient cash flow to
service interest payment and future principal payment obligations on our
outstanding indebtedness and if we cannot borrow or obtain equity financing to
satisfy those obligations, our business and results of operations will be
materially adversely affected. We cannot be assured that any replacement
borrowing or equity financing could be successfully completed on terms similar
to our current financing agreements, or at all.

We completed several debt transactions in order to facilitate increased
financial flexibility. On June 11, 2021, we redeemed the full $300.0 million
aggregate principal amount of the Secured Notes. The redemption price of the
Secured Notes was $323.7 million, plus accrued and unpaid interest to, but not
including, the date of redemption. Additionally, we repurchased $232.7 million
of principal on the Convertible Notes during Fiscal 2021. During the first
quarter of Fiscal 2022, we repurchased an additional $64.6 million of principal
on the Convertible Notes

We believe that cash generated from operations, along with our existing cash and
our ABL Line of Credit, will be sufficient to fund our expected cash flow
requirements and planned capital expenditures for at least the next twelve
months as well as the foreseeable future. However, there can be no assurance
that we would be able to offset declines in our comparable store sales with
savings initiatives in the event that the economy declines.

As market conditions warrant, we may, from time to time, repurchase our
outstanding debt securities in the open market, in privately negotiated
transactions, by tender offer, by exchange transaction or otherwise. Such
repurchases, if any, will depend on prevailing market conditions, our liquidity
and other factors and may be commenced or suspended at any time. The amounts
involved and total consideration paid may be material.

Cash flow for the three-month period ended April 30, 2022 Compared to the three-month period ended May 1, 2021

We used $464.0 million of cash during the three month period ended April 30,
2022 compared with net proceeds of $150.3 million during the three month period
ended May 1, 2021.

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Net cash used in operating activities amounted to $172.3 million during the
three month period ended April 30, 2022, compared with net cash provided of
$223.4 million during the three month period ended May 1, 2021. The decrease in
our operating cash flows was primarily driven by lower sales and decreased gross
margin rate, as well as changes in working capital, primarily increased
inventory.

Net cash used in investing activities was $107.0 million during the three month
period ended April 30, 2022 compared with $71.8 million during the three month
period ended May 1, 2021. This change was primarily the result of an increase in
capital expenditures related to our stores (new stores, remodels and other store
expenditures).

Net cash used in financing activities was $184.8 million during the three month
period ended April 30, 2022 compared with $1.3 million during the three month
period ended May 1, 2021. This change was primarily driven by our partial
repurchase of the Convertible Notes for $78.2 million in cash, inclusive of
third party fees during the first quarter of Fiscal 2022. Additionally, this
change was driven by our repurchase of shares of common stock for $99.1 million
under our share repurchase program during the first quarter of Fiscal 2022.

Changes in working capital also impact our cash flows. Working capital equals
current assets (exclusive of restricted cash) minus current liabilities. We had
working capital at April 30, 2022 of $445.2 million compared with $1,002.8
million at May 1, 2021. The decrease in working capital was primarily due to a
decrease in cash and cash equivalents due to payments on the Convertible Notes
and Secured Notes, partially offset by an increase to the inventory balance. We
had working capital at January 29, 2022 of $593.4 million.

Capital expenditure

For the three-month period ended April 30, 2022capital expenditures, net of $7.2 million of allowances to the lessor, amounted to $99.7 million.

We estimate that we will spend approximately $730 million, net of approximately
$15 million of landlord allowances, in capital expenditures during Fiscal 2022,
including approximately $255 million, net of the previously mentioned landlord
allowances, for store expenditures (new stores, remodels and other store
expenditures). In addition, we estimate that we will spend approximately $290
million to support our supply chain initiatives, with the remaining capital used
to support our information technology and other business initiatives.

Share buyback program

On August 18, 2021our board of directors has authorized the redemption of a maximum of
$400.0 million of ordinary shares, the execution of which is authorized by
August 2023. This buyback program is funded using our available cash and borrowings from our ABL line of credit.

On February 16, 2022, our Board of Directors authorized the repurchase of up to
an additional $500.0 million of common stock, which is authorized to be executed
through February 2024.

