Burlington Stores

2023

ANNUAL REPORT

Burlington Stores, Inc., headquartered in New Jersey, is a nationally recognized
off-price retailer with Fiscal 2023 net sales of $9.7 billion. The Company is a Fortune
500 company and its common stock is traded on the New York Stock Exchange
under the ticker symbol “BURL.” The Company operated 1007 stores as of the end
of Fiscal 2023, in 46 states, Washington D.C. and Puerto Rico, principally under
the name Burlington Stores. The Company’s stores offer 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.

TO OUR VALUED STOCKHOLDERS:

I am pleased to report that Fiscal 2023 was a successful year for Burlington.
We delivered strong financial results in a challenging environment. The
improvement we began to make in the fourth quarter of 2022 carried into
and through the successful completion of Fiscal 2023. I believe that this
momentum can be largely attributed to the great progress we have made
on our Burlington 2.0 strategic initiatives to achieve our “full potential”
as an off-price retailer. I would like to thank all our associates and our
management team for embracing and executing these critical strategic
initiatives. We are proud of our achievements, and we look forward to
building on our momentum in this fiscal year.

Fiscal 2023 Highlights1

On a 52-week basis, our comparable store sales increased 4% and total sales increased 10% versus last year. Our adjusted
operating margin also improved by 130 basis points, and our adjusted EPS increased 46%.2

A key driver of our performance was the rollout of many Burlington 2.0 initiatives, including our Merchandising, Supply Chain and
Stores 2.0 initiatives, which are designed to make our operations and execution more efficient, responsive and effective.

From an external environment perspective, our core shopper, the lower-income consumer, started to show early signs of recovery
as they lapped the record levels of inflation that we saw spike in 2022. When our core customer returned to the stores this year,
she found trending styles and desirable brands at great values.

In Fiscal 2023, we strengthened our balance sheet, enhanced our liquidity position, and returned significant excess cash to
our shareholders. During the year, we used excess cash to pay down $110 million of our 2.25% Convertible Senior Notes due in
2025 and we returned $232 million to stockholders through share buybacks. We ended the fiscal year with $1.6 billion in liquidity,
including $925 million in cash, and no borrowings on our ABL facility. We have a very strong balance sheet to support our
growth plans.

Updated Long-Range Plan

During our earnings call last November, I shared an update to our long-range financial model. We believe that if we can execute
on the underlying assumptions in this model, we should be able to create significant shareholder value. I would like to share the
highlights of this plan with you.

Over the next five years, we believe we can increase total sales by about 60%, to $16 billion by 2028. This implies that our average
growth rate each year for total sales should be in the low double digits, driven by an average comparable store sales increase in
the mid-single digits and the addition of 500 net new stores over the next five years.

We also believe we can achieve operating margins of approximately 10% in 2028, which implies about $1.6B of operating income
or almost three times our 2023 operating income.

That operating margin target implies about 400 basis points of potential margin expansion over the next five years. We project
about 200 basis points of operating margin expansion driven by leverage on total sales and comparable store sales growth. We
also project about 200 basis points of operating margin expansion to be driven by efficiencies we have identified to reduce costs,
which are not as dependent on sales growth.

To support new store growth, we also plan to expand our distribution center network. As a result, we are planning capital
expenditures to run at about 7% of sales for the next few years before dropping back to around 5% of sales. We believe we can
generate a lot of cash in the next five years, sufficient to fund the growth needs of the business while still returning excess cash
to shareholders.

1The 2023 fiscal year included 53 weeks ending February 3, 2024. For purposes of comparison, we have discussed results for the 52 weeks ended January 27, 2024 compared with the 52 weeks ended January 28, 2023.
2Results exclude approximately $18 million of expenses associated with our acquisition of 64 Bed Bath & Beyond stores leases, which significantly strengthened our new store pipeline. Additional information regarding
our Fiscal 2023 performance is contained in the “Management Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K. Refer to the section entitled “Key
Performance and Non-GAAP Measures” for a reconciliation of adjusted EBIT (or adjusted operating margin) and adjusted net income to net income. Adjusted net income is divided by our fully diluted weighted average
shares outstanding for fiscal 2023 of 64,917 thousand and for fiscal 2022 of 65,901 thousand to arrive at adjusted earnings per share.

Growing Responsibly
We take our commitment seriously to grow Burlington responsibly. We believe it is very important to understand what all our
stakeholders – shareholders, associates, customers, and vendors -- value as our most important environmental, social, and
governance initiatives. As we prioritize these initiatives, we remain highly focused on those that drive bottom line results for our business,
i.e., initiatives that drive down costs, protect and enhance our brand, and increase engagement and loyalty among our customers and
associates. These initiatives are described in our most recent Corporate Social Responsibility report, which can be found on our investor
relations website.

Looking Ahead
We are confident that our Burlington 2.0 strategy will continue to drive our growth and profitability in 2024 and beyond. I’m very proud of
the progress we made in 2023, and I’m looking forward to providing further updates moving forward.

Sincerely,

Michael O’Sullivan
Chief Executive Officer

This letter contains forward-looking statements, including relating to future actions and results, which are subject to risks and uncertainties. Refer to page 1 of our Annual Report on Form 10-K for additional information.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended February 3, 2024
OR

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from

to

Commission File Number 001-36107

BURLINGTON STORES, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)

2006 Route 130 North
Burlington, New Jersey
(Address of Principal Executive Offices)

80-0895227
(I.R.S. Employer
Identification No.)

08016
(Zip Code)

(609) 387-7800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, par value $0.0001 per share

Trading Symbol(s)
BURL
Securities registered pursuant to Section 12(g) of the Act: None

Name of each exchange on which registered
New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No È
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes È No ‘
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes È No ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of
the Exchange Act.
Large accelerated filer È

Accelerated filer

‘

Non-Accelerated filer ‘

Smaller reporting company ‘

Emerging growth company ‘
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. È
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect
the correction of an error to previously issued financial statements. ‘
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of
the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No È
The aggregate market value of the common stock held by non-affiliates of the registrant on July 29, 2023, the last business day of the registrant’s most recently
completed second fiscal quarter, was $11,490,446,355. The aggregate market value was computed by reference to the closing price of the common stock on such
date.
As of March 2, 2024, there were 63,919,382 shares of common stock of the registrant outstanding.

Documents Incorporated By Reference:

Certain provisions of the registrant’s definitive proxy statement for the 2024 Annual Meeting of Stockholders, to be filed within 120 days of the close of the
registrant’s 2023 fiscal year, are incorporated by reference in Part III of this Form 10-K to the extent described herein.
Auditor Firm Id:

Deloitte & Touche LLP

Auditor Location:

Auditor Name:

34

Morristown, New Jersey

[THIS PAGE INTENTIONALLY LEFT BLANK]

BURLINGTON STORES, INC.
INDEX TO REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED FEBRUARY 3, 2024

PART I.

Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C. Cybersecurity
Item 2.
Item 3.
Item 4. Mine Safety Disclosures

Properties
Legal Proceedings

PART II.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities

Item 6. Reserved
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Financial Statements and Supplementary Data

PART III.

Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services

PART IV.

Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary

SIGNATURES

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[THIS PAGE INTENTIONALLY LEFT BLANK]

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report contains forward-looking statements that are 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. 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, or make any other statement that is
not a historical fact, we are making “forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the
Exchange Act). These forward-looking statements may relate to such matters as future impacts of current
macroeconomic conditions, our future actions, including expected store openings and closings, ongoing strategic
initiatives and the intended results of those initiatives, future performance or results, anticipated sales, expenses and
interest rates, the effect of the adoption of recent or future accounting pronouncements and the outcome of
contingencies such as legal proceedings. Our forward-looking statements are subject to risks and uncertainties. Actual
events or results may differ materially from the events or results anticipated in these forward-looking statements as a
result of a variety of factors, including each of the factors discussed in Item 1A, Risk Factors as well as risks and
uncertainties discussed elsewhere in this Annual Report. While we believe that our assumptions are reasonable, we
caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors
that could affect our actual future events or results. In light of these risks and uncertainties, the forward-looking events
and circumstances discussed in this Annual Report might not occur. 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 do not undertake to publicly
update or revise our forward-looking statements, except as required by law, even if experience or future changes make
it clear that any projected results expressed or implied in such statements will not be realized. If we do update one or
more forward-looking statements, no inference should be made that we will make additional updates with respect to
those or other forward-looking statements.

PART I

Item 1.

Business Overview

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 1007 stores as of February 3, 2024, in 46 states, Washington D.C. 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.

We continue to focus on a number of ongoing initiatives aimed at increasing our overall profitability by

driving comparable store sales growth, expanding and enhancing our retail store base, and enhancing operating
margins. These initiatives include, but are not limited to, those discussed under “Ongoing Initiatives for Fiscal
2024” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

As used in this Annual Report, the terms “Company,” “we,” “us,” or “our” refer to Burlington Stores, Inc.

and all of its subsidiaries.

Fiscal Year End

We define our fiscal year as the 52- or 53-week period ending on the Saturday closest to January 31. This
Annual Report covers the 53-week fiscal year ended February 3, 2024 (Fiscal 2023) and the 52-week fiscal years
ended January 28, 2023 (Fiscal 2022) and January 29, 2022 (Fiscal 2021). The fiscal year ending February 1,
2025 (“Fiscal 2024”) will have 52 weeks.

1

Our Stores

Over 99% of our net sales are derived from stores we operate as Burlington Stores. We believe that our customers

are attracted to our stores principally by the availability of a large assortment of first-quality, current, brand-name
merchandise at everyday low prices.

Burlington Stores offer customers a complete line of merchandise, including: women’s ready-to-wear apparel,

menswear, youth apparel, baby, beauty, footwear, accessories, home, toys, gifts and coats. Our broad selection
provides a wide range of apparel, accessories and furnishings for all ages. 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. Furthermore, we believe the
“treasure hunt” nature of the off-price buying experience drives frequent visits to our stores.

Our store base is geographically diversified with stores located in 46 states, Washington D.C. and Puerto

Rico as set forth below:

State
AK
AL
AR
AZ
CA
CO
CT
DC
DE
FL
GA
IA
ID
IL
IN
KS

Number of Stores
2
13
6
21
108
16
15
1
3
101
35
4
3
40
18
8

State
KY
LA
MA
MD
ME
MI
MN
MO
MS
NC
ND
NE
NH
NJ
NM
NV

Number of Stores
8
9
24
22
2
27
13
12
2
27
1
4
4
47
5
14

State
NY
OH
OK
OR
PA
PR
RI
SC
SD
TN
TX
UT
VA
WA
WI
WV

Number of Stores
65
30
11
7
42
20
6
13
2
16
113
9
28
18
11
1

Store Expansion and Real Estate Strategy

We continue to explore expansion opportunities both within our current market areas and in other regions. 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 the availability of desirable locations
with suitable structures and the negotiation of acceptable lease terms.

We have a proven track record of new store expansion. Our store base has grown from 13 stores in 1980 to 1007

stores as of February 3, 2024. Based on our smaller store prototype, as well as the ongoing opportunity presented by
accelerating retail disruption and industry wide store closures, our long-term store target remains at 2,000 stores. If we
identify appropriate locations, including locations that fit our smaller store prototype, we believe that we will be able to
execute our growth strategy without significantly impacting our current stores. The table below shows our store
openings and closings each of the last three fiscal years.

Stores (beginning of period)
Stores opened(a)(b)
Stores closed(a)
Stores (end of period)

Fiscal 2023
927
91
(11)
1,007

Fiscal 2022
840
91
(4)
927

Fiscal 2021
761
84
(5)
840

(a) Exclusive of relocations.
(b) Stores opened during Fiscal 2023, Fiscal 2022 and Fiscal 2021 had an average size of approximately 27,000,

28,000 and 31,000 square feet, respectively.

2

The total gross square footage of all stores as of the end of Fiscal 2023, Fiscal 2022, and Fiscal 2021 were

51.5 million, 50.7 million, and 49.6 million, respectively. Of this total square footage, the area that represents the
total selling square footage for all stores as of the end of Fiscal 2023, Fiscal 2022, and Fiscal 2021 were
31.5 million, 31.0 million, and 30.0 million respectively.

Distribution and Warehousing

We have five distribution centers that shipped more than 99% of merchandise units to our stores in Fiscal
2023. The remaining merchandise units are drop shipped by our vendors directly to our stores. Our two east coast
distribution centers are located in Edgewater Park, New Jersey and Burlington, New Jersey. Our three west coast
distribution centers are located in San Bernardino, California, Redlands, California, and Riverside, California.
These five distribution centers occupy an aggregate of 4,106,000 square feet, and each includes processing,
shipping and storage capabilities. In addition, we entered into a lease during Fiscal 2021 for an additional
distribution center in Logan, New Jersey occupying approximately 1,029,000 square feet. This building was used
for storage and basic manual processing during Fiscal 2023, and is expected to be fully operational during Fiscal
2024. Lastly, we entered into a lease with a purchase option during Fiscal 2023 for an additional distribution
center in Ellabell, Georgia occupying approximately 2,057,000 square feet. This building is expected to be fully
operational during Fiscal 2026.

We also operate warehousing facilities to support our distribution centers. The east coast has two supporting

warehouses located in Burlington, New Jersey. The west coast has three supporting warehouses located in
Redlands, California, Riverside, California, and San Bernardino, California. These five warehousing facilities
occupy an aggregate of 2,383,000 square feet and primarily serve as storage facilities. We previously operated a
third warehousing facility in Burlington, New Jersey, which was closed during Fiscal 2023.

Primary Distribution Centers:
Edgewater Park, New Jersey (Route 130 South)(a)
Burlington, New Jersey (Daniels Way)
Logan, New Jersey
San Bernardino, California (E. Mill St)
Redlands, California (Pioneer Ave)
Riverside, California (Cactus Ave)
Ellabell, Georgia
Warehousing Facilities:
Burlington, New Jersey (Route 130 North)(a)
Burlington, New Jersey (Richards Run)
Redlands, California (River Bluff Ave)
Riverside, California (Oleander Ave)
San Bernardino, California (Waterman Ave)

Calendar
Year
Operational

Size
(sq. feet)

2004
2014
2022
2006
2014
2021
2026

1987
2017
2017
2023
2020

648,000
1,000,000
1,029,000
758,000
800,000
900,000
2,057,000

525,000
511,000
543,000
410,000
394,000

Leased
or
Owned

Owned
Leased
Leased
Leased
Leased
Leased
(b)

Owned
Leased
Leased
Leased
Leased

Inclusive of corporate offices.

(a)
(b) We entered into a lease with a purchase option during Fiscal 2023 for an additional distribution center in

Ellabell, Georgia. This building is expected to be fully operational during Fiscal 2026.

In addition to the distribution centers that we operate, we have arrangements with third parties for the use of

pool point facilities, which we believe streamline and optimize our distribution network.

3

Customer Service

We are committed to providing our customers with an enjoyable shopping experience in stores that are

clean, neat and easy to shop. In training our associates, our goal is to emphasize knowledgeable, friendly
customer service and a sense of professional pride.

We have empowered our store teams to provide an outstanding customer experience for every customer in
every store, every day. We have and continue to streamline processes and strive to create opportunities for fast
and friendly customer interactions. Our goal is to facilitate a “treasure-hunt” experience for our customers with
clean, organized merchandise presentations that highlight the brands, value and diversity of selection within our
frequently refreshed assortments.

Our Off-Price Sourcing and Merchandising Model

We believe that our ability to chase sales within the off-price model enables us to provide our customers
with products that are nationally branded, fashionable, high quality and priced right. We have an experienced
team of General Merchandise Managers, Divisional Merchandise Managers and buyers that are continually
focused on improving comparable store inventory turnover, inventory age and freshness of merchandise.

We continue to improve the quality of our brand portfolio, driven by the growth of our merchandising team,

wide breadth of our product categories, and a vendor community increasingly committed to grow with
Burlington. We carry many different brands, none of which accounted for more than 6% of our net purchases
during Fiscal 2023, Fiscal 2022 or Fiscal 2021. We have no long-term purchase commitments or arrangements
with any of our suppliers, and believe that we are not dependent on any one supplier. We continue to have good
working relationships with our suppliers.

We have designed our merchant organization so that buyers focus primarily on buying, planners focus
primarily on planning, and information systems help inform data-driven decisions for both groups. Buyers are in
the market each week and focus on purchasing great products for great value. We seek to purchase a majority of
our merchandise in-season. Buyers spend time interacting face-to-face with new and existing vendors and
continuously evaluating trends in the market to which we believe our customers would respond positively. Our
buyers use a merchant scorecard that rates products across four key attributes—fashion, quality, brand and
price—to help formalize a framework for buying decisions.

Our merchandising model allows us to provide our customers with a wide breadth of product categories.

Sales percentage by major product category over the last three fiscal years was as follows:

Category

Ladies apparel
Accessories and shoes
Home
Mens apparel
Kids apparel and baby
Outerwear

Human Capital Resources

Fiscal 2023

Fiscal 2022

Fiscal 2021

21%
27%
20%
17%
12%
3%

22%
24%
21%
17%
12%
4%

23%
23%
20%
16%
14%
4%

Attracting, developing and retaining top talent is key to our growth, and our success depends on cultivating

an engaged and motivated workforce. Our goal is to create a welcoming, diverse and inclusive environment
where our associates can build a career for life.

Oversight and Management

Our Human Resources department is tasked with managing associate-related matters, including recruiting
and hiring, compensation and benefits, performance management, and learning and development. In addition, our

4

management and cross-functional teams also work closely to evaluate human capital management issues such as
associate retention and workplace safety, as well as to implement measures to mitigate these risks. This process
is informed by the results of our annual associate survey, which is discussed in further detail below./-

Our Board of Directors and Board committees provide oversight on certain human capital matters. For

example, our Compensation Committee is responsible for, among other things, developing and reviewing
executive management succession plans and reviewing our compensation policies for executives and associates
generally to assess (i) whether the compensation structure establishes appropriate incentives and (ii) the risks
associated with such policies and practices. In addition, our Nominating and Corporate Governance Committee
reviews environmental, social and governance (“ESG”) trends, issues and concerns, including legislative and
regulatory developments, that could significantly affect our public affairs. Our Audit Committee receives
periodic reports from, and discusses related controls and procedures with, management regarding ESG reporting
and disclosures. Our Board of Directors provides oversight of ESG matters.

Associates

As of February 3, 2024, we employed 71,049 associates, of which 76% were part-time or seasonal

associates. Of our associates, 88% worked in our stores, 8% worked in our distribution centers and 4% worked in
our corporate organization. As of February 3, 2024, 73% of our associates are female, and 78% of our associates
have a racial or ethnic minority background.

Our staffing requirements fluctuate during the year as a result of the seasonality of our business. We hire
additional associates and increase the hours of part-time associates during seasonal peak selling periods. As of
February 3, 2024, associates at one of our stores were subject to a collective bargaining agreement.

Corporate Culture

We recognize the critical importance of talent and culture to our success. Our value proposition, “Our

Burlington,” which defines who we are as an employer and what is important to us as a team, is based on five tenets:

• We Are an Off-Price Retailer: We deliver great values to our customers every day.