During the first quarter of Fiscal 2022, we repurchased 512,905 shares of common
stock for $99.1 million under this repurchase program. As of April 30, 2022, we
had $550.9 million remaining under our share repurchase authorization.

We are authorized to repurchase shares of our outstanding common stock from time
to time on the open market or in privately negotiated transactions under our
repurchase program. The timing and amount of stock repurchases will depend on a
variety of factors, including the market conditions as well as corporate and
regulatory considerations. Our share repurchase program may be suspended,
modified or discontinued at any time, and we have no obligation to repurchase
any amount of our common stock under the program.




Dividends

We currently do, and intend to continue to, retain all available funds and any
future earnings to fund all of the Company's capital expenditures, business
initiatives, and to support any potential opportunistic capital structure
initiatives. Therefore, at this time, we do not anticipate paying cash dividends
in the near term. Our ability to pay dividends on our common stock will be
limited by restrictions on the ability of our subsidiaries to pay dividends or
make distributions under the terms of current and any future agreements
governing our indebtedness. Any future determination to pay dividends will be at
the discretion of our Board of Directors, subject to

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compliance with covenants in our current and future agreements governing our
indebtedness, and will depend upon our results of operations, financial
condition, capital requirements and other factors that our Board of Directors
deems relevant.

In addition, since we are a holding company, substantially all of the assets
shown on our Condensed Consolidated Balance Sheets are held by our subsidiaries.
Accordingly, our earnings, cash flow and ability to pay dividends are largely
dependent upon the earnings and cash flows of our subsidiaries and the
distribution or other payment of such earnings to us in the form of dividends.

Operational growth

During the three month period ended April 30, 2022, we opened 33 new stores,
inclusive of five relocations, and closed two stores, exclusive of the
aforementioned relocations, bringing our store count as of April 30, 2022 to 866
stores. During Fiscal 2022, we plan to open 90 net new stores, which includes
approximately 120 gross new stores, along with approximately 30 store
relocations and closings.

We have identified numerous market opportunities that we believe will allow us
to operate 2,000 stores over the long-term. We believe that our ability to find
satisfactory locations for our stores is essential for the continued growth of
our business. The opening of stores generally is contingent upon a number of
factors including, but not limited to, the availability of desirable locations
with suitable structures and the negotiation of acceptable lease terms. There
can be no assurance, however, that we will be able to find suitable locations
for new stores or that we will be able to open the number of new stores
presently planned, even if such locations are found and acceptable lease terms
are obtained. Assuming that appropriate locations are identified, we believe
that we will be able to execute our growth strategy without significantly
impacting our current stores.

Debt and hedging

As of April 30, 2022, our obligations, inclusive of original issue discount,
include $948.5 million under our Term Loan Facility, $507.7 million of
Convertible Notes and no outstanding borrowings on our ABL Line of Credit. Our
debt obligations also include $42.8 million of finance lease obligations as of
April 30, 2022.

Term Loan Facility

On June 24, 2021, Burlington Coat Factory Warehouse Corporation, an indirect
subsidiary of the Company (BCFWC), entered into Amendment No. 9 (the Ninth
Amendment) to the Term Loan Credit Agreement governing the Term Loan Facility.
The Ninth Amendment, among other things, extended the maturity date from
November 17, 2024 to June 24, 2028, and changed the interest rate margins
applicable to the Term Loan Facility from 0.75% to 1.00%, in the case of prime
rate loans, and from 1.75% to 2.00%, in the case of LIBOR loans, with a 0.00%
LIBOR floor. Refer to Note 4, "Long Term Debt," for further discussion regarding
our debt transactions.

To April 30, 2022our borrowing rate on the term loan facility was 2.8%.

ABL line of credit

At April 30, 2022, we had $597.5 million available under the ABL Line of Credit.
There were no borrowings on the ABL Line of Credit during the three month period
ended April 30, 2022.

Convertible Notes

On April 16, 2020, we issued $805.0 million of Convertible Notes. The
Convertible Notes have an initial conversion rate of 4.5418 shares per $1,000
principal amount of Convertible Notes (equivalent to an initial conversion price
of approximately $220.18 per share of the Company's common stock), subject to
adjustment if certain events occur.