• We Live by Our Core Values: Drive Results. Trust & Respect Each Other. Build Teams & Partnerships.

• We Believe Everyone Matters: We listen to the individual viewpoints of our diverse workforce through

open and honest communication.

• We Win Together: We recognize those who make a difference. Great performance leads to exciting

career opportunities.

• We Are a Caring Company: We have a caring work environment, and the generosity of our associates

and customers helps to improve the communities we live and work in and beyond.

We conduct an annual associate survey to measure associate engagement. The survey results help us
understand the associate experience, evaluate our performance, identify our strengths and pinpoint opportunities
for improvement.

Diversity, Equity and Inclusion

As Burlington continues to grow, innovate, and thrive, we are integrating diversity, equity, and inclusion

(“DEI”) best practices across the entire spectrum of business functions. Our DEI strategy consists of five pillars
that support all areas of the business:

• Leadership & Workforce Diversity

•

Inclusive & Equitable Environments for Associates and Customers

5

• Enhanced Education & Awareness

•

Product, Vendor & Supplier Diversity

• Community Advocacy

Burlington has a DEI team that is further supported by an enhanced governance structure consisting of
additional DEI councils to support corporate, merchandising, distribution centers, and field/store operations,
along with expanded Associate Resource Groups, which gives associates more ways to participate in DEI efforts
as members of an associate-led community.

Learning and Development

We support our associates’ career growth by offering a blended learning approach that includes online
education, on-the-job training, coaching and career development. All associates, including full- and part-time, in
our stores, distribution centers and corporate offices, are offered training and development opportunities. Our
learning and development programs are integral to the development of our associates and enable them to take on
new and expanded roles across our organization.

Compensation and Benefits

As part of our commitment to offer competitive wages, Burlington works to ensure that our pay structure

aligns with industry standards. In addition to being merit based, Burlington reviews compensation for all
associates at every level of the business based on market analysis, seeking to ensure associates are fairly and
appropriately compensated. Through this process, we have increased the wages of our hourly associates every
year since 2010. We also offer a wide array of benefits for our associates and their families, including health and
wellness and retirement benefits.

Customer Demographic

Our core customer is 25-49 years old, has an average annual household income of $25,000-$100,000, and is
more ethnically diverse than the general population. The core customer is educated, resides in mid- to large-sized
metropolitan areas and shops for themselves, their family, and their home. We appeal to value seeking and brand
conscious customers who understand the off-price model and love the thrill of the hunt.

Marketing and Advertising

We use a mix of broad-based and targeted marketing strategies to efficiently deliver the right message to our

audience at the right time. Broad-based strategies include television and radio, while our digital and streaming
audio strategies allow for more personalized and targeted messaging. Email reaches our best customers, while
social marketing, including relationships with influencers, allows for authentic consumer engagement.
Burlington.com highlights our great merchandise values, while encouraging customers to visit our stores to
discover fantastic deals on the brands and products they love—from stylish apparel to everything they need and
want for their entire family and home.

Competition

The U.S. retail apparel and home furnishings markets are highly fragmented and competitive. We compete

on the basis of a combination of factors, including, among others, price, breadth, quality and style of merchandise
offered, in-store experience, level of customer service, ability to identify and respond to new and emerging
fashion trends, brand image and scalability. We compete for business with department stores, off-price retailers,
specialty stores, online retailers, 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 stores.

6

Seasonality

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 is also 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.

Trademarks

We are the owner of certain registered and common law trademarks, service marks and tradenames
(collectively referred to as the Marks) that we use in connection with our business. Our Marks include, but are
not limited to, “Burlington Stores,” “BCF,” “Burlington,” “Burlington Coat Factory,” “Cohoes,” “B” and “Baby
Depot.” We consider these Marks and the accompanying name recognition to be valuable to our business. We
believe that our rights to these properties are adequately protected. Our rights in these Marks endure for as long
as they are used.

Available Information

We are subject to the reporting requirements of the Exchange Act. Therefore, we file reports, proxy
statements and other information with the Securities and Exchange Commission (SEC). The SEC maintains a
website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC, including us.

You can access financial and other information about us on the Investor Relations page of our website at

www.burlingtoninvestors.com. We make available through our website, free of charge, copies of our annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those
reports filed with or furnished to the SEC under Section 13(a) or 15(d) of the Exchange Act as soon as
reasonably practicable after electronically filing or furnishing such material to the SEC.

Investors and others should note that we currently announce material information using SEC filings, press
releases, public conference calls and webcasts. In the future, we will continue to use these channels to distribute
material information about the Company, and may also utilize our website and/or various social media sites to
communicate important information about the Company, key personnel, new brands and services, trends, new
marketing campaigns, corporate initiatives and other matters. Information that we post on our website or on
social media channels could be deemed material; therefore, we encourage investors, the media, our customers,
business partners and others interested in the Company to review the information posted on our website, as well
as the following social media channels: Facebook (www.facebook.com/BurlingtonStores) and X (formerly
Twitter) (www.twitter.com/burlington). Any updates to the list of social media channels we may use to
communicate material information will be posted on the Investor Relations page of our website at
www.burlingtoninvestors.com.

The information contained on, or accessible through, our website and these social media channels is not part

of this Annual Report and is therefore not incorporated by reference. The references to our website and these
social media channels are intended to be inactive textual references only.

7

Item 1A. Risk Factors

Set forth below are material risks and uncertainties that could adversely affect our results of operations,

financial condition or cash flows and cause our actual results to differ materially from those expressed in
forward-looking statements made by us. Although we believe that we have identified and discussed below the
key risks and uncertainties affecting our business, there may be additional risks and uncertainties that are not
presently known or that are not currently believed to be material that may adversely affect our results of
operations, financial condition or cash flows. Before making an investment decision, you should carefully
consider the risks and uncertainties described below together with all of the other information included or
incorporated by reference in this Annual Report.

Macroeconomic, Industry and Business Risks

A downturn in general economic conditions or consumer spending or inflationary conditions could adversely
affect our business.

Consumer spending levels and shopping behaviors are affected by various economic conditions, which can

affect our business or the retail industry generally as a result. These factors include, 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. Slowdown in the U.S. economy, an uncertain global economic outlook, interest rate volatility, 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 and periods of social unrest. The occurrence of terrorist acts or other hostilities in or affecting
the U.S. could lead to a decrease in spending by consumers. In addition, natural disasters, industrial accidents,
acts of war or global international conflicts (such as the conflict in Ukraine or the Hamas-Israel war), and public
health issues (such as pandemics or epidemics) 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. Certain of these risks, such as risks arising from political volatility, may be
enhanced in 2024 and other election years.

We have also experienced inflationary pressure in our supply chain and with respect to raw materials and

finished goods to a greater extent than we have in recent years due to current economic conditions. There can be
no assurance that we will be able to offset inflationary pressure and other fluctuations in costs in the future, or
that consumer behavior or our business, operations, liquidity, and/or financial results, will not be negatively
affected by continued inflation in the future. We may not be able to adequately increase our prices over time to
offset increased costs, whether due to inflation or otherwise. Any decreases in consumer discretionary spending
could result in a decrease in store traffic and same store sales, all of which could negatively affect the Company’s
business, operations, liquidity, financial results and/or stock price, particularly if consumer spending levels are
depressed for a prolonged period of time.

We face increased competition from other retailers that could adversely affect our business.

The retail sector is highly competitive, and retailers are constantly adjusting their business models,
promotional activities and pricing strategies in response to changing conditions. We compete on the basis of a
combination of factors, including, among others, price, breadth, quality and style of merchandise offered, in-store
experience, level of customer service, ability to identify and respond to new and emerging fashion trends, brand
image and scalability. We compete with a wide variety of retailers for customers, vendors, suitable store
locations and personnel. Some of our competitors are larger than we are or have more experience than we do in
selling certain product lines or through certain channels. Additionally, existing competitors may consolidate with
other retailers, expand their merchandise offerings, expand their e-commerce capabilities, and/or add new sales

8

channels, change their pricing strategies, or use technology more effectively than we do, including the use of
artificial intelligence. More generally, consumer e-commerce spending may continue to increase, as it has in
recent years, while our business is exclusively in brick-and-mortar stores. If we fail to compete effectively, our
sales and results of operations could be adversely affected.

In order to increase traffic and drive consumer spending, competitors, including department stores, mass

merchants and specialty apparel stores, have been offering brand-name merchandise at substantial markdowns.
Continuation of this trend, or the possible effect on consumer buying patterns that improving economic
conditions could have, may cause consumer demand to shift from off-price retailers to other retailers, which
could have a material adverse effect on our business and results of operations.

Certain traditional, full-price retail chains have developed off-price concepts, which may directly compete

with our business. Our competitors, including such retail chains, may seek to emulate facets of our business
strategy, which could result in a reduction of any competitive advantage or special appeal that we might possess.
In addition, most of our products are sold to us on a non-exclusive basis. As a result, our current and future
competitors may be able to duplicate or improve on some or all of our product offerings that we believe are
important in differentiating our stores. If our competitors were to duplicate or improve on some or all of our
in-store experience or product offerings, obtaining the products we sell may become increasingly difficult,
competition for customers may increase, and our competitive position and our business could suffer.

Our net sales, operating income and inventory levels fluctuate on a seasonal basis.

Our net sales and operating income fluctuate seasonally, with a higher level of our operating income
typically realized during the second half of the year. Any decrease in sales or margins during this period could
have a disproportionate effect on our financial condition and results of operations. Seasonal fluctuations also
affect our inventory levels. We must carry a significant amount of inventory, especially before the holiday season
selling period. If we are not successful in selling our inventory, we may have to write down our inventory or sell
it at significantly reduced prices or we may not be able to sell such inventory at all, which could have a material
adverse effect on our financial condition and results of operations.

A reduction in traffic to, or the closing of, the other destination retailers in the shopping areas where our
stores are located could significantly reduce our sales.

Many of our stores are strategically located in off-mall shopping areas known as “power centers.” Power
centers typically contain three to five big-box anchor stores along with a variety of smaller specialty tenants. Due
to many of our stores being located in such shopping areas, our sales are derived, in part, from the volume of
traffic generated by the other destination retailers and the anchor stores in power centers where our stores are
located. Customer traffic to these shopping areas may be adversely affected by the closing of such destination
retailers or anchor stores, or by a reduction in traffic to such stores resulting from a regional or global economic
downturn, a general downturn in the local area where our store is located, increased competition from alternative
retail options such as those accessible via the internet or a decline in the desirability of the shopping environment
of a particular power center. Such a reduction in customer traffic would reduce our sales and leave us with excess
inventory, which could have a material adverse effect on our business, financial condition, profitability and cash
flows. We may respond by increasing markdowns or transferring product to other stores to reduce excess
inventory, which would further decrease our gross profits and net income.

Failure to identify customer trends and preferences to meet customer demand could negatively impact our
performance and reputation.

Because our success depends on our ability to meet customer demand, we work to follow customer trends

and preferences on an ongoing basis and to buy inventory in response to those trends and preferences. However,
identifying consumer trends and preferences in the diverse product lines and many markets in which we do

9

business and successfully meeting customer demand across those lines and for those markets on a timely basis is
challenging. Although our flexible business model allows us to buy close to need and in response to consumer
preferences and trends, and to expand and contract merchandise categories in response to consumers’ changing
tastes, we may not do so successfully, which could adversely affect our sales and the markdowns required to
move the resulting excess inventory will adversely affect our operating margins.

Customers may also have expectations about how they shop in stores, or more generally engage with
businesses across different channels or media (through internet-based and other digital or mobile channels or
particular forms of social media), which may vary across demographics and may evolve rapidly. Customers are
increasingly using technology and mobile devices to rapidly compare products and prices and to purchase
products. Failure to effectively meet these changing expectations and demands may adversely impact our
reputation and our financial results.

We may be unable to meet our environmental, social or governance (“ESG”) goals or otherwise meet the
expectations of our stakeholders with respect to ESG matters.

Many stakeholders, including investors, customers, employees, consumers and others, have increasingly
focused on ESG topics, including environmental sustainability and corporate social responsibility matters such as
climate change, packaging and waste reduction, energy consumption, and diversity, equity and inclusion in a
variety of ways that are not necessarily consistent. We face pressures from certain constituencies to meet our
goals related to, and to make significant advancements toward achievements in, these areas. Achievement of our
goals is subject to risks and uncertainties, many of which are outside of our control, and it is possible that we
may fail to achieve these goals or that these constituencies may not be satisfied with the goals we set or our
efforts to achieve them. Our disclosure on these matters and our failure, or perceived failure, to meet our goals
and otherwise effectively address these matters, could harm our reputation, which could negatively impact our
business, our relationship with our various stakeholders, and our results of operations. In addition, we could be
criticized for the scope of our ESG initiatives. Our failure to meet shifting stakeholder expectations could
negatively impact our brand, image, reputation, credibility, and the willingness of our customers and suppliers to
do business with us.

In addition, developing and acting on ESG initiatives, including collecting, measuring and reporting related

data, can be costly, difficult and time consuming. Significant expenditures and commitment of time by
management, employees and outside advisors may be involved in developing, implementing and overseeing
policies, practices and internal controls related to ESG risk and performance, and we may undertake additional
costs to control, assess and report on ESG metrics as the nature, scope and complexity of ESG reporting,
diligence and disclosure requirements expand. For example, the State of California recently passed the Climate
Corporate Data Accountability Act and the Climate-Related Financial Risk Act that will impose broad climate-
related disclosure obligations on companies doing business in California. In addition, the SEC has adopted final
rulemaking on climate change disclosures that could increase compliance burdens and associated regulatory costs
and complexity.

We also may face potential governmental enforcement actions or private litigation challenging our ESG and

sustainability goals, or our disclosure of those goals and our metrics for measuring achievement of them, which
may increase our costs of compliance, damage our reputation, or cause investors or consumers to lose confidence
in us.

Extreme and/or unseasonable weather conditions caused by climate change or otherwise, or natural disasters,
could have a significant adverse effect on our business.

Our business is susceptible to risks associated with climate change, which may cause more frequent and

extreme weather events. Extreme weather conditions in the areas in which our stores or distribution centers are
located—especially in areas with a high concentration of our stores—could have a material adverse effect on our

10

business, financial condition and results of operations. For example, heavy snowfall or other extreme weather
conditions over a prolonged period, caused by climate change or otherwise, might make it difficult for our
customers or employees to travel to our stores. In addition, natural disasters such as hurricanes, tornados, floods,
earthquakes, and other extreme weather or climate conditions, or a combination of these or other factors, could
severely damage or destroy one or more of our stores or distribution facilities located in the affected areas, or
disrupt our computer systems, thereby disrupting our business operations. Any of these events or circumstances
also could disrupt the operations of one or more of our vendors. Day-to-day operations, particularly our ability to
receive products from our vendors or transport products to our stores, could be adversely affected, or we could be
required to close stores.

Our business is also susceptible to unseasonable weather conditions. For example, extended periods of
unseasonably warm temperatures during the Fall or Winter seasons or cool weather during the Spring or Summer
seasons could render a portion of our inventory incompatible with those unseasonable conditions, particularly in
light of our historical product mix. These prolonged unseasonable weather conditions could adversely affect our
business, financial condition and results of operations. In addition, because higher net sales historically have
occurred during the second half of the year, unseasonably warm weather during these months could have a
disproportionately large effect on our business and materially adversely affect our financial condition and results
of operations.

Public health crises, epidemics or pandemics, such as the COVID-19 pandemic have had, and could in the
future have, a negative impact on the Company’s business and operations.

Public health crises, epidemics or pandemics have had, and could in the future have, a negative impact on
our business and operations, including Company sales and cash flow. Such public health crises, epidemics and
pandemics have the potential to create significant volatility, uncertainty and worldwide economic disruption,
resulting in an economic slowdown of potentially extended duration, as seen with the COVID-19 pandemic. Such
public health crises, epidemics and pandemics, could adversely affect our business and financial results, they
may also have the effect of heightening many of the other risks described throughout this Annual Report.

Strategic Risks

We may not be able to sustain our growth plans or successfully implement our long-range strategic goals.

Our growth largely depends on our ability to successfully open and operate new stores, as well as to expand

our distribution capabilities in order to support that growth. While we have identified numerous market
opportunities that we believe will allow us to operate 2,000 stores over the long term, the success of these
strategies is dependent upon, among other things, the current retail environment, the identification of suitable
markets and the availability of real estate that meets our criteria for traffic, square footage, co-tenancies, lease
economics, demographics and other factors, the negotiation of acceptable lease terms, construction costs, the
availability of financing, the hiring, training and retention of competent sales personnel, and the effective
management of inventory to meet the needs of new and existing stores on a timely basis.

Notably, as we continue to evolve our off-price model, we plan on more effectively chasing the sales trend,

making greater investments in our merchandising capabilities, operating with leaner inventories, improving
operational flexibility, and challenging expenses, among other strategic initiatives. Executing these initiatives
while also maintaining the current pace of our expansion may place increased demands on our operational,
managerial and administrative resources. These initiatives may require us to increase the number of merchants
and other associates we employ, modify how we manage our liquidity and inventory, as well as to monitor and
upgrade our management information and other systems and our distribution infrastructure.

We may not be able to successfully execute our growth and other strategies on a timely basis or at all. If we

fail to implement these strategies successfully, if we cannot keep up with the pace required for execution, or if
these strategies do not yield the desired outcomes, our financial condition and results of operations would be
adversely affected.

11

Failure to execute our opportunistic buying and inventory management process could adversely affect our
business.

We purchase the majority of our inventory opportunistically, with our buyers purchasing close to need.
Establishing the “treasure hunt” nature of the off-price buying experience to drive traffic to our stores requires us
to offer changing assortments of merchandise in our stores. While opportunistic purchasing provides our buyers
the ability to buy at desirable times and prices, in the quantities we need and into market trends, it places
considerable discretion with our buyers, which subjects us to risks related to the pricing, quantity, nature and
timing of inventory flowing to our stores. If we are unable to provide frequent replenishment of fresh, high
quality, attractively priced merchandise in our stores, it could adversely affect traffic to our stores as well as our
sales and margins. We base our purchases of inventory, in part, on our sales forecasts. If our sales forecasts do
not match customer demand, we may experience higher inventory levels and need to mark down excess or slow-
moving inventory, leading to decreased profit margins, or we may have insufficient inventory to meet customer
demand, leading to lost sales, either of which could adversely affect our financial performance. We need to
purchase inventory sufficiently below conventional retail to maintain our pricing differential to regular
department and specialty store prices, and to attract customers and sustain our margins, which we may not
achieve at various times and which could adversely affect our results.

In order to better serve our customers and maximize sales, we must properly execute our inventory
management strategies by appropriately allocating merchandise among our stores, timely and efficiently
distributing inventory to such locations, maintaining an appropriate mix and level of inventory in such locations,
appropriately changing the allocation of floor space of stores among product categories to respond to customer
demand, and effectively managing pricing and markdowns, and there is no assurance we will be able to do so. In
addition, as we execute inventory localization initiatives, there could be disruptions in inventory flow and
placement. Failure to effectively execute our opportunistic inventory buying and inventory management
strategies could adversely affect our performance and our reputation.

In addition to our own execution, we may need to react to factors affecting inventory flow that are outside
our control, such as adverse weather, natural disasters, epidemics or pandemics or other changes in conditions
affecting our vendors and others in our supply chain, such as political instability, labor issues (including strikes
or threats of strikes and scarcity of labor) and increased labor costs, reduced freight capacity and other
transportation issues, or increasing cost of regulations. If we are not able to adjust appropriately to such factors,
our inventory management may be affected, which could impact our performance and our reputation.

Operational Risks

If we cannot optimize our existing stores or maintain favorable lease terms, our growth strategy and
profitability could be negatively impacted.

We lease substantially all of our store locations. Most of our current leases expire at various dates after
ten-year terms, the majority of which are subject to our option to renew such leases for several additional five-
year periods. While we have the right to terminate some of our leases under specified conditions, including by
making specified payments, we may not be able to terminate a particular lease if or when we would like to close
a particular store. If we decide to close stores, we are generally required to continue to perform obligations under
the applicable leases, which generally include, among other things, paying rent and operating expenses for the
balance of the lease term, or paying to exercise rights to terminate, and performing any of these obligations may
be expensive. When we assign leases or sublease space to third parties, we may remain liable on the lease
obligations, which could lead to significant expense if the assignee or sublessee does not perform. In addition,
when the lease terms for the stores in our ongoing operations expire, our ability to renew such expiring leases on
commercially acceptable terms or, if such leases cannot be renewed, our ability to lease a suitable alternative
location, and our ability to enter into leases for new stores on favorable terms will each depend on many factors,
some of which may not be within our control, such as conditions in the local real estate market, competition for
desirable properties and our relationships with current and prospective lessors. As we renew and replace our store

12

leases, we also strive to optimize the size of our existing stores to ensure maximum space utilization, which
frequently means adjusting operations to accommodate smaller space through alternative floor plans and
inventory turn optimization.

In addition, to the extent that our new store openings are in existing markets, we may experience reduced
net sales volumes in existing stores in those markets. If we experience a decline in performance or lease payment
allowances from our lessors become unavailable, we may slow or discontinue store openings, relocations,
refreshes and/or remodels.

If any of the foregoing occurs, our growth and profitability may be negatively impacted.

If we are unable to purchase attractive brand name merchandise in sufficient quantities at competitive prices,
we may be unable to offer an appealing merchandise mix and our sales may be harmed.

Our ability to purchase merchandise opportunistically from third party vendors depends upon the

continuous, sufficient availability of high-quality merchandise that we can acquire at prices sufficiently below
those paid by conventional retailers in order to achieve the value proposition we strive to provide to our
customers. Some of our key vendors may limit the number of retail channels they use to sell their merchandise,
which may result in intense competition among retailers to obtain and sell these goods. Moreover, we typically
buy products from our vendors on a purchase order basis. We have no long-term purchase contracts with any of
our vendors and, therefore, have no contractual assurances of continued supply, pricing or access to products, and
any vendor could change the terms upon which they sell to us or discontinue selling to us at any time. Finally, if
our vendors are better able to manage their inventory levels and reduce the amount of their excess inventory, the
amount of high-quality merchandise available to us could be materially reduced.

If our relationships with our vendors are disrupted, we may not be able to acquire the merchandise we
require in sufficient quantities or on terms acceptable to us. Any inability to acquire high quality merchandise
would have a negative effect on our business and operating results because we would be missing products from
our merchandise mix unless and until alternative supply arrangements were made, resulting in deferred or lost
sales. In addition, events that adversely affect our vendors could impair our ability to obtain desired merchandise
in sufficient quantities. Such events include difficulties or problems associated with our vendors’ businesses,
finances, labor, importation of products, costs, production, insurance and reputation.

Our failure to attract, train and retain quality employees and temporary personnel in sufficient numbers could
adversely affect our business.

Our performance depends on recruiting, developing, training and retaining quality store, distribution center
and other employees in large numbers as well as experienced buying and management personnel, and we invest
significant resources in training and motivating them to maintain a high level of job satisfaction. Many of our
store and distribution center employees are in entry level or part-time positions with historically high rates of
turnover, which can lead to increased training and retention costs, particularly if employment opportunities
increase. Availability and skill of employees may differ across markets in which we do business and in new
markets we enter, and we need to manage our labor needs effectively.

In addition, because of the distinctive nature of our off-price model, we must provide significant internal training

and development for key employees across the company, including within our buying organization. Similar to other
retailers, we face challenges in securing and retaining sufficient talent in management and other key areas for many
reasons, including competition in the retail industry generally and for talent in various geographic markets. If we do not
continue to attract qualified individuals, train them in our business model, support their development and retain them,
our performance could be adversely affected or our growth could be limited.

We are also dependent upon temporary personnel to adequately staff our distribution facilities, with
heightened dependence during busy periods such as the holiday season. Although we strive to secure long-term

13

contracts on favorable terms with our service providers and other vendors, we may not be able to avoid
unexpected operating cost increases in the future, such as those associated with minimum wage increases or
enhanced health care requirements. In addition, there can be no assurance that we will receive adequate
assistance from our temporary personnel, or that there will be sufficient sources of suitable temporary personnel
to meet our demand. Any such failure to meet our staffing needs or any material increases in associate turnover
rates could have a material adverse effect on our business or results of operations. Further, any negative publicity
regarding the agencies from which we source temporary personnel, such as in connection with immigration
issues or employment practices, could damage our reputation, disrupt our ability to obtain needed labor or result
in financial harm to our business.

Labor costs, including healthcare costs, and other challenges from our large workforce may adversely affect
our results and profitability.

We have a large workforce, and our ability to meet our labor needs while controlling costs, including costs
of providing health, retirement and other associate benefits, is subject to various factors such as unemployment
levels; prevailing wage rates and minimum wage requirements; participant benefit levels; economic conditions;
interest rate changes; health and other insurance costs; and the regulatory environment, including health care
legislation, and with respect to governmental labor and employment and associate benefits programs and
requirements. When wage rates or benefit levels increase in the market or the unemployment rate is otherwise
low, increasing our wages or benefits to compete for employees may cause our earnings to decrease, while failing
to increase our wages or benefits competitively or reducing our wages or benefits could result in a decline in our
ability to attract or retain employees or in the quality of our workforce, causing our customer service or
performance to suffer, which could negatively impact our results.

Parties with whom we do business may be subject to insolvency risks or may otherwise become unable or
unwilling to perform their obligations to us.

We are party to contracts, transactions and business relationships with various third parties, including

vendors, suppliers, service providers and lenders, pursuant to which such third parties have performance,
payment and other obligations to us. In some cases, we depend upon such third parties to provide essential
leaseholds, products, services or other benefits, including with respect to store and distribution center locations,
merchandise, advertising, software development and support, logistics, other agreements for goods and services
in order to operate our business in the ordinary course, extensions of credit, hedging instruments and other vital
matters. Economic, industry and market conditions could result in increased risks to us associated with the
potential financial distress of such third parties.

If any of the third parties with which we do business become subject to bankruptcy, receivership or similar

insolvency proceedings, our rights and benefits in relation to our contracts, transactions and business
relationships with such third parties could be terminated, modified in a manner adverse to us, or otherwise
impaired. We cannot make any assurances that we would be able to arrange for alternate or replacement
contracts, transactions or business relationships on terms as favorable as our existing contracts, transactions or
business relationships, if at all. Any inability on our part to do so could negatively affect our cash flows, financial
condition and results of operations.

Many of our vendors produce merchandise overseas, and our business is exposed to the risk of foreign and
domestic operations and international tax policies and trade relations.

We do not own or operate any manufacturing facilities. As a result, we are dependent upon the timely
receipt of quality merchandise from vendors, many of which produce merchandise overseas. Factors which affect
overseas production could affect our vendors and, in turn, our ability to obtain inventory and the price levels at
which they may be obtained. Factors that cause an increase in merchandise costs or a decrease in supply could
lead to generally lower sales and gross margins in the retail industry.

14

Such factors include:

•

•

•

•

•

•

•

•

•

•

political or labor instability in countries where vendors are located or at foreign ports which could
result in lengthy shipment delays, which, particularly if timed ahead of the Fall and Winter peak selling
periods, could materially and adversely affect our ability to stock inventory on a timely basis;

disruptions in the operations of domestic ports through which we import our merchandise, including
labor disputes involving work slowdowns, lockouts or strikes, which could require us and/or our
vendors to ship merchandise to alternative ports in the United States or through the use of more
expensive means, and shipping to alternative ports in the United States could result in increased lead
times and transportation costs; disruptions at ports through which we import our goods could also
result in unanticipated inventory shortages;

political or military conflict, which could cause a delay in the transportation of our products to us and
an increase in transportation costs;

heightened terrorism security concerns, which could subject imported goods to additional, more
frequent or more thorough inspections, leading to delays in deliveries or impoundment of goods for
extended periods;

disease epidemics, pandemics, outbreaks and other health-related concerns, which could result in
closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods
produced in affected areas;

natural disasters and industrial accidents, which could have the effect of curtailing production and
disrupting supplies;

increases in labor and production costs in goods-producing countries, which would result in an increase
in our inventory costs;

the migration and development of manufacturers, which can affect where our products are or will be
produced;

fluctuation in our vendors’ local currency against the dollar, which may increase our cost of goods
sold; and

changes in import duties, taxes, charges, quotas, loss of “most favored nation” trading status with the
United States for a particular foreign country and trade restrictions (including the United States
imposing antidumping or countervailing duty orders, safeguards, remedies or compensation and
retaliation due to illegal foreign trade practices).

Any of the foregoing factors, or a combination thereof, could have a material adverse effect on our business.

Over the past few years, uncertainty has increased with respect to tax and trade policies, tariffs and

government regulations affecting trade between the U.S. and other countries. Although we source the majority of
our merchandise from third party vendors located in the U.S., the production of that merchandise occurs
primarily overseas. As a result, we continue to evaluate the impact of currently effective tariffs, as well as any
additional proposed tariffs, on our supply chain, costs, sales and profitability. We can provide no assurance that
any strategies we implement to mitigate the impact of such tariffs or other trade actions will be successful.

In addition, other major developments in tax policy or trade relations, such as the disallowance of tax

deductions for imported merchandise or the imposition of additional unilateral tariffs on imported products,
could increase the cost of products purchased from suppliers in such countries or restrict the importation of
products from such countries, which in turn could have a material adverse effect on our business, results of
operations and liquidity.

15

Any disruption to our distribution network could cause disruptions in our business, a loss of sales and profits,
increases in our expenses, and other material adverse effects.

Most of the merchandise we purchase is shipped directly to our distribution centers, where it is prepared for

shipment to the appropriate stores. The success of our stores depends in part on their timely receipt of
merchandise, and a strong, efficient and flexible distribution network is critical to our ability to grow and to
maintain a low-cost operating structure. A disruption within our distribution network, including the shutdown of
or loss of significant capacity by one or more of our current primary distribution centers could adversely affect
our ability to deliver inventory in a timely manner and significantly disrupt our business. In addition, any failure
to continue to add capacity to our existing distribution centers and build out planned additional distribution
centers timely and cost effectively could adversely affect our business.

In addition to the distribution centers that we operate, we have arrangements with third parties for the use of

pool point facilities, which we believe streamline and optimize our distribution network. If complications arise
with a pool point facility or its operator, or if any such facility is severely damaged or destroyed, it may cause
delays in the delivery of our merchandise to our stores. We also may be affected by disruptions in the global
transportation network such as port strikes, weather conditions, work stoppages or other labor unrest, which may
also adversely affect our ability to deliver inventory on a timely basis. We also depend upon third-party carriers
for shipment of merchandise; any interruption in service by these carriers for any reason could cause disruptions
in our business, a loss of sales and profits, and other material adverse effects.

If we are unable to protect our information systems against service interruption, misappropriation of data,
breaches of security, or other cyber-related attacks, our operations could be disrupted, we may suffer financial
losses and our reputation may be damaged.

We rely extensively on various information systems, including data centers, hardware, software and applications
to manage many aspects of our business, including to process and record transactions in our stores, to enable effective
communication systems, to plan and track inventory flow, to manage logistics and to generate performance and
financial reports. In addition, some aspects of our business, like that of most retailers, involve the receipt, storage and
transmission of customers’ personal information and consumer preferences, as well as confidential information about
our employees, our vendors and our Company, some of which is entrusted to third-party service providers and vendors.
We are dependent on the integrity, security and consistent operations of these systems and related back-up systems,
software, tools (including encryption technology) and monitoring to provide security and oversight for processing,
transmission, storage and the protection of such confidential information.

Like most major corporations, we, our customers and our third-party services providers face an evolving,

increasing threat landscape in which cybercriminals, among others, employ a complex array of techniques
designed to access personal and other information, including, for example, the use of fraudulent or stolen access
credentials, malware, ransomware, phishing, denial of service and other types of attacks. Hardware, software or
applications we develop or obtain from third parties may contain defects in design or manufacture or other
problems that are not presently known and could unexpectedly compromise information security. In addition, our
employees, contractors or third parties with which we do business or to which we outsource business operations
may attempt to circumvent our security measures in order to misappropriate such information, and may
purposefully or inadvertently cause a breach involving such information or become subject to various other
cyber-crimes. Further, our computer systems and the third-party systems of our vendors are also subject to
damage or interruption from a number of non-criminal causes, including power outages; computer and
telecommunications failures; computer viruses; and design or usage errors by our employees or contractors.
Moreover, the rapid evolution and increased adoption of artificial intelligence technologies may intensify our
cybersecurity risks.

16

If we or third parties with which we do business were to fall victim to successful cyber-attacks or experience

other material cybersecurity incidents, including the loss of individually identifiable customer or other sensitive
data, we may incur substantial costs and suffer other negative consequences, which may include:

•

•

•

•

•

•

•

remediation costs, such as liability for stolen assets or information, repairs of system damage or
replacement of systems, and incentives to customers or business partners in an effort to maintain
relationships after an attack;

increased cybersecurity protection costs, which may include the cost of continuing to make
organizational changes, deploy additional personnel and protection technologies, train employees, and
engage third party consultants;

lost revenues resulting from the unauthorized use of proprietary information or the failure to retain or
attract customers following an attack;

litigation and legal risks, including regulatory actions by state and federal governmental authorities;

increased cybersecurity and other insurance premiums;

reputational damage that adversely affects customer or investor confidence; and

damage to our competitiveness, stock price, and long-term stockholder value.

We employ various security measures and technologies to actively monitor, prevent and mitigate cyber-
attacks. Despite advances in security hardware, software, and encryption technologies, the methods and tools
used to obtain unauthorized access, disable or degrade service, or sabotage systems are constantly changing and
evolving, and may be difficult to anticipate or detect, and there is no guarantee that the proactive measures we
put in place will be adequate to safeguard against all data security breaches or misuses of data. As many of our
non-store associates continue to work remotely, we face an increased risk due to the potential interruptions to
internal or external information technology infrastructure as well as ongoing threats and attempts to breach our
security networks. The Company carries information security risk insurance that is designed to mitigate against
certain potential losses arising from a cybersecurity incident. However, there is no guarantee that this insurance
coverage will be sufficient to cover all possible claims and we could suffer losses that could have a material
adverse effect on our business.

Although we endeavor to protect consumer identity and payment information through the implementation and
modification of security technologies, processes and procedures, including training programs for employees to raise
awareness about phishing, malware and other cyber risks, we could experience increased costs associated with
maintaining these protections as threats of cyber-attacks increase in sophistication and complexity. In addition, there
are inherent risks associated with modifying or replacing systems, and with new or changed relationships, including
accurately capturing and maintaining data, realizing the expected benefit of the change and managing the potential
disruption of the operation of the systems as the changes are implemented. Potential issues associated with
implementing technology initiatives and the time and resources required to optimize the benefits of new elements of
our systems and infrastructure could reduce the efficiency of our operations in the short term.

We are subject to payment-related risks that could increase our operating costs, expose us to fraud or theft,
subject us to potential liability and potentially disrupt our business.

We accept payments using a variety of methods, including cash, checks, credit and debit cards, and gift cards, and

we may offer new payment options over time. Acceptance of these payment methods subjects us to rules, regulations,
contractual obligations and compliance requirements, including payment network rules and operating guidelines, data
security standards and certification requirements, and rules governing electronic funds transfers. These requirements
may change over time or be reinterpreted, making compliance more difficult or costly.

For certain payment methods, including credit and debit cards, we pay interchange and other fees, which
may increase over time and raise our operating costs. We rely on third parties to provide payment processing

17

services, including the processing of credit cards, debit cards, and other forms of electronic payment. If these
companies become unable to provide these services to us, or if their systems are compromised, it could
potentially disrupt our business. The payment methods that we offer also subject us to potential fraud and theft
by criminals, who are becoming increasingly sophisticated, seeking to obtain unauthorized access to or exploit
weaknesses that may exist in the payment systems. If we fail to comply with applicable rules or requirements for
the payment methods we accept, or if payment-related data is compromised due to a breach or misuse of data, we
may be liable for costs incurred by payment card issuing banks and other third parties or subject to fines and
higher transaction fees, or our ability to accept or facilitate certain types of payments may be impaired. In
addition, our customers could lose confidence in certain payment types, which may result in a shift to other
payment types or potential changes to our payment systems that may result in higher costs. As a result, our
business and operating results could be adversely affected.

Our future growth and profitability could be adversely affected if our advertising and marketing programs are
not effective in generating sufficient levels of customer awareness and traffic.

We rely on advertising to increase consumer awareness of our product offerings and pricing to drive traffic

to our stores. In addition, we rely and will increasingly rely on other forms of media advertising, including
digital, social media and e-marketing. Our future growth and profitability will depend in part upon the
effectiveness and efficiency of our advertising and marketing programs. Our advertising and marketing programs
may not be successful if we do not:

• manage advertising and marketing costs effectively in order to maintain acceptable operating margins

and return on our marketing investment; and

•

convert customer awareness into actual store visits and product purchases.

Our planned advertising and marketing expenditures may not result in increased total or comparable store
sales or generate sufficient levels of product awareness. Further, we may not be able to manage our advertising
and marketing expenditures on a cost-effective basis. Additionally, some of our competitors may have
substantially larger marketing budgets, which may provide them with a competitive advantage over us.

Damage to our corporate reputation or brand could adversely affect our sales and operating results.

Building brand reputation is important to our continuing success. Our reputation is partially based on
perceptions of various subjective qualities and overall integrity. Any incident that erodes the trust or confidence
of our customers or the general public could adversely affect our reputation and business, particularly if the
incident results in significant adverse publicity or governmental inquiry. Such an incident could also include
alleged acts or omissions by or situations involving our vendors (or their contractors or subcontractors), the
landlords for our stores, or our associates outside of work, and may pertain to social or political issues or protests
largely unrelated to our business. In addition, information concerning us, whether or not true, may be instantly
and easily posted on social media platforms and similar devices at any time, which information may be adverse
to our reputation or business.

The harm may be immediate without affording us an opportunity for redress or correction. Damage to our

reputation in any form could result in declines in customer loyalty and sales, affect our vendor relationships,
development opportunities and associate retention, and otherwise adversely affect our business.

The loss of executives or other key personnel may disrupt our business and adversely affect our financial results.