Convertible Notes are general unsecured obligations of the Company. The convertible notes bear interest at the rate of 2.25% per annum, payable semi-annually in cash, in arrears on April 15 and October 15 of each year, from October 15, 2020. The Convertible Notes will mature on April 15, 2025unless previously converted, redeemed or redeemed.

During Fiscal 2021, we entered into separate, privately negotiated exchange
agreements with certain holders of the Convertible Notes. Under the terms of
these exchange agreements, the holders exchanged $232.7 million in aggregate
principal amount of Convertible Notes held by them for a combination of an
aggregate of $199.8 million in cash and 513,991 shares of our common stock.
These exchanges resulted in aggregate pre-tax debt extinguishment charges of
$124.6 million in Fiscal 2021.

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During the first quarter of Fiscal 2022, we entered into separate, privately
negotiated exchange agreements with certain holders of the Convertible Notes.
Under the terms of the exchange agreements, the holders exchanged $64.6 million
in aggregate principal amount of Convertible Notes held by them for $78.2
million in cash. These exchanges resulted in aggregate pre-tax debt
extinguishment charges of $14.7 million.

Secure tickets

On April 16, 2020, BCFWC, issued $300.0 million of Secured Notes. The Secured
Notes are senior, secured obligations of BCFWC, and interest was payable
semiannually in cash at a rate of 6.25% per annum on April 15 and October 15 of
each year, beginning on October 15, 2020. The Secured Notes were guaranteed on a
senior secured basis by Burlington Coat Factory Holdings, LLC, Burlington Coat
Factory Investments Holdings, Inc. and BCFWC's subsidiaries that guarantee the
loans under the Term Loan Facility and ABL Line of Credit.

On June 11, 2021, BCFWC redeemed the full $300.0 million aggregate principal
amount of the Secured Notes. The redemption price of the Secured Notes was
$323.7 million, plus accrued and unpaid interest to, but not including, the date
of redemption. Refer to Note 4, "Long Term Debt," for further discussion
regarding our debt transactions.

Cover

On June 24, 2021, the Company terminated its previous interest rate swap and
entered into a new interest rate swap. The new interest rate swap, which hedges
$450 million of variable rate exposure under our Term Loan Facility, is
designated as a cash flow hedge and expires on June 24, 2028. Refer to Note 5,
"Derivative Instruments and Hedging Activities," for further discussion
regarding our derivative transactions.

Certain information regarding contractual obligations

We had $1,452.3 million of purchase commitments related to goods that were not
received as of April 30, 2022, and had $3,728.0 million of future minimum lease
payments under operating leases as of April 30, 2022. Additionally, during the
first quarter of Fiscal 2022, we repurchased $64.6 million in aggregate
principal amount of the Convertible Notes. See Note 4, "Long Term Debt," for
additional information related to our debt transactions. There were no other
significant changes regarding our obligations to make future payments under
current contracts from those included in our Fiscal 2021 10-K.

Significant Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements have been prepared in accordance
with GAAP. We believe there are several accounting policies that are critical to
understanding our historical and future performance as these policies affect the
reported amounts of revenues and other significant areas that involve
management's judgments and estimates. The preparation of our Condensed
Consolidated Financial Statements requires management to make estimates and
assumptions that affect (i) the reported amounts of assets and liabilities; (ii)
the disclosure of contingent assets and liabilities at the date of the Condensed
Consolidated Financial Statements; and (iii) the reported amounts of revenues
and expenses during the reporting period. On an ongoing basis, management
evaluates its estimates and judgments, including those related to revenue
recognition, inventories, long-lived assets, intangible assets, goodwill,
insurance reserves and income taxes. Historical experience and various other
factors that are believed to be reasonable under the circumstances form the
basis for making estimates and judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions. As of the
end of the first quarter of Fiscal 2022, the impact of the COVID-19 pandemic
continues to unfold. As a result, many of our estimates and judgments carry a
higher degree of variability and volatility. As events continue to evolve and
additional information becomes available, our estimates may change materially in
future periods. A critical accounting estimate meets two criteria: (1) it
requires assumptions about highly uncertain matters and (2) there would be a
material effect on the consolidated financial statements from either using a
different, although reasonable, amount within the range of the estimate in the
current period or from reasonably likely period-to-period changes in the
estimate.