We depend on the contributions of key personnel in various functions for our continued success. These executives

and other key personnel may be hired by our competitors, some of which have considerably more financial resources
than we do. The loss of key personnel, or the inability to hire, train, motivate and retain qualified employees, or
changes to our organizational structure, operating results, or business model that adversely affect morale or retention,
could adversely affect our business, financial condition and results of operations.

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Effective succession planning is also a key factor for our success. Our failure to enable the effective transfer

of knowledge and facilitate smooth transitions with regard to key personnel could adversely affect our strategic
planning and execution and negatively affect our business, financial condition and results of operations. If we fail
to enable the effective transfer of knowledge and facilitate smooth transitions for key personnel, the operating
results and future growth for our business could be adversely affected, and the morale and productivity of the
workforce could be disrupted.

Legal, Regulatory, Compliance and Tax Risks

Difficulty complying with existing and changing laws, rules, regulations and local codes could negatively
affect our business operations and financial performance.

We are subject to federal, state and local laws, rules and regulations in the operation of our business. In
addition to complying with current laws, rules and regulations, we must also comply with new and changing laws
and regulations, new regulatory initiatives, evolving interpretation of existing laws by judicial and regulatory
authorities, and reforms in jurisdictions where we do business. Complying with local zoning codes, real estate
land use restrictions, employment-related laws, and other local laws across numerous jurisdictions is particularly
challenging as we grow the number of our stores in new municipalities and need to stay abreast of changes in
such local laws. The increasing proliferation of local laws, some of which may be conflicting, further
complicates our efforts to comply with all of the various laws, rules and regulations that apply to our business.
We could also be negatively impacted by changes in government regulations in areas including taxes, healthcare
and environmental protection.

All of the above legal, regulatory and administrative requirements may, individually or collectively, affect
multiple aspects of our business, including those involving labor and employment benefits; health, welfare and
finance; real estate management; consumer protection and product safety; climate change, supply chain, energy
and waste; electronic communications, data protection and privacy; protection of third-party intellectual property
rights; and income taxes. Changes to these laws and regulations could increase our costs of compliance or of
doing business, and could adversely affect our operating results. In addition, we require our vendors to adhere to
various conduct, compliance and other requirements, including those relating to employment and labor
(including wages and working conditions), health and safety, and anti-bribery standards. Although we have
implemented policies and procedures to facilitate compliance with laws and regulations, this does not guarantee
that vendors and other third parties with whom we do business will not violate such laws and regulations or our
policies. If we or other third parties with whom we do business fail to comply with these laws, rules and
regulations, we may be subject to judgments, fines or other costs or penalties, which could materially adversely
affect our business operations and financial performance.

The insurance we carry may not always pay, or be sufficient to pay or reimburse us, for our losses.

We are primarily self-insured and we purchase insurance only for catastrophic types of events for such risks

as workers’ compensation, employment practices liability, employee health benefits, product and other general
liability claims, among others. If we suffer a substantial loss that is not covered by commercial insurance or our
self-insurance reserves, the loss and related expenses could harm our business and operating results.

Issues with safety and merchandise shrinkage could damage our sales and financial results.

Various governmental authorities in the jurisdictions where we do business regulate the safety of the
merchandise we sell to consumers. Regulations and standards in this area, including those related to the U.S.
Consumer Product Safety Improvement Act of 2008, state regulations like California’s Proposition 65, and
similar legislation, impose restrictions and requirements on the merchandise we sell in our stores. These
regulations change from time to time as new federal, state or local regulations are enacted. If we or our
merchandise vendors are unable to comply with regulatory requirements on a timely basis or at all, or to

19

adequately monitor new regulations that may apply to existing or new merchandise categories, significant fines
or penalties could be incurred or we could have to curtail some aspects of our sales or operations, which could
have a material adverse effect on our financial results.

We rely on our vendors to provide quality merchandise that complies with applicable product safety laws
and other applicable laws, but they may not comply with their obligations to do so. Although our arrangements
with our vendors frequently provide for indemnification for product liabilities, the vendors may fail to honor
those obligations to an extent we consider sufficient or at all. Issues with the safety of merchandise, and issues
with the authenticity of merchandise, or customer concerns about such issues, regardless of our fault, could cause
damage to our reputation and could result in lost sales, uninsured product liability claims or losses, merchandise
recalls and increased costs, and regulatory, civil or criminal fines or penalties, any of which could have a material
adverse effect on our financial results.

An unfavorable, uncertain or volatile economic environment, as we have experienced recently as a result of
inflation, rising interest rates and supply chain disruptions, among other things, has and may continue to cause an
increase in inventory shrinkage. Risk of loss or theft of assets, including inventory shrinkage, is inherent in the
retail business, and we experienced increased shrinkage, as well as increased loss prevention costs, in recent
years. Loss or theft may be caused by error or misconduct of associates, customers, vendors, organized retail
theft, or other third parties. Our inability to effectively prevent and/or minimize the loss or theft of assets, or to
effectively reduce the impact of those losses, could adversely affect our financial performance. Additionally, acts
of violence at, or threatened against, our stores, including active shooter situations, may, in addition to other
operational impact, result in damage and restricted access to our stores and/or store closures for short or extended
periods of time, all of which could materially adversely affect our financial performance.

Compliance with increasingly rigorous privacy and data security regulations could be costly, affect or limit
our business opportunities and how we collect and/or use data, and potentially subject us to fines and lawsuits.

As described above, the protection of customer, employee, vendor and Company data is critical to our

business. As the regulatory environment relating to retailers’ and other companies’ obligation to protect such
sensitive data becomes increasingly rigorous, with new and evolving requirements applicable to our business,
compliance with those requirements could result in additional costs and could have a significant impact on our
current and planned privacy, data protection and information security-related practices, our collection, use,
sharing, retention and safeguarding of customer and/or employee information, and some of our current or future
business plans. A material failure on our part to comply could subject us to fines or other regulatory sanctions
and potentially to lawsuits.

In recent years, there has been increasing regulatory enforcement and litigation activity in the areas of

privacy, data protection and information security in various states in which we operate. Compliance with the
evolving privacy regulatory landscape will likely increase the costs of doing business, especially if we face
differing regulatory requirements across multiple jurisdictions and/or a lack of adequate regulatory guidance.
New legislation or regulations, including any potential comprehensive federal privacy legislation, as well as any
associated inquiries or investigations or any other government actions, could also result in negative publicity,
require significant management time and attention, and subject us to remedies that may harm our business,
including fines or demands or orders that we modify or cease existing business practices.

Legal and regulatory proceedings could have an adverse impact on our results of operations.

We are subject to various legal and regulatory proceedings relating to our business, certain of which may involve

jurisdictions with reputations for aggressive application of laws and procedures against corporate defendants. We are
impacted by trends in litigation, such as representative claims under the California Private Attorneys’ General Act and
class action litigation brought under various consumer protection, employment, and privacy and information security
laws. Accruals are established based on our best estimates of our potential liability. However, we cannot accurately
predict the ultimate outcome of any such proceedings due to the inherent uncertainties of litigation. Regardless of the

20

outcome or whether the claims are meritorious, legal and regulatory proceedings may require that we devote
substantial time and expense to defend our Company. Unfavorable rulings could result in a material adverse impact on
our business, financial condition or results of operations.

Use of social media by the Company or third parties at our direction in violation of applicable laws and
regulations may adversely impact our reputation or subject us to fines or other penalties.

There has been a substantial increase in the use of social media platforms and other forms of internet-based
communications, which allow individuals access to a broad audience of consumers and other interested persons.
We have increasingly utilized social media in our marketing and employment recruiting efforts in order to reach
as many current and potential new customers and potential employment candidates as efficiently and cost
effectively as possible, and have also retained third parties, such as influencers, with expertise and distinction in
the social media realm to bolster our social media efforts and our perceived affiliation with these individuals
could cause us brand or reputational damage in the event they are perceived to be or take actions inconsistent
with our brands and values. As laws and regulations rapidly evolve to govern the use of these platforms, the
failure by us, our employees or third parties acting at our direction to abide by applicable laws and regulations in
the use of these platforms could adversely impact our reputation or subject us to fines or other penalties.

Risk Related to Our Substantial Indebtedness and Corporate Structure

Our ability to generate sufficient cash depends on numerous factors beyond our control, and we may be
unable to generate sufficient cash flow to service our debt obligations.

As of February 3, 2024, our obligations include (i) $933.4 million, inclusive of original issue discount,
under our $1,200.0 million senior secured term loan facility (Term Loan Facility) and (ii) $156.2 million under
our 2.25% Convertible Notes due April 15, 2025 and $297.1 million under our 1.25% Convertible Notes due
December 15, 2027 (collectively, our “Convertible Notes”). We had no outstanding balance on our
$900.0 million asset-based lending facility (ABL Line of Credit) as of February 3, 2024. Our debt obligations
also include $29.1 million of finance lease obligations as of February 3, 2024. Estimated cash required to make
interest payments for these debt obligations, net of the impact of our interest rate swap, amounts to
approximately $63.1 million in the aggregate for the fiscal year ending February 1, 2025.

Our ability to make payments on and to refinance our debt, and to fund planned capital expenditures, will

depend on our ability to generate cash in the future, which is to some extent subject to general economic,
financial, competitive, legislative, regulatory and other factors that are beyond our control. If we are unable to
generate sufficient cash flow to service our debt and meet our other commitments, we will be required to adopt
one or more alternatives, such as refinancing all or a portion of our debt, selling material assets or operations or
raising additional debt or equity capital. We may not be able to successfully carry out any of these actions on a
timely basis, on commercially reasonable terms or at all, or be assured that these actions would be sufficient to
meet our capital requirements. In addition, the terms of our existing or future debt agreements may restrict us
from affecting any of these alternatives.

Our failure to comply with the agreements relating to our outstanding indebtedness, including as a result of
events beyond our control, could result in an event of default that could materially and adversely affect our
results of operations and our financial condition.

If an event of default under any of the agreements relating to our outstanding indebtedness occurred, the
holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable
immediately. Our assets or cash flow may not be sufficient to fully repay borrowings under our outstanding debt
instruments if accelerated upon an event of default, resulting in a need for an alternate source of funding. We
cannot make any assurances that we would be able to obtain such an alternate source of funding on satisfactory
terms, if at all, and our inability to do so could cause the holders of our securities to experience a partial or total
loss of their investments in the Company. Further, if we are unable to repay, refinance or restructure our secured

21

indebtedness, the holders of such debt could proceed against the collateral securing that indebtedness through
foreclosure proceedings and/or by forcing us into bankruptcy or liquidation. In addition, any event of default or
acceleration under one debt instrument could also result in an event of default under one or more of our other
debt instruments.

The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial
condition and operating results.

In the event the conditional conversion feature of our Convertible Notes is triggered, holders of the
Convertible Notes will be entitled to convert their notes at any time during specified periods at their option. If
one or more holders elect to convert their Convertible Notes, we would be required to settle the principal portion
of our conversion obligation in cash, which could adversely affect our liquidity. In addition, even if holders of
Convertible Notes do not elect to convert their notes, we could be required under applicable accounting rules to
reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term
liability, which would result in a material reduction of our net working capital.

Conversion of the Convertible Notes will dilute the ownership interest of existing stockholders, including
holders who had previously converted their Convertible Notes, or may otherwise depress the price of our
common stock.

The conversion of some or all of the Convertible Notes will dilute the ownership interests of existing

stockholders, as we will deliver shares of our common stock with respect to any excess over principal upon
conversion of any of the Convertible Notes. The Convertible Notes may from time to time in the future be
convertible at the option of their holders prior to their scheduled terms under certain circumstances. Any sales in
the public market of the common stock issuable upon such conversion could adversely affect prevailing market
prices of our common stock. In addition, the existence of the Convertible Notes may encourage short selling by
market participants because the conversion of the Convertible Notes could be used to satisfy short positions, or
anticipated conversion of the Convertible Notes into shares of our common stock could depress the price of our
common stock.

We are a holding company and rely on dividends, distributions and other payments, advances and transfers of
funds from our subsidiaries to meet our obligations.

We are a holding company that does not conduct any business operations of our own. As a result, we are
largely dependent upon cash dividends and distributions and other transfers from our subsidiaries to meet our
obligations. The deterioration of income from, or other available assets of, our subsidiaries for any reason could
limit or impair their ability to pay dividends or other distributions to us.

Risks Related to Ownership of Our Common Stock

Our stock price has been and may continue to be volatile.

The market price of our common stock has fluctuated substantially in the past and may continue to fluctuate
significantly. For example, in Fiscal 2023, our stock price fluctuated from a high of $239.94 to a low of $115.66.
Future announcements or disclosures concerning us or any of our competitors, our strategic initiatives, our sales and
profitability, our financial condition, any quarterly variations in actual or anticipated operating results or comparable
sales, any failure to meet analysts’ expectations and sales of large blocks of our common stock, among other factors,
could cause the market price of our common stock to fluctuate substantially. In addition, the stock market has
experienced price and volume fluctuations that have affected the market price of many retail and other stocks that have
often been unrelated or disproportionate to the operating performance of these companies.

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Anti-takeover provisions in our charter documents and Delaware law might discourage or delay acquisition
attempts for us that stockholders might consider favorable.

Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions

that may make the acquisition of the Company more difficult without the approval of our Board of Directors.
These provisions:

•

•

•

•

•

•

•

•

authorize the issuance of undesignated preferred stock, the terms of which may be established and the
shares of which may be issued without stockholder approval, and which may include super voting,
special approval, dividend, or other rights or preferences superior to the rights of the holders of
common stock;

prohibit stockholder action by written consent, requiring all stockholder actions be taken at a meeting
of our stockholders;

establish advance notice requirements for nominations for elections to our Board of Directors or for
proposing matters that can be acted upon by stockholders at stockholder meetings;

establish a classified Board of Directors, as a result of which our Board of Directors is divided into
three classes, with each class serving for staggered three-year terms, which prevents stockholders from
electing an entirely new Board of Directors at an annual meeting;

limit the ability of stockholders to remove directors only for cause and only upon the affirmative vote
of at least 75% of the outstanding shares of our common stock;

prohibit stockholders from calling special meetings of stockholders;

provide that the Board of Directors is expressly authorized to alter or repeal our amended and restated
bylaws; and

require the approval of holders of at least 75% of the outstanding shares of our voting common stock to
amend the amended and restated bylaws and certain provisions of the amended and restated certificate
of incorporation.

These anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent

a transaction involving a change in control of the Company, even if doing so would benefit our stockholders.
These provisions could also discourage proxy contests and make it more difficult for stockholders to elect
directors they choose or to cause us to take other corporate actions they desire.

Our business could be impacted as a result of actions by activist stockholders or others.

From time to time, we may be subject to legal and business challenges in the operation of our Company due

to stockholder proposals, media campaigns, proxy contests, and other such actions instituted by activist
stockholders or others. Responding to such actions could be costly and time-consuming, disrupt our operations,
may not align with our business strategies and could divert the attention of our Board of Directors and senior
management from the pursuit of current business strategies. Perceived uncertainties as to our future direction as a
result of stockholder activism or potential changes to the composition of the Board of Directors may lead to the
perception of a change in the direction of the business or other instability, and may affect our stock price or may
make it more difficult to attract and retain qualified personnel and business partners.

Item 1B. Unresolved Staff Comments

Not Applicable.

Item 1C. Cybersecurity

Cybersecurity represents an important component of the Company’s overall cross-functional approach to
risk management. Our cybersecurity practices are integrated into the Company’s enterprise risk management

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(“ERM”) approach, and cybersecurity risks are among the core enterprise risks identified for oversight by the
Board through our annual ERM assessment. While the Board is ultimately responsible for risk oversight, the
Audit Committee oversees the overall review of our policies and procedures with respect to risk assessment and
risk management, and has oversight of information technology and security matters, which includes
cybersecurity strategies and risks, as well as data privacy and data protection (“Information Security”). The Audit
Committee oversees the management of risks from cybersecurity threats, including the policies, processes, and
practices that the Company’s management implements to address risks from cybersecurity threats.

On a quarterly basis, our Chief Information Officer reports to the Audit Committee on our Information
Security program, including presentations and reports on cybersecurity risks, which address a wide range of
topics including, for example, recent developments, security initiatives, vulnerability assessments, the threat
environment, technological trends, and information security considerations arising with respect to the Company’s
peers and vendors; recent cybersecurity-related developments; strategic activities; and the execution of our
cybersecurity awareness training. In turn, the chair of the Audit Committee reports out to the full Board on a
quarterly basis regarding these matters, among other matters addressed by the Audit Committee.

Ongoing internal and external cybersecurity assessments are conducted, which include the evaluation of
certain tools, procedures, and policies to measure the program’s overall maturity based on the National Institute
of Standards and Technology Cybersecurity (“NIST”) Framework and annual compliance with the Payment Card
Industry Data Security Standard to protect customer credit card data.

Our cybersecurity program includes:

• Vigilance: The Company maintains a cybersecurity threat operation that endeavors to detect, contain
and respond to cybersecurity threats and incidents in a prompt and effective manner with the goal of
minimizing disruptions to the business.

• Partnerships: The Company has established partnerships with a number of third parties, including

service providers, to identify and assess cybersecurity risks.

•

Systems Safeguards: The Company deploys technical safeguards that are designed to protect the
Company’s information systems from cybersecurity threats, including firewalls, intrusion prevention
and detection systems, anti-malware functionality, access controls and ongoing vulnerability
assessments.

• Third-Party Management: The Company maintains a risk-based approach to identifying and

overseeing cybersecurity risks presented by third parties, such as vendors and service providers. The
Company performs due diligence on third parties that have access to our systems, data or facilities that
house such systems or data. Additionally, the Company generally requires those third parties that could
introduce significant cybersecurity risk to us to agree by contract to manage their cybersecurity risks in
specified ways.

• Education: The Company provides periodic awareness training for personnel regarding cybersecurity

best practices. Routine security bulletins are sent to personnel throughout the year to enhance
awareness of responsibility regarding security risks and we conduct regular phishing exercises.
“Security Awareness Month” activities also occur on an annual basis and include sessions with guest
speakers, relevant communication, and additional educational opportunities related to security risks.

•

Incident Response Planning: The Company has established and maintains a written incident response
plan that addresses the Company’s response to a cybersecurity incident, and such plan is tested
periodically with tabletop exercises.

• Communication and Coordination: The Company utilizes a cross-functional approach to address the

risk from cybersecurity threats, involving senior management personnel from the technology,
operations, legal, risk management, internal audit and other key business functions (the “cybersecurity
team”), as well as members of the Company’s Board and the Audit Committee of the Board.

24

•

Insurance: The Company carries information security risk insurance that is designed to mitigate
against certain potential losses arising from a cybersecurity incident.

A key part of the Company’s strategy for managing risks from cybersecurity threats is the ongoing
assessment and testing of the Company’s processes and practices through assessments, tabletop exercises and
other exercises focused on evaluating effectiveness, including regular network and endpoint monitoring,
vulnerability scanning and penetration testing. The Company also engages third parties to perform assessments
on our cybersecurity measures, including information security maturity assessments and independent reviews of
our information security control environment and operating effectiveness. The results of such assessments and
reviews are reported to the Company’s Chief Information Officer and Audit Committee, and the Company
considers adjustments to its cybersecurity processes and practices as appropriate based on the information
provided by the third-party assessments and reviews.

The Company’s Chief Information Officer, who has many years of relevant experience, with support from

the other members of the cybersecurity team, is the member of the Company’s management that is principally
responsible for overseeing the Company’s cybersecurity risk management program. We believe our
cybersecurity team has the appropriate expertise, background and depth of experience to manage risks arising
from cybersecurity threats.

The Company’s Chief Information Officer, in coordination with the cybersecurity team, works to implement

a program designed to protect the Company’s information systems from cybersecurity threats and to promptly
respond to cybersecurity incidents. To facilitate the success of this program, the cybersecurity team addresses
cybersecurity threats and responds to cybersecurity incidents in accordance with the Company’s written incident
response plan. The Chief Information Officer and cybersecurity team regularly meet to monitor the prevention,
detection, mitigation and remediation of cybersecurity incidents, and the Chief Information Officer consults with
executive management, including the CEO, to report such incidents to the Audit Committee and the Board and
initiate a response to incidents when appropriate.

To date, we have not identified any risks from cybersecurity threats, including as a result of any previous
cybersecurity incidents, that have materially affected or are likely to materially affect the Company, including its
business strategy, results of operations, or financial condition; however, as further discussed in Item 1A, Risk
Factors, if we are unable to protect our information systems against service interruption, misappropriation of
data, breaches of security, or other cyber-related attacks, our operations could be disrupted, we may suffer
financial losses and our reputation may be damaged.

Item 2.

Properties

We own the land and/or buildings for 26 of our stores and have leases for 981 of our stores. Our new stores
are generally leased for an initial term of ten years, the majority of which are subject to our option to renew such
leases for several additional five-year periods. Store leases generally provide for fixed monthly rental payments,
plus the payment, in most cases, of real estate taxes and other charges with escalation clauses. In some locations,
our store leases contain formulas providing for the payment of additional rent based on sales. Some of our stores
are freestanding or located in regional power centers, strip shopping centers or in malls.

We own approximately 235 acres of land in Burlington and Florence, New Jersey on which we have
constructed our corporate campus, which includes our corporate headquarters and the Burlington, New Jersey
(Route 130 North) warehousing facility. We own approximately 43 acres of land in Edgewater Park, New Jersey
on which we have constructed our Edgewater Park, New Jersey (Route 130 South) distribution center and an
office facility. We lease approximately 103,000 square feet of office space in New York City (east coast buying
office), and 50,000 square feet of office space in Los Angeles, California (west coast buying office).

As described in Item 1, Business, we currently operate multiple distribution centers and warehousing

facilities.

25

Item 3.

Legal Proceedings

In the course of business, the Company is party to class or collective actions alleging violations of federal
and state wage and hour and other labor statutes, representative claims under the California Private Attorneys’
General Act and various other lawsuits and regulatory proceedings from time to time including, among others,
commercial, product, employee, customer, intellectual property and other claims. Actions against us are in
various procedural stages. Many of these proceedings raise factual and legal issues and are subject to
uncertainties. Refer to Note 16, “Commitments and Contingencies,” to our Consolidated Financial Statements for
further detail.

Item 4. Mine Safety Disclosures

Not applicable.

26

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities

Market Information

Our common stock is listed on the New York Stock Exchange under the symbol “BURL.”

Holders

As of March 2, 2024, we had one holder of record of our common stock. This figure does not include the

significantly greater number of beneficial holders of our common stock.

Dividends

We have not declared, and do not anticipate declaring in the near term, dividends on shares of our common
stock. 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. Any determination to pay dividends in the future will be at the discretion of our Board of
Directors and will depend upon results of operations, financial condition, contractual restrictions, including those
under agreements governing our existing indebtedness, or any potential future indebtedness we may incur,
restrictions imposed by applicable law, capital requirements and other factors our Board of Directors deems
relevant.

In addition, since we are a holding company, substantially all of the assets shown on our 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.

27

Stock Performance Graph

The performance graph below and related information shall not be deemed “soliciting material” or to be
“filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under
that Section, and shall not be deemed to be incorporated by reference into any future filing under the Securities
Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.

The following graph compares the cumulative total stockholder return on our common stock from the
closing prices as of the end of each fiscal year from February 2, 2019 through February 3, 2024, with the return
on the Standard & Poor’s (S&P) 500 Index and the Dow Jones United States Apparel Retailers Index over the
same period. This graph assumes an initial investment of $100 and assumes the reinvestment of dividends, if any.
Such returns are based on historical results and are not intended to suggest future performance.

Cumulative Stockholder Return Performance
Assumes Initial Investment of $100

$225.00

$175.00

$125.00

$75.00

2/2/2019

2/1/2020

1/30/2021

1/29/2022

1/28/2023

2/3/2024

Burlington Stores Inc.

S&P 500

Dow Jones U.S. Apparel Retailers Index

Company / Index

Burlington Stores, Inc.
S&P 500 Index
Dow Jones U.S. Apparel

Base Period

February 2,
2019

$100.00
$100.00

Indexed Returns for Fiscal Years Ended

February 1,
2020

January 30,
2021

January 29,
2022

January 28,
2023

February 3,
2024

$126.53
$119.18

$144.82
$137.23

$133.99
$163.75

$131.72
$150.40

$114.46
$183.21

Retailers Index

$100.00

$110.85

$117.75

$127.23

$138.11

$156.55

28

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table provides information regarding our purchases of common stock during the three fiscal

months ended February 3, 2024:

Month

October 29, 2023 through November 25, 2023
November 26, 2023 through December 30, 2023
December 31, 2023 through February 3, 2024

Total

Total Number
of Shares
Purchased

Average Price
Paid Per
Share(1)

76,490
468,668
60,153

605,311

$127.91
$173.04
$194.39

Approximate
Dollar Value
of Shares
That May Yet
Be Purchased
Under the
Plans or
Programs
(in thousands)

$708,186
$627,085
$615,393

Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs(2)

76,490
468,668
60,153

605,311

Includes commissions for the shares repurchased under our publicly announced share repurchase programs.

(1)
(2) On February 16, 2022, our Board of Directors authorized the repurchase of up to $500 million of common
stock, which was authorized to be executed through February 2024. On August 15, 2023, our Board of
Directors authorized the repurchase of up to an additional $500 million of common stock, which is
authorized to be executed through August 2025. For a further discussion of our share repurchase program,
see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources—Share Repurchase Program.”

Item 6.

Reserved

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 our Consolidated Financial Statements, including the notes
thereto, appearing elsewhere in this Annual Report.

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 as further described under the caption above entitled “Cautionary Statement
Regarding Forward-Looking Statements.” Our actual results or other events and the timing of events may differ
materially from those anticipated in these forward-looking statements as a result of various factors, including
those set forth in Item 1A, Risk Factors and elsewhere in this Annual Report.

General

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 1007 stores as of February 3, 2024 in 46 states, Washington D.C. 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.

29

Executive Summary

Store Openings, Closings and Relocations

During Fiscal 2023, we opened 104 new stores, inclusive of 13 relocations, and closed 11 stores, exclusive

of the aforementioned relocations, bringing our store count as of February 3, 2024 to 1007 stores. We continue to
pursue our growth plans and invest in capital projects that meet our financial requirements. During the fiscal year
ending February 1, 2025 (Fiscal 2024), we plan to open approximately 100 net new stores.

Fiscal Year Ended

Our fiscal year ends on the Saturday closest to January 31. We report fiscal years under a 52/53-week
format and as a result, certain fiscal years will contain 53 weeks. The fiscal year ended February 3, 2024 (“Fiscal
2023”) included 53 weeks, while the fiscal years ended January 28, 2023 (“Fiscal 2022”) and January 29, 2022
(“Fiscal 2021”) each included 52 weeks. The fiscal year ending February 1, 2025 (“Fiscal 2024”) will have
52 weeks.

Ongoing Initiatives for Fiscal 2024

We continue to focus on a number of ongoing initiatives aimed at increasing our overall profitability. These

initiatives include, but are not limited to:

• Driving Comparable Store Sales Growth.

We strive to increase comparable store sales through the following initiatives:

• More Effectively Chasing the Sales Trend. We plan sales using conservative comparable store

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.

•

Investment in Merchandising Capabilities. We plan to continue investing in training and coaching,
improved tools and reporting, incremental headcount, especially in growing or under-developed
businesses, and other forms of merchant support. We believe that these investments should
improve our ability to strengthen vendor relationships, source great merchandise buys, more
accurately assess value, and better forecast and chase the sales trend.

• Enhancing Existing Categories and Introducing New Categories. We have opportunities to

expand our offerings in certain existing categories, such as ladies’ apparel, beauty, and home
merchandise, and maintain the flexibility to introduce new categories as we expand our
merchandising capabilities.

• Expanding and Enhancing 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. 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

30

stores over the long term. Beginning in Fiscal 2024, we expect to average about 100 net new
stores per year through Fiscal 2028, for a total of 500 net new stores over the five-year period.

• 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 lease expirations, 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 our new store designs and reduce occupancy costs.

• Enhancing 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 sales chase, enhancing their ability at flexing up and down based on trends, and allowing us to
maximize leverage on sales.

• 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 should reduce the amount of markdowns taken compared to
historical levels.

• Optimizing the Supply Chain. We believe that our transportation initiatives will lead to lower

freight costs compared to recent levels, and that our efficiency and labor productivity initiatives
will result in lower supply chain costs over the next several years. We also believe there are
longer-term supply chain opportunities through investments in automation.

• Challenging Expenses to Drive Operating Leverage. We believe sales growth will drive fixed cost

operating leverage. 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 favorable 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.

General Economic Conditions. There remains a high level of uncertainty in the current macroeconomic and
geopolitical environments, and prolonged inflationary pressures continue to negatively impact the discretionary
spending of the low-income shopper, our core customer. In addition to inflation, consumer spending habits,
including spending for the merchandise that we sell, are affected by, among other things, prevailing global
economic conditions, the costs of basic necessities and other goods, levels of employment, salaries and wage
rates, prevailing interest rates, reductions in government benefits and lower tax refunds, housing costs, energy
costs, commodities pricing, income tax rates and policies, consumer confidence and consumer perception of
economic conditions. In addition, consumer purchasing patterns are generally influenced by consumers’
disposable income, credit availability and debt levels.

A broad, protracted slowdown or downturn in the U.S. economy, an extended period of high unemployment

or inflation rates, an uncertain domestic or global economic outlook or a financial crisis could adversely affect
consumer spending habits resulting in lower net sales and profits than expected on a quarterly or annual basis.

31

Conversely, if inflation continues to decline next year, it could benefit our core customers who have been
impacted by the higher cost of living since early 2022, and if economic growth slows, it could cause moderate
and higher-income shoppers to become more value conscious. Both of these developments, if they occur, would
be expected to improve our business. 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, could lead to a decrease in spending by consumers. In addition, natural
disasters, public health issues, industrial accidents and acts of war or conflicts in various parts of the world (such
as the conflict in Ukraine or the Hamas-Israel war), 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
generally increased by early cold weather during the Fall, while sales of warm weather clothing are generally
increased 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. Additionally, lower-to-moderate income shoppers
continue to face economic pressure due to higher cost of living. 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. We
believe that this enables us to obtain better terms with our suppliers, which we expect will help offset any rising
costs of goods.

While freight rates are now moderating compared to Fiscals 2022 and 2021, we have experienced
inflationary pressure in our supply chain and with respect to raw materials and finished goods, as well as in

32

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.

Key Performance 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 $339.6 million during Fiscal 2023 compared with $230.1 million
during Fiscal 2022. This increase was primarily driven by higher sales and increased gross margin rate. 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) costs related to debt amendments; (iv) impairment
charges; (v) amounts related to certain litigation matters; and (vi) other unusual or non-recurring 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) costs related to debt amendments;
(v) income tax expense; (vi) depreciation and amortization; (vii) net favorable lease costs; (viii) impairment
charges; (ix) amounts related to certain litigation matters; and (x) other unusual or non-recurring 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) costs related to debt amendments; (v) income tax
expense; (vi) impairment charges; (vii) net favorable lease costs; (viii) amounts related to certain litigation
matters; and (ix) other unusual or non-recurring 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:

•

•

•

•

net favorable lease costs;

losses on extinguishment of debt;

costs related to debt amendments;

impairment charges on long-lived assets;

33

•

•

amounts charged for certain litigation matters; and

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

During Fiscal 2023, Adjusted Net Income improved $112.6 million to $393.4 million. This increase was

primarily driven by higher sales and increased gross margin rate. Refer to the section below entitled “Results of
Operations” for further explanation.

The following table shows our reconciliation of net income to Adjusted Net Income for Fiscal 2023, Fiscal

2022 and Fiscal 2021:

Reconciliation of net income to Adjusted Net

Income:

Net income
Net favorable lease costs (a)
Loss on extinguishment of debt (b)
Costs related to debt amendments (c)
Impairment charges—long-lived assets
Litigation matters (d)
Tax effect (e)

(unaudited)
(in thousands)

Fiscal Year Ended

February 3,
2024
(53 Weeks)

January 28,
2023

January 29,
2022

$339,649
15,263
38,274
97
6,367
1,500
(7,770)

$230,123
18,591
14,657
—
21,402
10,500
(14,503)

$408,839
21,914
156,020
3,419
7,748
—
(24,741)

Adjusted Net Income

$393,380

$280,770

$573,199

(a) Net favorable lease costs represent 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 Consolidated Statements of Income.

(b) Amounts relate to the partial repurchases of the 2.25% Convertible Senior Notes due 2025 (2025

Convertible Notes) in Fiscal 2023 and Fiscal 2022, the exchange of a portion of the 2025 Convertible Notes
in Fiscal 2023, and the redemption of the Secured Notes in Fiscal 2021.

(c) Fiscal 2023 amount relates to the Term Loan Credit Agreement amendment in the second quarter of Fiscal

2023 changing one of the reference rates under the Term Loan Credit Agreement from the Adjusted LIBOR
Rate to the Adjusted Term SOFR Rate. Fiscal 2021 amount represents costs incurred in connection with the
review and execution of refinancing opportunities.
(d) Represents amounts charged for certain litigation matters.
(e) 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 (d).

Adjusted EBIT and Adjusted EBITDA have limitations as analytical tools, 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:

•

•

•

•

•

net interest expense;

net favorable lease costs;

losses on the extinguishment of debt;

costs related to debt issuances and amendments;

amounts charged for certain litigation matters;

34

•

•

•

impairment charges on long-lived assets;

income tax expense; and

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

Adjusted EBITDA is further adjusted for cash requirements for replacement of assets. Although

depreciation and amortization are non-cash charges, the assets being depreciated and amortized will likely have
to be replaced in the future

During Fiscal 2023, Adjusted EBIT improved $150.7 million to $581.0 million. During Fiscal 2023, Adjusted

EBITDA improved $187.4 million to $888.1 million. These increases were primarily driven by higher sales and
increased gross margin rate. Refer to the section below entitled “Results of Operations” for further explanation.

The following table shows our reconciliation of net income to Adjusted EBIT and Adjusted EBITDA for

Fiscal 2023, Fiscal 2022 and Fiscal 2021:

Reconciliation of net income to Adjusted EBIT

and Adjusted EBITDA

Net income
Interest expense
Interest income
Net favorable lease costs (a)
Loss on extinguishment of debt (b)
Costs related to debt amendments (c)
Impairment charges—long-lived assets
Litigation matters (d)
Income tax expense

Adjusted EBIT
Depreciation and amortization

Adjusted EBITDA

(unaudited)

(in thousands)

Fiscal Year Ended

February 3,
2024
(53 Weeks)

January 28,
2023

January 29,
2022

$339,649
78,399
(24,633)
15,263
38,274
97
6,367
1,500
126,124

581,040
307,064

$230,123
66,474
(8,799)
18,591
14,657
—
21,402
10,500
77,386

430,334
270,398

$ 408,839
67,502
(189)
21,914
156,020
3,419
7,748
—
136,459

801,712
249,217

$888,104

$700,732

$1,050,929

(a) Net favorable lease costs represent the non-cash expense associated with favorable and unfavorable leases

that were recorded as a result of purchase accounting related to the Merger Transaction. These expenses are
recorded in the line item “Selling, general and administrative expenses” in our Consolidated Statements of
Income.

(b) Amounts relate to the partial repurchases of the 2025 Convertible Notes in Fiscal 2023 and Fiscal 2022, the
exchange of a portion of the 2025 Convertible Notes in Fiscal 2023, and the redemption of the Secured
Notes in Fiscal 2021.

(c) Fiscal 2023 amount relates to the Term Loan Credit Agreement amendment in the second quarter of Fiscal

2023 changing one of the reference rates under the Term Loan Credit Agreement from the Adjusted LIBOR
Rate to the Adjusted Term SOFR Rate. Fiscal 2021 amount represents costs incurred in connection with the
review and execution of refinancing opportunities.
(d) Represents amounts charged for certain litigation matters.

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

35

impact of the COVID-19 pandemic in 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.

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 store sales for any such month, as well as during the month(s) of their
grand re-opening activities. The table below depicts the change in our comparable store sales during Fiscal 2023,
Fiscal 2022 and Fiscal 2021, all of which are calculated on a 52-week basis.

Fiscal Year Ended

February 3, 2024
January 28, 2023
January 29, 2022

Change in Comparable Store Sales

4%
-13%
15%

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 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 expanded to 42.5% during Fiscal 2023, compared with 40.4% during Fiscal
2022, driven primarily by higher merchandise margins and improved freight costs. Product sourcing costs, which
are included in selling, general and administrative expenses, increased approximately 20 basis points as a
percentage of net sales.

Inventory. Inventory at February 3, 2024 decreased to $1,087.8 million from $1,182.0 million at January 28,

2023. This decrease primarily relates to a decrease in reserve inventory and a decrease in comparable store
inventory, partially offset by 80 net new stores since the end of Fiscal 2022.

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.

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 8.2% and 8.0% during Fiscal 2023 and Fiscal 2022, respectively.

36

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, increased $46.2 million during Fiscal 2023,
compared with a decrease of $218.5 million during Fiscal 2022. Refer to the section below entitled “Liquidity
and Capital Resources” for further explanation.

Results of Operations

The following table sets forth certain items in the Consolidated Statements of Income as a percentage of net

sales for the periods indicated.

Net sales
Other revenue

Total revenue

Cost of sales
Selling, general and administrative expenses
Costs related to debt amendments
Depreciation and amortization
Impairment charges—long-lived assets
Other income—net
Loss on extinguishment of debt
Interest expense

Total costs and expenses

Income before income tax expense
Income tax expense

Net income

Percentage of Net Sales

Fiscal Year Ended

February 3,
2024

January 28,
2023

January 29,
2022

100.0%
0.2

100.0%
0.2

100.0%
0.2

100.2
57.5
33.9
0.0
3.2
0.1
(0.4)
0.4
0.8

95.5

4.7
1.3

100.2
59.6
33.1
—
3.1
0.2
(0.3)
0.2
0.8

96.7

3.5
0.9

100.2
58.4
30.8
0.0
2.7
0.1
(0.1)
1.7
0.7

94.3

5.9
1.5

3.4%

2.6%

4.4%

Performance for Fiscal Year Ended February 3, 2024 (Fiscal 2023) Compared with Fiscal Year Ended
January 28, 2023 (Fiscal 2022)

Net sales

Net sales improved $1,024.4 million, or 11.8%, to $9,709.0 million, primarily driven by 80 net new stores

since the end of Fiscal 2022, an increase of 4% in comparable store sales during Fiscal 2023, and additional sales
of $138.0 million from the 53rd week in Fiscal 2023.