Our significant accounting policies and estimates are consistent with those disclosed in Note 1, “Summary of Significant Accounting Policies”, to the audited consolidated financial statements, included in Part II, Item 8 of 10-K FY2021.

Safe Harbor Statement

This report contains forward-looking statements based on current expectations, estimates, forecasts and projections about us, the industry in which we operate and other matters, as well as management’s beliefs and assumptions and other statements.

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regarding matters that are not historical facts. For example, when we use words
such as "projects," "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "estimates," "should," "would," "could," "will," "opportunity,"
"potential" or "may," variations of such words or other words that convey
uncertainty of future events or outcomes, we are making forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended
(Exchange Act). Our forward-looking statements are subject to risks and
uncertainties. Such statements may include, but are not limited to, future
impacts of the COVID-19 pandemic, proposed store openings and closings, proposed
capital expenditures, projected financing requirements, proposed developmental
projects, projected sales and earnings, our ability to maintain selling margins,
and the effect of the adoption of recent accounting pronouncements on our
consolidated financial position, results of operations and cash flows. Actual
events or results may differ materially from the results anticipated in these
forward-looking statements as a result of a variety of factors. While it is
impossible to identify all such factors, factors that could cause actual events
or results to differ materially from those we expected include: the impact of
the COVID-19 pandemic and actions taken to slow its spread and the related
impacts on economic activity, financial markets, labor markets and the global
supply chain; general economic conditions, including inflation, and the related
impact on consumer confidence and spending; competitive factors, including
pricing and promotional activities of major competitors and an increase in
competition within the markets in which we compete; weather patterns, including
changes in year-over-year temperatures; the reduction in traffic to, or the
closing of, the other destination retailers in the shopping areas where our
stores are located; changing consumer preferences and demand; industry trends,
including changes in buying, inventory and other business practices; natural and
man-made disasters, including fire, snow and ice storms, flood, hail, hurricanes
and earthquakes; our ability to successfully implement one or more of our
strategic initiatives and growth plans; the availability, selection and
purchasing of attractive merchandise on favorable terms; the availability of
desirable store locations on suitable terms; industry trends, including changes
in buying, inventory and other business practices; terrorist attacks,
particularly attacks on or within markets in which we operate; our ability to
attract, train and retain quality employees and temporary personnel in
appropriate numbers; our ability to control costs and expenses; the solvency of
parties with whom we do business and their willingness to perform their
obligations to us; import risks, including tax and trade policies, tariffs and
government regulations; our dependence on vendors for our merchandise; domestic
and international events affecting the delivery of merchandise to our stores;
unforeseen cyber-related problems or attacks; regulatory and tax changes; issues
with merchandise safety and shrinkage; any unforeseen material loss or casualty
or the existence of adverse litigation; the impact of current and future laws
and the interpretation of such laws; our substantial level of indebtedness and
related debt-service obligations; consequences of the failure to comply with
covenants in our debt agreements; the availability of adequate financing; and
other risks discussed from time to time in our filings with the Securities and
Exchange Commission (SEC), including those under the heading "Risk Factors" in
the Fiscal 2021 10-K.

Many of these factors, including the ultimate impact of the COVID-19 pandemic,
are beyond our ability to predict or control. In addition, as a result of these
and other factors, our past financial performance should not be relied on as an
indication of future performance. The cautionary statements referred to in this
section also should be considered in connection with any subsequent written or
oral forward-looking statements that may be issued by us or persons acting on
our behalf. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law. In light of these risks and
uncertainties, the forward-looking events and circumstances discussed in this
report might not occur. Furthermore, we cannot guarantee future results, events,
levels of activity, performance or achievements.

Recent accounting pronouncements

Refer to Note 1, "Summary of Significant Accounting Policies," to our Condensed
Consolidated Financial Statements in Part I, Item 1 for a discussion of recent
accounting pronouncements and their impact on our Condensed Consolidated
Financial Statements.

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