Cost of sales

Cost of sales as a percentage of net sales decreased to 57.5% during Fiscal 2023, primarily driven by higher

merchandise margins and improved freight costs. On a dollar basis, cost of sales increased $412.3 million, or
8.0%, primarily driven by our overall increase in sales.

37

Selling, general and administrative expenses

The following table details selling, general and administrative expenses for Fiscal 2023 compared with

Fiscal 2022.

(in millions)

Fiscal Year Ended

February 3,
2024

Percentage
of Net Sales

January 28,
2023

Percentage
of Net Sales

$ Variance % Change

$1,972.6
780.3
353.4
53.7

20.3% $1,739.7
677.8
8.0
300.7
3.6
47.0
0.6

20.0%
7.8
3.5
0.5

$232.9
102.5
52.7
6.7

13.4%
15.1
17.5
14.3

128.3

1.4

112.2

1.3

16.1

14.3

Store related costs
Product sourcing costs
Corporate costs
Marketing and strategy costs
Other selling, general and
administrative expenses

Selling, general and administrative

expenses

$3,288.3

33.9% $2,877.4

33.1%

$410.9

14.3%

The increase in selling, general and administrative expenses as a percentage of net sales was primarily
driven by increased incentive compensation, store payroll, product sourcing costs, and a 20 basis point impact for
costs related to acquiring store leases from Bed, Bath & Beyond (as described below). The dollar basis increase
was primarily due to the same drivers listed above as well as costs incurred during the 53rd week of Fiscal 2023.

During Fiscal 2023, we acquired 64 store leases directly from Bed, Bath & Beyond. We started paying rent

immediately upon acquisition for all of the stores. 32 of these stores were opened during Fiscal 2023, with the
remaining planned to be open during the first half of Fiscal 2024. This transaction resulted in $18.4 million of
selling, general and administrative expenses related to occupancy of unopened stores during Fiscal 2023.

Depreciation and amortization

Depreciation and amortization expense amounted to $307.1 million during Fiscal 2023, compared with
$270.4 million during Fiscal 2022. The increase in depreciation and amortization expense was primarily driven
by capital expenditures related to new and non-comparable stores, our supply chain investments, and costs
incurred during the 53rd week of Fiscal 2023.

Impairment charges—long-lived assets

Impairment charges related to long-lived assets were $6.4 million and $21.4 million during Fiscal 2023 and

Fiscal 2022, respectively, related to unrecoverable fixed assets at eleven underperforming stores and
unrecoverable lease assets at three of those stores during Fiscal 2023, compared to four stores sold below
carrying value as well as impairment of store-level assets and lease assets at twelve stores during Fiscal 2022.

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, “Impairment Charges,” for further discussion.

Other income, net

Other income, net improved $14.0 million to $40.9 million during Fiscal 2023. The improvement in other
income was primarily driven by increased interest income from higher interest rates, the sale of certain state tax
credits, and income earned during the 53rd week of Fiscal 2023, partially offset by gains on real estate sales in
Fiscal 2022 as well as insurance claims in Fiscal 2022.

38

Loss on Extinguishment of Debt

During Fiscal 2023, we entered into separate, privately negotiated exchange agreements with certain holders

of the 2025 Convertible Notes, whereby the holders exchanged $241.2 million in aggregate principal amount of
2025 Convertible Notes held by them for $255.0 million in aggregate principal amount of 2027 Convertible
Notes, as well as $110.3 million in aggregate principal amount of 2025 Convertible Notes held by them for
$133.3 million in cash. These exchanges resulted in aggregate pre-tax debt extinguishment charges of
$38.3 million. During Fiscal 2022, we entered into separate, privately negotiated exchange agreements with
certain holders of the 2025 Convertible Notes, whereby the holders exchanged $64.6 million in aggregate
principal amount of 2025 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. Refer to Note 7, “Long Term Debt,” for further
discussion regarding our debt transactions.

Interest expense

Interest expense increased $11.9 million to $78.4 million. The increase was driven by a higher interest rate

on the unhedged portion of the term loan, as well as costs incurred during the 53rd week, partially offset by a
lower average balance of 2025 Convertible Notes and a lower interest rate on the 2027 Convertible Notes
compared to the 2025 Convertible Notes that were extinguished.

Our average interest rates and average balances related to our variable rate debt for Fiscal 2023 compared

with Fiscal 2022 are summarized in the table below:

Average balance—ABL Line of Credit (in millions)
Average interest rate—ABL Line of Credit
Average balance—Term Loan Facility (in millions) (a)
Average interest rate—Term Loan Facility

Fiscal Year Ended

February 3,
2024

January 28,
2023

$ —
—
$942.5

$ —
—
$952.2

7.2%

4.0%

(a) Excludes original issue discount

Income tax expense

Income tax expense was $126.1 million for Fiscal 2023 compared with $77.4 million for Fiscal 2022. The

effective tax rate was 27.1% related to pretax income of $465.8 million for Fiscal 2023, and 25.2% related to
pretax income of $307.5 million for Fiscal 2022. The increase in income tax expense and tax rate is due to higher
pre-tax income and the disallowance of certain debt extinguishment costs related to the partial repurchase of the
2025 Convertible Notes during Fiscal 2023.

Net income

We earned net income of $339.6 million during Fiscal 2023 compared with net income of $230.1 million for

Fiscal 2022. This increase was primarily driven by higher sales and increased gross margin rate.

Performance for Fiscal Year Ended January 28, 2023 (Fiscal 2022) Compared with Fiscal Year Ended
January 29, 2022 (Fiscal 2021)

For a discussion related to Fiscal 2022 performance compared to Fiscal 2021 performance, refer to Part II,
Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in
our Annual Report on Form 10-K for the fiscal year ended January 28, 2023 (Fiscal 2022 10-K).

39

Liquidity and Capital Resources

Our ability to satisfy interest and 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 and 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. Refer to “Debt and Hedging” below for recent debt transactions
completed.

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 potential 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 Flows

Cash Flows for Fiscal 2023 Compared with Fiscal 2022

We generated $46.2 million of cash flows during Fiscal 2023 compared with a use of $218.5 million during

Fiscal 2022.

Net cash provided by operating activities amounted to $868.7 million and $596.4 million during Fiscal 2023
and Fiscal 2022, respectively. The increase in our operating cash flows was primarily driven by higher sales and
margin in Fiscal 2023, as well as changes in working capital.

Net cash used in investing activities was $503.7 million and $423.1 million during Fiscal 2023 and Fiscal

2022, respectively. This change was primarily the result of an increase in capital expenditures related to our
stores (new stores, remodels and other store expenditures and an increase in lease acquisition costs, as a result of
our acquisition of 64 Bed, Bath & Beyond stores.

Net cash used in financing activities was $318.8 million during Fiscal 2023 compared to $391.7 million

during Fiscal 2022. This change was primarily driven by additional debt issued on the Convertible Notes
exchange and lower share repurchases, partially offset by increased convertible debt repayments.

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 February 3, 2024 of $298.2 million compared
with $365.3 million at January 28, 2023. The decrease in working capital was primarily driven by decreased
inventory and increased other current liabilities (primarily accrued payroll and fixed assets), partially offset by
increased prepaid assets (primarily prepaid rent due to timing) and increased cash balance.

Cash Flows for Fiscal 2022 Compared with Fiscal 2021

For a discussion of our cash flows for Fiscal 2022 compared to Fiscal 2021, refer to Part II, Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our
Fiscal 2022 10-K.

40

Capital Expenditures

For Fiscal 2023, capital expenditures, net of $14.6 million of landlord allowances, amounted to

$522.5 million (inclusive of accrued capital expenditures). These capital expenditures include approximately
$291.0 million, net of the previously mentioned landlord allowances, for store expenditures (new stores,
remodels and other store expenditures). In addition, we made capital expenditures of $116.4 million to support
our supply chain initiatives, with the remaining capital to support information technology and other business
initiatives. We incurred capital expenditures of $427.0 million (inclusive of accrued capital expenditures), net of
approximately $23.1 million of landlord allowances, during Fiscal 2022.

We estimate that we will spend approximately $750 million, net of approximately $40 million of landlord

allowances, in capital expenditures during Fiscal 2024, including approximately $340 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 $210 million to support our supply
chain initiatives, with the remaining capital used to support our information technology and other business
initiatives.

Share Repurchase Program

On February 16, 2022, our Board of Directors authorized the repurchase of up to an additional

$500.0 million of common stock, which was authorized to be executed through February 2024. As of the end of
Fiscal 2023, we had $115.4 million remaining under this share repurchase authorization.

On August 15, 2023, our Board of Directors authorized the repurchase of up to an additional $500 million of

common stock, which is authorized to be executed through August 2025. As of the end of Fiscal 2023, we had
$500.0 million remaining under this share repurchase authorization.

During Fiscal 2023, we repurchased 1,354,031 shares of common stock for $231.9 million under our share

repurchase program.

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 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 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.

41

Debt and Hedging

As of February 3, 2024, our obligations, inclusive of original issue discount, include $933.4 million under

our Term Loan Facility, $453.2 million of 2025 Convertible Notes and 2027 Convertible Notes, and no
outstanding borrowings on our ABL Line of Credit. Our debt obligations also include $29.1 million of finance
lease obligations as of February 3, 2024. Refer to Note 7 to our Consolidated Financial Statements, “Long Term
Debt,” for an overview of the terms and conditions of these instruments.

Term Loan Facility

On May 11, 2023, we amended the Term Loan Credit Agreement to change one of the reference interest
rates for borrowings under the Term Loan Facility from the Term Loan Adjusted LIBOR Rate to the Adjusted
Term SOFR Rate (as defined in the Term Loan Credit Agreement), effective as of July 1, 2023. The Adjusted
Term SOFR Rate includes a credit spread adjustment of 0.11% for an interest period of one-month’s duration,
0.26% for an interest period of three-months’ duration and 0.43% for an interest period of six-months’ duration,
with a floor of 0.00%.

At February 3, 2024, our borrowing rate related to the Term Loan Facility was 7.4%.

ABL Line of Credit

On June 26, 2023, we entered into an amendment to the credit agreement governing our ABL Line of
Credit, which increased the sublimit for letters of credit thereunder from $150 million to $250 million. The letter
of credit sublimit will automatically be reduced to (i) $237.5 million on April 1, 2024, (ii) $225 million on July 1,
2024, (iii) $212.5 million on October 1, 2024, and (iv) $200 million on January 1, 2025. BCFWC and the agent
may extend the foregoing dates under clauses (i) through (iii), as long as the sublimit is reduced to $200 million
no later than January 1, 2025.

At February 3, 2024, we had $708.8 million available under the ABL Line of Credit. We did not have any

borrowings during Fiscal 2023.

2025 Convertible Notes

On April 16, 2020, we issued $805.0 million of 2025 Convertible Notes. The 2025 Convertible Notes have
an initial conversion rate of 4.5418 shares per $1,000 principal amount of 2025 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.

The 2025 Convertible Notes are general unsecured obligations of the Company. The 2025 Convertible

Notes bear interest at a rate of 2.25% per year, payable semi-annually in cash, in arrears on April 15 and
October 15 of each year, beginning on October 15, 2020. The 2025 Convertible Notes will mature on April 15,
2025, unless earlier converted, redeemed or repurchased.

During the first quarter of Fiscal 2022, we entered into separate, privately negotiated exchange agreements

with certain holders of the 2025 Convertible Notes. Under the terms of the exchange agreements, the holders
exchanged $64.6 million in aggregate principal amount of 2025 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.

During the first quarter of Fiscal 2023, we entered into separate, privately negotiated exchange agreements

with certain holders of the 2025 Convertible Notes. Under the terms of the exchange agreements, the holders
exchanged $110.3 million in aggregate principal amount of 2025 Convertible Notes held by them for
$133.3 million in cash. These exchanges resulted in aggregate pre-tax debt extinguishment charges of
$24.6 million.

42

Prior to the close of business on the business day immediately preceding January 15, 2025, the 2025
Convertible Notes will be convertible at the option of the holders only upon the occurrence of certain events and
during certain periods. Thereafter, the 2025 Convertible Notes will be convertible at the option of the holders at
any time until the close of business on the second scheduled trading day immediately preceding the maturity
date. The 2025 Convertible Notes have an initial conversion rate of 4.5418 shares per $1,000 principal amount of
2025 Convertible Notes (equivalent to an initial conversion price of approximately $220.18 per share of our
common stock), subject to adjustment if certain events occur. The initial conversion price represents a conversion
premium of approximately 32.50% over $166.17 per share, the last reported sale price of our common stock on
April 13, 2020 (the pricing date of the offering) on the New York Stock Exchange. During the first quarter of
Fiscal 2021, the Company made an irrevocable settlement election for any conversions of the 2025 Convertible
Notes. Upon conversion, we will pay cash for the principal amount. For any excess above principal, we will
deliver shares of its common stock. We were not permitted to redeem the 2025 Convertible Notes prior to
April 15, 2023. From and after April 15, 2023, we are able to redeem for cash all or any portion of the 2025
Convertible Notes, at our option, if the last reported sale price of the Company’s common stock is equal to or
greater than 130% of the conversion price for a specified period of time, at a redemption price equal to 100% of
the principal aggregate amount of the 2025 Convertible Notes to be redeemed, plus accrued and unpaid interest,
if any, to, but excluding, the redemption date.

Holders of the 2025 Convertible Notes may require us to repurchase their 2025 Convertible Notes upon the

occurrence of certain events that constitute a fundamental change under the indenture governing the 2025
Convertible Notes at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid
interest to, but excluding, the date of repurchase. In connection with certain corporate events or if we issue a
notice of redemption, it will, under certain circumstances, increase the conversion rate for holders who elect to
convert their 2025 Convertible Notes in connection with such corporate event or during the relevant redemption
period for such 2025 Convertible Notes.

2027 Convertible Notes

On September 12, 2023, we closed the issuance of approximately $297.1 million aggregate principal amount

of our 2027 Convertible Notes pursuant to separate, privately negotiated exchange and subscription agreements
with a limited number of holders of our 2025 Convertible Notes and certain investors, in each case pursuant to
exemptions from registration under the Securities Act of 1933. We exchanged approximately $241.2 million in
aggregate principal amount of the 2025 Convertible Notes for approximately $255.0 million in aggregate
principal amount of the 2027 Convertible Notes. These exchanges resulted in aggregate pre-tax debt
extinguishment charges of $13.6 million. We also issued approximately $42.1 million in aggregate principal
amount of 2027 Convertible Notes in a private placement to certain investors. An aggregate of up to 1,422,568
shares of common stock may be issued upon conversion of the 2027 Convertible Notes, which number is subject
to adjustment up to an aggregate of 1,911,372 shares following certain corporate events that occur prior to the
maturity date or if we issue a notice of redemption, and which is also subject to certain anti-dilution adjustments.

The 2027 Convertible Notes bear interest at a rate of 1.25% per year, payable semi-annually in arrears on

June 15 and December 15 of each year, beginning on December 15, 2023. The 2027 Convertible Notes will
mature on December 15, 2027, unless earlier converted, redeemed or repurchased.

Prior to the close of business on the business day immediately preceding September 15, 2027, the 2027
Convertible Notes will be convertible at the option of the holders only upon the occurrence of certain events and
during certain periods. Thereafter, the 2027 Convertible Notes will be convertible at the option of the holders at
any time until the close of business on the second scheduled trading day immediately preceding the maturity
date. The 2027 Convertible Notes have an initial conversion rate of 4.8560 shares per $1,000 principal amount of
2027 Convertible Notes (equivalent to an initial conversion price of approximately $205.93 per share of our
common stock), subject to adjustment if certain events occur. The initial conversion price represents a conversion
premium of approximately 32.50% over $155.42 per share, the last reported sale price of our common stock on

43

September 7, 2023 on The New York Stock Exchange. Upon conversion, we will pay cash up to the aggregate
principal amount of 2027 Convertible Notes being converted, and pay (and deliver, if applicable) cash, shares of
our common stock or a combination thereof, at its election, in respect of the remainder (if any) of our conversion
obligation in excess of such aggregate principal amount. We will not be able to redeem the 2027 Convertible
Notes prior to December 20, 2025. On or after December 20, 2025 and prior to the 21st scheduled trading day
immediately preceding December 15, 2027, we will be able to redeem for cash all or any portion of the 2027
Convertible Notes, at our option, if the last reported sale price of our common stock is equal to or greater than
130% of the conversion price for a specified period of time, at a redemption price equal to 100% of the aggregate
principal amount of the 2027 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but
excluding, the redemption date.

If we undergo a fundamental change, subject to certain conditions, holders of the 2027 Convertible Notes
may require us to repurchase for cash all or any portion of our 2027 New Convertible Notes. The fundamental
change repurchase price will be 100% of the aggregate principal amount of the 2027 Convertible Notes to be
repurchased plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

Hedging

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 8, “Derivative
Instruments and Hedging Activities,” for further discussion regarding our derivative transactions.

Certain Information Concerning Material Cash Requirements

The following table sets forth certain information regarding our obligations to make future payments under

current contracts as of February 3, 2024:

Debt obligations(1)
Interest on debt obligations(2)
Finance lease obligations(3)
Operating lease obligations(4)
Purchase obligations(5)
Other(6)

Payments Due By Period

Total

1 Year

2-3 Years

4-5 Years

Thereafter

$1,390,603
259,007
40,851
4,216,082
1,304,465
4,574

$

9,614
63,064
5,733
586,885
1,304,465
3,603

(in thousands)
$ 175,383
117,578
7,244
1,146,564
—
971

$1,205,606
78,365
7,087
977,448
—
—

$

—
—
20,787
1,505,185
—
—

Total

$7,215,582

$1,973,364

$1,447,740

$2,268,506

$1,525,972

(1) Represents future principal payments on outstanding borrowings as of February 3, 2024.
(2) Represents interest payments on (i) the outstanding balance of the Term Loan Facility, with an interest rate

of 7.4% as of January 28, 2023; (ii) $450.0 million interest rate swap with a SOFR rate of 2.16%; (iii) the
outstanding balance of the 2025 Convertible Notes, with an interest rate of 2.25%; and (iv) the outstanding
balance of the 2027 Convertible Notes, with an interest rate of 1.25%.

(3) Finance lease obligations include future interest payments.
(4) Represents minimum rent payments for operating leases under the current terms.
(5) Represents commitments to purchase goods that have not been received as of February 3, 2024. The table
above excludes estimated commitments for services to be used in our business of up to approximately
$165 million over the next five years.

(6) Represents severance payments in the normal course of business that are included in the line item “Selling,

general and administrative expenses” in our Consolidated Statements of Income.

44

Our agreements with three former employees to pay their respective beneficiaries $1.0 million upon their

deaths for a total of $3.0 million is not reflected in the table above because the timing of the payments is
unpredictable.

The table above excludes ASC Topic No. 740 “Income Taxes” (Topic No. 740) liabilities which represent

uncertain tax positions related to temporary differences. The total Topic No. 740 liability was $10.1 million,
inclusive of $7.0 million of interest and penalties included in our total Topic No. 740 liability neither of which is
presented in the table above as we are not certain if and when these payments would be required.

The table above excludes our irrevocable letters of credit guaranteeing payment and performance under
certain leases, insurance contracts, debt agreements, merchandising agreements and utility agreements in the
amount of $75.8 million as of February 3, 2024.

As of February 3, 2024, insurance reserves amounted to $94.8 million. These amounts are excluded from

the table above as we are not certain if and when these payments would be required.

Critical Accounting Policies and Estimates

Our 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 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 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 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.

While there are a number of accounting policies, methods and estimates affecting our Consolidated

Financial Statements as addressed in Note 1 to our Consolidated Financial Statements, “Summary of Significant
Accounting Policies,” areas that are particularly critical and significant include:

Revenue Recognition. While our revenue recognition does not involve significant judgment, it represents an

important accounting policy. We record revenue at the time control of goods are transferred to the customer,
which we determine to be at point of sale and delivery of merchandise, net of allowances for estimated future
returns, which is estimated based on historical return rates. We present sales, net of sales taxes, in our
Consolidated Statements of Income. We account for layaway sales in compliance with ASC Topic No. 606
“Revenue from Contracts with Customers.” Layaway sales are recognized upon delivery of merchandise to the
customer. The amount of cash received upon initiation of the layaway is recorded as a deposit liability within the
line item “Other current liabilities” in our Consolidated Balance Sheets. Stored value cards (gift cards and store
credits issued for merchandise returns) are recorded as a liability at the time of issuance, and the related sale is
recorded upon redemption.

45

We estimate and recognize stored value card breakage income in proportion to actual stored value card

redemptions. We determine an estimated stored value card breakage rate by continuously evaluating historical
redemption data. Breakage income is recognized on a monthly basis in proportion to the historical redemption
patterns for those stored value cards for which the likelihood of redemption is remote.

Inventory. Our inventory is valued at the lower of cost or market using the retail inventory method. Under

the retail inventory method, the valuation of inventory and the resulting gross margin are determined by applying
a calculated cost to retail ratio to the retail value of inventory. The retail inventory method is an averaging
method that results in valuing inventory at the lower of cost or market provided markdowns are taken timely to
reduce the retail value of inventory. Inherent in the retail inventory method calculation are certain significant
management judgments and estimates including merchandise markups, markdowns and shortage, which
significantly impact the ending inventory valuation as well as the resulting gross margin. Management believes
that our retail inventory method provides an inventory valuation which approximates cost using a first-in,
first-out assumption and results in carrying value at the lower of cost or market. We reserve for aged inventory
based on historical trends and specific identification. Our aged inventory reserve contains uncertainties as the
calculations require management to make assumptions and to apply judgment regarding a number of factors,
including market conditions, the selling environment, historical results and current inventory trends. A 1%
change in the dollar amount of retail markdowns would have resulted in an increase in markdown dollars, at cost,
of approximately $2.9 million for Fiscal 2023.

Estimates are used to record inventory shortage at retail stores between physical inventories. Actual physical

inventories are conducted at least annually to calculate actual shortage. While we make estimates on the basis of
the best information available to us at the time the estimates are made, over accruals or under accruals of
shortage may be identified as a result of the physical inventory counts, requiring adjustments.

Insurance Reserves. We have risk participation agreements with insurance carriers with respect to workers’

compensation, general liability insurance and health insurance. Pursuant to these arrangements, we are
responsible for paying individual claims up to designated dollar limits. The amounts included in our costs related
to these claims are estimated and can vary based on changes in assumptions or claims experience included in the
associated insurance programs. For example, changes in legal trends and interpretations, as well as changes in the
nature and method of how claims are settled, can impact ultimate costs. An increase in workers’ compensation
claims by employees, health insurance claims by employees or general liability claims may result in a
corresponding increase in our costs related to these claims. Insurance reserves amounted to $94.8 million and
$86.2 million at February 3, 2024 and January 28, 2023, respectively.

Recent Accounting Pronouncements

There were no new accounting standards that had a material impact on the Company’s Consolidated

Financial Statements during Fiscal 2023.

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topics 740): Improvements to Income

Tax Disclosures” to expand the disclosure requirements for income taxes, specifically related to the rate
reconciliation and income taxes paid. ASU 2023-09 is effective for annual reporting periods beginning after
December 15, 2024, with early adoption permitted and can be applied on either a prospective or retroactive basis.
We are currently determining the impact that ASU 2023-09 will have on the Company’s consolidated financial
statement disclosures.

Fluctuations in Operating Results

We expect that our revenues and operating results may fluctuate from fiscal quarter to fiscal quarter or over

the longer term. Certain of the general factors that may cause such fluctuations are discussed in Item 1A, Risk
Factors and elsewhere in this Annual Report.

46

Inflation

While freight rates are now moderating, we have experienced inflationary pressure in our supply chain and

with respect to raw materials and finished goods, as well as in occupancy, wages, and other operating costs.
There can be no assurance that we will be able to offset inflationary pressure in the future, or that our business
will not be negatively affected by continued inflation in the future. We may not be able to adequately increase
our prices over time to offset increased costs, whether due to inflation or otherwise. Any decreases in consumer
discretionary spending could result in a decrease in store traffic and same store sales, all of which could
negatively affect our business, operations, liquidity, financial results and/or stock price, particularly if consumer
spending levels are depressed for a prolonged period of time.

The U.S. retail industry continues to face increased pressure on margins as commodity prices increase and

the overall challenging retail conditions have led consumers to be more value conscious. Additionally,
lower-to-moderate income shoppers continue to face economic pressure due to higher cost of living. Our strategy
of chasing sales, in which we purchase both pre-season and in-season merchandise, allows us the flexibility to
purchase less pre-season with the balance purchased in-season and opportunistically. It also provides us 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 the expected rising costs of goods.

Market Risk

We are exposed to market risks relating to fluctuations in interest rates. Our borrowings contain floating rate

obligations and are subject to interest rate fluctuations. The objective of our financial risk management is to
minimize the negative impact of interest rate fluctuations on our earnings and cash flows. We manage interest
rate risk through the use of our interest rate swap contracts.

As more fully described in Note 8 to our Consolidated Financial Statements, “Derivative Instruments and
Hedging Activities,” we enter into interest rate derivative contracts to manage interest rate risks associated with
our long term debt obligations. The effective portion of changes in the fair value of derivatives designated and
that qualify as cash flow hedges is recorded in the line item “Accumulated other comprehensive income” on the
Consolidated Balance Sheets and is subsequently reclassified into earnings in the period that the hedged
forecasted transaction affects earnings. We continue to have exposure to interest rate risks to the extent they are
not hedged.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to certain market risks as part of our ongoing business operations. Primary exposures
include changes in interest rates, as borrowings under our ABL Line of Credit and Term Loan Facility bear
interest based on SOFR, in each case plus an applicable borrowing margin. The interest rate of our Term Loan
Facility is also dependent on the prime rate, and the federal funds rate as further discussed in Note 7 to our
Consolidated Financial Statements, “Long Term Debt.” During Fiscal 2022, an amendment to the ABL Line of
Credit replaced the LIBOR-based interest rate benchmark provisions with interest rate benchmark provisions
based on a term secured overnight financing rate (SOFR) or a daily SOFR rate (in the case of daily SOFR,
available for borrowings up to $100 million, or up to the full amount of the commitments if the term SOFR rate
is not available). Additionally, during Fiscal 2023, we amended the Term Loan Credit Agreement changing from
Adjusted LIBOR Rate to the Adjusted Term SOFR Rate.

We manage our interest rate risk through the use of interest rate derivative contracts. For our floating-rate

debt, interest rate changes generally impact our earnings and cash flows, assuming other factors are held
constant.

On June 24, 2021, we terminated our previous interest rate swap and entered into a new interest rate swap.

The new interest rate swap, which hedges $450.0 million of variable rate exposure under our Term Loan Facility,

47

is designated as a cash flow hedge and expires on June 24, 2028. During the second quarter of Fiscal 2023, we
amended our interest rate swap to be based on SOFR rather than LIBOR, which resulted in an updated swap rate
of 2.16%. This amendment was covered under the guidance in ASU 2020-04, Reference Rate Reform (“ASC
848”) and did not impact the hedge accounting relationship. Refer to Note 8, “Derivative Instruments and
Hedging Activities,” for further discussion regarding our derivative transactions.

We have unlimited interest rate risk related to borrowings on our variable rate debt in excess of the notional

principal amount of our interest rate swap contract.

At February 3, 2024, we had $937.4 million of floating-rate debt, exclusive of original issue discount. Based
on $937.4 million outstanding as floating-rate debt, a one percentage point interest rate increase or decrease as of
February 3, 2024 (after considering our interest rate swap contract and assuming current borrowing level remains
constant), would cause an increase or decrease, respectively, to cash interest expense of $4.9 million per year.
This sensitivity analysis assumes our mix of financial instruments and all other variables will remain constant in
future periods. These assumptions are made in order to facilitate the analysis and are not necessarily indicative of
our future intentions.

Our ability to satisfy our interest payment obligations on our outstanding debt will depend largely on our
future performance, which, in turn, is in part 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 our interest 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.

48

Item 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm
Consolidated Statements of Income for the fiscal years ended February 3, 2024, January 28, 2023 and

January 30, 2021

Consolidated Statements of Comprehensive Income for the fiscal years ended February 3, 2024,

January 28, 2023 and January 30, 2021

Consolidated Balance Sheets as of February 3, 2024 and January 28, 2023
Consolidated Statements of Cash Flows for the fiscal years ended February 3, 2024, January 28, 2023

and January 30, 2021

Consolidated Statements of Stockholders’ Equity for the fiscal years ended February 3, 2024,

January 28, 2023 and January 30, 2021

Notes to Consolidated Financial Statements for the fiscal years ended February 3, 2024, January 28,

2023 and January 30, 2021

Page

50

52

53
54

55

56

57

49

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of
Directors of Burlington Stores, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Burlington Stores, Inc. and subsidiaries (the
“Company”) as of February 3, 2024 and January 28, 2023, the related consolidated statements of income,
comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended
February 3, 2024, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as
the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Company as of February 3, 2024 and January 28, 2023, and the results of its operations
and its cash flows for each of the three years in the period ended February 3, 2024, in conformity with accounting
principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of February 3, 2024, based
on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated March 15, 2024, expressed an
unqualified opinion on the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 7 to the financial statements, on January 31, 2021, the Company adopted Financial
Accounting Standards Board Accounting Standards Update (ASU) 2020-06, “Accounting for Convertible
Instruments and Contracts in an Entity’s Own Equity.”

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our
opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

50

Retail Inventory Method—Impact of Markdowns—Refer to Note 1 to the financial statements

Critical Audit Matter Description

The Company values merchandise inventories at the lower of cost or market using the retail inventory method.
Under this method, the valuation of inventories at cost and the resulting gross margins are determined by
applying a calculated cost-to-retail ratio to the retail value of inventories. The retail inventory method is an
averaging method that results in valuing inventory at the lower of cost or market provided markdowns are taken
timely to reduce the retail value of inventory.

The judgments involved in determining when to record markdowns can significantly impact the ending inventory
valuation and the resulting gross profit. Given the significant judgments necessary to identify and record
markdowns timely, performing audit procedures to evaluate the timeliness of markdowns involved a high degree
of auditor judgment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the timing of markdowns taken included the following, among others:

• We tested the effectiveness of management’s controls over inventory valuation, specifically those

over the determination and execution of markdowns.

• We made a selection of markdowns recorded throughout the year to test the accuracy and

timeliness of markdowns taken.

• We made a selection of markdowns recorded after year-end to determine if the selected

markdowns should have been taken as of the year-end balance sheet date.

• We made a selection of purchases made throughout the year; determined if those purchases were
subsequently marked down; and, if marked down, that the markdown was recorded timely.

• We analyzed trends in the aging of inventory to determine if there were any significant
fluctuations in aged inventory that would indicate markdowns were not taken timely.

• We developed an expectation of markdowns in ending inventory based on historical relationships
between markdowns and inventory balances on hand and compared to recorded markdowns.

/s/ Deloitte & Touche LLP

Morristown, New Jersey
March 15, 2024

We have served as the Company’s auditor since 1983.

51

BURLINGTON STORES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(All amounts in thousands, except per share data)

REVENUES:
Net sales
Other revenue

Total revenue

COSTS AND EXPENSES:
Cost of sales
Selling, general and administrative expenses
Costs related to debt amendments
Depreciation and amortization
Impairment charges—long-lived assets
Other income—net
Loss on extinguishment of debt
Interest expense

Total costs and expenses

Income before income tax expense
Income tax expense

Net income

Net income per common share:
Common stock—basic

Common stock—diluted

Weighted average number of common shares:

Common stock—basic

Common stock—diluted

Fiscal Year Ended

February 3,
2024
(53 Weeks)

January 28,
2023

January 29,
2022

$9,708,973
18,494

$8,684,545
18,059

$9,306,549
15,707

9,727,467

8,702,604

9,322,256

5,584,060
3,288,315
97
307,064
6,367
(40,882)
38,274
78,399

5,171,715
2,877,356
—

270,398
21,402
(26,907)
14,657
66,474

5,436,155
2,868,527
3,419
249,217
7,748
(11,630)
156,020
67,502

9,261,694

8,395,095

8,776,958

465,773
126,124

307,509
77,386

545,298
136,459

$ 339,649

$ 230,123

$ 408,839

$

$

5.25

5.23

$

$

3.51

3.49

$

$

6.14

6.00

64,672

64,917

65,637

65,901

66,588

68,126

See Notes to Consolidated Financial Statements.

52

BURLINGTON STORES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(All amounts in thousands)

Net income
Other comprehensive income, net of tax:
Interest rate derivative contracts:

Net unrealized gain arising during the period
Net reclassification into earnings during the period

Other comprehensive income, net of tax

Total comprehensive income

Fiscal Year Ended

February 3,
2024
(53 Weeks)

January 28,
2023

January 29,
2022

$339,649

$230,123

$408,839

10,460
(5,675)

4,785

27,726
5,463

33,189

7,931
10,643

18,574

$344,434

$263,312

$427,413

See Notes to Consolidated Financial Statements.

53

BURLINGTON STORES, INC.
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share and per share data)

ASSETS
Current assets:
Cash and cash equivalents
Restricted cash and cash equivalents
Accounts receivable—net of allowance for doubtful accounts of $2,313 and $1,252,

respectively

Merchandise inventories
Assets held for disposal
Prepaid and other current assets

Total current assets

Property and equipment—net
Operating lease assets
Tradenames
Goodwill
Deferred tax assets
Other assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Current operating lease liabilities
Other current liabilities
Current maturities of long term debt

Total current liabilities

Long term debt
Long term operating lease liabilities
Other liabilities
Deferred tax liabilities
Commitments and contingencies (Note 16)
Stockholders’ equity:
Preferred stock, $0.0001 par value: authorized: 50,000,000 shares; no shares issued

and outstanding

Common stock, $0.0001 par value:

Authorized: 500,000,000 shares
Issued: 82,399,577 shares and 82,037,994 shares, respectively
Outstanding: 63,964,371 shares and 65,019,713 shares, respectively

Additional paid-in-capital
Accumulated earnings
Accumulated other comprehensive income
Treasury stock, at cost

Total stockholders’ equity

Total liabilities and stockholders’ equity

See Notes to Consolidated Financial Statements.

54

February 3,
2024

January 28,
2023

$

925,359
—

$

872,623
6,582

74,361
1,087,841
23,299
216,164

2,327,024
1,880,325
3,132,768
238,000
47,064
2,436
79,223

71,091
1,181,982
19,823
131,691

2,283,792
1,668,005
2,945,932
238,000
47,064
3,205
83,599

$ 7,706,840

$ 7,269,597

$

956,350
411,395
647,338
13,703

2,028,786
1,394,942
2,984,794
73,793
227,593

$

955,793
401,111
541,413
13,634

1,911,951
1,462,072
2,825,292
69,386
205,991

—

—

8
2,118,356
984,064
33,533
(2,139,029)

8
2,015,625
644,415
28,748
(1,893,891)

996,932

794,905

$ 7,706,840

$ 7,269,597

BURLINGTON STORES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)

OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization
Impairment charges—long-lived assets
Amortization of deferred financing costs
Accretion of long term debt instruments
Deferred income taxes
Loss on extinguishment of debt
Non-cash stock compensation expense
Non-cash lease expense
Cash received from landlord allowances

Changes in assets and liabilities:
Accounts receivable
Merchandise inventories
Prepaid and other current assets
Accounts payable
Other current liabilities
Other long term assets and long term liabilities

Other operating activities

Net cash provided by operating activities

INVESTING ACTIVITIES
Cash paid for property and equipment
Lease acquisition costs
Proceeds from sale of property and equipment and assets held for sale

Net cash used in investing activities

FINANCING ACTIVITIES
Proceeds from long term debt—Term B-6 Loans
Principal payments on long term debt—Term B-6 Loans
Principal payments on long term debt—Term B-5 Loans
Proceeds from long term debt—2027 Convertible Notes
Principal payment on long term debt—2025 Convertible Notes
Principal payments on long term debt—Secured Notes
Purchase of treasury shares
Proceeds from stock option exercises
Deferred financing costs
Other financing activities

Net cash used in financing activities

Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period

Fiscal Year Ended

February 3,
2024
(53 Weeks)

January 28,
2023

January 29,
2022

$ 339,649

$ 230,123

$ 408,839

307,064
6,367
3,193
958
20,663
38,274
83,948
(7,724)
14,585

(4,464)
94,141
(84,473)
(21,953)
80,774
3,651
(5,918)

868,735

(492,644)
(24,640)
13,539

(503,745)

—
(9,614)
—
297,069
(386,519)

—

(243,188)
18,783
—
4,633

(318,836)

46,154
879,205

270,398
21,402
3,633
949
(25,431)
14,657
67,480
(523)
23,137

(13,012)
(160,974)
244,852
(125,006)
44,830
(360)
230

596,385

(447,393)
(3,710)
27,961

(423,142)

—
(9,614)
—
—
(78,240)
—

(316,896)
20,592
—
(7,553)

(391,711)

249,217
7,748
5,323
889
51,952
156,020
58,546
(10,294)
34,051

10,186
(280,220)
(56,363)
214,792
(33,129)
(2,782)
18,384

833,159

(352,467)
(576)
8,654

(344,389)

956,608
(4,807)
(961,415)

—

(201,695)
(323,905)
(266,628)
39,887
(2,143)
(13,857)

(777,955)

(218,468)
1,097,673

(289,185)
1,386,858

Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period

$ 925,359

$ 879,205

$1,097,673

Supplemental disclosure of cash flow information:
Interest paid

Income tax payments (refund)—net

Non-cash investing and financing activities:
Shares issued to repurchase Convertible Notes

Finance lease modification

Accrued purchases of property and equipment

Exchange of noncash assets

$ 88,148

$

51,445

$

52,671

$ 86,237

$ (208,333)

$ 130,247

$

$

—

—

$ 110,475

$

—

$

$

$

$

—

$ 151,206

(6,042)

66,007

7,300

$

$

$

—

63,296

—

See Notes to Consolidated Financial Statements.

55

BURLINGTON STORES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(All dollar amounts in thousands)

Common Stock

Paid-in Accumulated

Additional

Accumulated
Other
Comprehensive

Treasury Stock

Shares

Amount Capital

Deficit

Loss (Income)

Shares

Amount

Total

Balance at January 30, 2021
Net income
Stock options exercised
Shares used for tax withholding
Shares purchased as part of

publicly announced programs
Vesting of restricted shares, net of
forfeitures of 2,886 restricted
shares

Stock based compensation
Shares issued to redeem
convertible notes

Unrealized gains on interest rate

derivative contracts, net of related
taxes of $3.0 million
Amount reclassified into

earnings, net of related taxes of
$4.0 million

Adoption of ASU 2020-06

Balance at January 29, 2022
Net income
Stock options exercised
Shares used for tax withholding
Shares purchased as part of

publicly announced programs
Vesting of restricted shares, net of
forfeitures of 199 restricted
shares

Stock based compensation
Unrealized gains on interest rate

derivative contracts, net of related
taxes of $10.1 million
Amount reclassified into

earnings, net of related taxes of
$2.0 million

Balance at January 28, 2023
Net income
Stock options exercised
Shares used for tax withholding
Shares purchased as part of

publicly announced programs,
inclusive of $1.9 million related
to excise tax

Vesting of restricted shares
Stock based compensation
Unrealized gains on interest rate

derivative contracts, net of related
taxes of $3.8 million
Amount reclassified into

earnings, net of related taxes of
$2.1 million

80,661,453
—
418,173
—

7

$
—
—
—

—

83,698
—

513,991

—

—
—

81,677,315
—
168,720
—

—

191,959
—

—

—

82,037,994
—
157,003
—

—

204,580

—

—

—

—

—
—

—

—

—
—

7

—
1
—

—

—
—

—

—

8

—
—
—

—
—
—

—

—

$1,809,831

—
39,887
—

—

—
58,546

151,206

—

—

(131,916)

1,927,554
—
20,591
—

—

—
67,480

—

—

2,015,625
—
18,783
—

—
—
83,948

—

—

$ (11,702)
408,839

—
—

—

—
—

—

—

—
17,155

414,292
230,123

—
—

—

—
—

—

—

644,415
339,649

—
—

—
—
—

—

—

$(23,015)

—
—
—

—

—
—

—

7,931

10,643
—

(4,441)
—
—
—

—

—
—

27,726

5,463

28,748
—
—
—

—
—
—

10,460

(5,675)

(14,275,122) $(1,310,367) $ 464,754
— 408,839
39,887
—
(16,612)
(16,612)

—
—
(53,783)

(856,855)

(250,016)

(250,016)

—
—

—

—

—
—

—
—

—
58,546

— 151,206

—

7,931

—
10,643
— (114,761)

(15,185,760)

—
—
(75,710)

(1,576,995)

760,417
— 230,123
20,592
—
(14,238)
(14,238)

(1,756,811)

(302,658)

(302,658)

—
—

—

—

—
—

—

—

—
67,480

27,726

5,463

(17,018,281)

—
—
(62,894)

(1,893,891)

794,905
— 339,649
18,783
—
(11,255)
(11,255)

(1,354,031)

(233,883)

(233,883)

—
—

—

—

—
—

—

—

—
83,948

10,460

(5,675)

Balance at February 3, 2024

82,399,577

$

8

$2,118,356

$984,064

$ 33,533

(18,435,206) $(2,139,029) $ 996,932

See Notes to Consolidated Financial Statements.

56

BURLINGTON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Business

As of February 3, 2024, Burlington Stores, Inc., a Delaware corporation (collectively with its subsidiaries,
the Company), has expanded its store base to 1007 retail stores in 46 states, Washington D.C. and Puerto Rico.
The Company sells 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. As of February 3, 2024, the Company operated stores under the names “Burlington Stores” (1,006
stores), and “Cohoes Fashions” (1 store). Cohoes Fashions offers products similar to those offered by Burlington
Stores.

Basis of Consolidation and Presentation

The accompanying Consolidated Financial Statements have been prepared in accordance with accounting
principles generally accepted in the United States of America (GAAP). The Consolidated Financial Statements
include the accounts of Burlington Stores, Inc. and its subsidiaries. All inter-company accounts and transactions
have been eliminated in consolidation.

Fiscal Years

The Company defines its fiscal year as the 52 or 53-week period ending on the Saturday closest to January

31. The fiscal year ended February 3, 2024 (Fiscal 2023) consisted of 53 weeks, and the fiscal years ended
January 28, 2023 (Fiscal 2022) and January 29, 2022 (Fiscal 2021) each consisted of 52 weeks.

Use of Estimates

Certain amounts included in the Consolidated Financial Statements are estimated based on historical
experience, currently available information and management’s judgment as to the expected outcome of future
conditions and circumstances. While every effort is made to ensure the integrity of such estimates, actual results
could differ from these estimates, and such differences could have a material impact on the Company’s
Consolidated Financial Statements.

Cash and Cash Equivalents

Cash and cash equivalents represent cash and short-term, highly liquid investments with maturities of three
months or less at the time of purchase. Book cash overdrafts are included in the line item “Accounts payable” on
the Company’s Consolidated Balance Sheets.

Accounts Receivable

Accounts receivable consist of credit card receivables, interest receivables, and other receivables. Accounts

receivable are recorded at net realizable value, which approximates fair value. The Company provides an
allowance for doubtful accounts for amounts deemed uncollectible.

Inventories

Merchandise inventories are valued at the lower of cost or market, as determined by the retail inventory

method. Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins
are calculated by applying a calculated cost to retail ratio to the retail value of inventories. The Company
regularly records a provision for estimated shortage, thereby reducing the carrying value of merchandise

57

inventory. Complete physical inventories of all of the Company’s stores and warehouses are performed no less
frequently than annually, with the recorded amount of merchandise inventory being adjusted to coincide with
these physical counts.

The Company records its cost of merchandise (net of purchase discounts and certain vendor allowances),
certain merchandise acquisition costs (primarily commissions and import fees), inbound freight, outbound freight
from distribution centers, and freight on internally transferred merchandise in the line item “Cost of sales” in the
Company’s Consolidated Statements of Income.

Costs associated with the Company’s distribution, buying, and store receiving functions (product sourcing

costs) are included in the line items “Selling, general and administrative expenses” and “Depreciation and
amortization” in the Company’s Consolidated Statements of Income. Product sourcing costs included within the
line item “Selling, general and administrative expenses” amounted to $780.3 million, $677.6 million and
$618.3 million during Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. Depreciation and amortization
related to the distribution and purchasing functions for the same periods amounted to $68.8 million,
$56.3 million and $45.0 million, respectively.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over

the estimated useful lives of the assets, which range from 20 to 40 years for buildings, depending upon the
expected useful life of the facility, and 3 to 15 years for store fixtures and equipment. Leasehold improvements
are amortized over the lease term, including any reasonably assured renewal options or the expected economic
life of the improvement, whichever is less. Repairs and maintenance expenditures are expensed as incurred.
Renewals and betterments, which significantly extend the useful lives of existing property and equipment, are
capitalized. Assets recorded under capital leases are recorded at the present value of minimum lease payments
and are amortized over the lease term. Amortization of assets recorded as capital leases is included in the line
item “Depreciation and amortization” in the Company’s Consolidated Statements of Income. The carrying value
of all long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable, in accordance with ASC Topic No. 360 “Property, Plant, and
Equipment” (Topic No. 360). Refer to Note 6, “Impairment Charges,” for further discussion of the Company’s
measurement of impairment of long-lived assets.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is
measured by a comparison of the carrying amount of an asset to undiscounted pre-tax future net cash flows
expected to be generated by that asset. If the undiscounted future cash flows are not adequate to recover the
carrying value of the asset, an impairment charge is recognized for the amount by which the carrying amount of
the assets exceeds the fair value of such assets. Refer to Note 6, “Impairment Charges,” for further discussion of
the Company’s measurement of impairment of long-lived assets.

Capitalized Computer Software Costs

The Company accounts for capitalized software in accordance with ASC Topic No. 350 “Intangibles—

Goodwill and Other” (Topic No. 350) which requires the capitalization of certain costs incurred in connection
with developing or obtaining software for internal use. The Company capitalized $33.9 million, $26.1 million,
and $25.3 million relating to these costs during Fiscal 2023, Fiscal 2022, and Fiscal 2021, respectively.

Intangible Assets

The Company accounts for intangible assets in accordance with Topic No. 350. The Company’s intangible

assets represent tradenames. The tradename asset “Burlington” is expected to generate cash flows indefinitely

58

and, therefore, is accounted for as an indefinite-lived asset not subject to amortization. The Company evaluates
its intangible assets for possible impairment as follows:

The Company tests identifiable intangible assets with an indefinite life for impairment on an annual basis, or

when a triggering event occurs, relying on a number of factors that include operating results, business plans and
projected future cash flows. The impairment test consists of a comparison of the fair value of the indefinite-lived
intangible asset with its carrying amount. The Company determines fair value through the relief of royalty
method which is a widely accepted valuation technique. On the first business day of the second quarter, the
Company’s annual assessment date, the Company performed a quantitative analysis and determined that the fair
values of each of the Company’s identifiable intangible assets are greater than their respective carrying values.
There were no impairment charges recorded during Fiscal 2023, Fiscal 2022 or Fiscal 2021 related to indefinite-
lived intangible assets.

Goodwill

Goodwill represents the excess of the acquisition cost over the estimated fair value of tangible assets and
other identifiable intangible assets acquired less liabilities assumed. Topic No. 350 requires a comparison, at least
annually, of the carrying value of the assets and liabilities associated with a reporting unit, including goodwill,
with the fair value of the reporting unit. The Company determines fair value through multiple widely accepted
valuation techniques. These techniques use a variety of assumptions including projected market conditions,
discount rates and future cash flows. If the carrying value of the assets and liabilities exceeds the fair value of the
reporting unit, the Company would calculate the implied fair value of its reporting unit goodwill as compared
with the carrying value of its reporting unit goodwill to determine the appropriate impairment charge. On the first
business day of the second fiscal quarter, the Company’s annual assessment date, the Company performed a
quantitative analysis and determined that the fair value of the Company’s reporting unit was greater than its
carrying value. There were no impairment charges related to goodwill during Fiscal 2023, Fiscal 2022 or
Fiscal 2021.

Other Assets

Other assets consist primarily of landlord-owned store assets that the Company has paid for as part of its
lease, deferred financing costs associated with the Company’s senior secured asset-based revolving credit facility
(the ABL Line of Credit), and the fair value of derivative contracts. Landlord-owned assets represent leasehold
improvements at certain stores for which the Company has paid and derives a benefit, but the landlord has
retained title. These assets are amortized over the lease term inclusive of reasonably assured renewal options, and
are included in the line item “Depreciation and amortization” in the Company’s Consolidated Statements of
Income. Deferred financing costs are amortized over the life of the ABL Line of Credit using the interest method
of amortization. Amortization of deferred financing costs is recorded in the line item “Interest expense” in the
Company’s Consolidated Statements of Income.

Other Current Liabilities

Other current liabilities primarily consist of accrued payroll costs, self-insurance reserves, customer
liabilities, accrued operating expenses, sales tax payable, payroll taxes payable and other miscellaneous items.
Customer liabilities totaled $37.0 million and $36.0 million as of February 3, 2024 and January 28, 2023,
respectively.

The Company has risk participation agreements with insurance carriers with respect to workers’

compensation, general liability insurance and health insurance. Pursuant to these arrangements, the Company is
responsible for paying individual claims up to designated dollar limits. The amounts related to these claims are
estimated and can vary based on changes in assumptions or claims experience included in the associated
insurance programs. An increase in workers’ compensation claims, health insurance claims or general liability

59

claims may result in a corresponding increase in costs related to these claims. Self-insurance reserves as of
February 3, 2024 and January 28, 2023 were:

Short-term self-insurance reserve
Long-term self-insurance reserve

Total

(in thousands)

February 3,
2024

January 28,
2023

$38,295
56,530

$94,825

$35,808
50,368

$86,176

Other Liabilities

Other liabilities primarily consist of the long term portion of self-insurance reserves and tax liabilities
associated with the uncertain tax positions recognized by the Company in accordance with ASC Topic No. 740
“Income Taxes” (Topic No. 740).

Revenue Recognition

The Company records revenue at the time control of the goods are transferred to the customer, which the
Company determines to be at point of sale and delivery of merchandise, net of allowances for estimated future
returns, which is estimated based on historical return rates. The Company presents sales, net of sales taxes, in its
Consolidated Statements of Income. The Company accounts for layaway sales in compliance with ASC Topic
No. 606 “Revenue from Contracts with Customers” (Topic No. 606). Layaway sales are recognized upon
delivery of merchandise to the customer. The amount of cash received upon initiation of the layaway is recorded
as a deposit liability in the line item “Other current liabilities” in the Company’s Consolidated Balance Sheets.
Stored value cards (gift cards and store credits issued for merchandise returns) are recorded as a liability at the
time of issuance, and the related sale is recorded upon redemption.

The Company determines an estimated stored value card breakage rate by continuously evaluating historical

redemption data. Breakage income is recognized monthly in proportion to the historical redemption patterns for
those stored value cards for which the likelihood of redemption is remote.

The Company has a private label credit card program, in which customers earn reward points for purchases
made using the card. The Company reduces net sales for the dollar value of any points earned at the time of the
initial transaction, and subsequently recognizes net sales at the time the points are redeemed or expired. The
Company receives royalty revenue based on a percentage of all purchases made on the card, which is recognized
within net sales at the time of the initial transaction.

Other Revenue

Other revenue consists of service fees (layaway and other miscellaneous service charges), subleased rental

income and revenue from the Company’s private label credit card (PLCC) as shown in the table below:

(in thousands)
Fiscal Years Ended

February 3,
2024

January 28,
2023

January 29,
2022

$ 4,165
9,317

5,012

$ 4,131
9,444

4,484

$ 3,178
9,529

3,000

$18,494

$18,059

$15,707

Service fees
Subleased rental income and other

PLCC

Total

60

Advertising Costs

The Company’s advertising costs consist primarily of video, audio and digital marketing. Advertising costs

are expensed the first time the advertising takes place, and are included in the line item “Selling, general and
administrative expenses” on the Company’s Consolidated Statements of Income. During Fiscal 2023, Fiscal 2022
and Fiscal 2021, advertising costs were $36.5 million, $33.8 million and $48.5 million, respectively.

Income Taxes

The Company accounts for income taxes in accordance with ASC Topic No. 740, “Income Taxes ” (Topic

No. 740). Deferred income taxes reflect the impact of temporary differences between amounts of assets and
liabilities for financial reporting purposes and such amounts as measured by tax laws. A valuation allowance
against the Company’s deferred tax assets is recorded when it is more likely than not that some portion or all of
the deferred tax assets will not be realized. In determining the need for a valuation allowance, management is
required to make assumptions and to apply judgment, including forecasting future earnings, taxable income, and
the mix of earnings in the jurisdictions in which the Company operates. Management periodically assesses the
need for a valuation allowance based on the Company’s current and anticipated results of operations. The need
for and the amount of a valuation allowance can change in the near term if operating results and projections
change significantly.

Topic No. 740 requires the recognition in the Company’s Consolidated Financial Statements of the impact

of a tax position taken or expected to be taken in a tax return, if that position is “more likely than not” to be
sustained upon examination by the relevant taxing authority, based on the technical merits of the position. The
tax benefits recognized in the Company’s Consolidated Financial Statements from such a position are measured
based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate
resolution. The Company records interest and penalties related to unrecognized tax benefits as part of income
taxes.

Other Income, Net

Other income, net, consists of interest income, gains and losses on insurance proceeds, net gains and losses

on disposition of assets, gift card breakage, and other miscellaneous items. The Company recognized
$3.0 million and $1.5 million of gain on insurance recoveries during Fiscal 2022 and Fiscal 2021, respectively,
and none during Fiscal 2023. The Company also recognized $5.0 million and $3.7 million during Fiscal 2023 and
Fiscal 2021, respectively, related to the sale of certain state tax credits. There were no sales of tax credits during
Fiscal 2022.

Comprehensive Income

Comprehensive income is comprised of net income and the effective portion of changes in the fair value of

derivatives designated and that qualify as cash flow hedges, less amounts reclassified into earnings.

Lease Accounting

The Company leases store locations, distribution centers and office space used in its operations. The
Company accounts for these types of leases in accordance with ASC Topic No. 842, “Leases” (Topic No. 842),
which requires that leases be evaluated and classified as operating or finance leases for financial reporting
purposes. The lease liability is calculated as the present value of the remaining future lease payments over the
lease term, including reasonably assured renewal options. The discount rates used in valuing the Company’s
leases are not readily determinable, and are based on the Company’s incremental borrowing rate on a fully
collateralized basis. In calculating its incremental borrowing rate, the Company uses a retail industry yield curve,
adjusted for the Company’s credit profile. The right-of-use asset for operating leases is based on the lease
liability plus initial direct costs and prepaid lease payments, less landlord incentives received.

61

The Company’s operating lease cost, included in the line item “Selling, general and administrative
expenses” on its Consolidated Statements of Income, includes amortization of right-of-use assets, interest on
lease liabilities, as well as any variable and short-term lease cost. The Company commences recording operating
lease cost when the underlying asset is made available for use.

Assets held under finance leases are included in the line item “Property and equipment—net of accumulated

depreciation and amortization” in the Company’s Consolidated Balance Sheets.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC Topic No. 718, “Stock

Compensation” (Topic No. 718), which requires companies to record stock compensation expense for all
non-vested and new awards beginning as of the grant date and through the end of the vesting period. Refer to
Note 11, “Stock-Based Compensation,” for further details.

Net Income Per Share

Net income per share is calculated using the treasury stock method. Refer to Note 10, “Net Income Per

Share,” for further details.

Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist

principally of cash, cash equivalents and investments. The Company manages the credit risk associated with cash
equivalents and investments by investing with high-quality institutions and, by policy, limiting investments only
to those which meet prescribed investment guidelines. The Company maintains cash accounts that, at times, may
exceed federally insured limits. The Company has not experienced any losses from maintaining cash accounts in
excess of such limits. Management believes that it is not exposed to any significant risks on its cash and cash
equivalent accounts.

Segment Information

The Company reports segment information in accordance with ASC Topic No. 280 “Segment Reporting.”

The Company has one reportable segment. The Company is an off-price retailer that offers customers a complete
line of value-priced apparel, including: women’s ready-to-wear apparel, menswear, youth apparel, baby, beauty,
footwear, accessories, home, toys, gifts and coats. Sales percentage by major product category is as follows:

Category

Ladies apparel
Accessories and shoes
Home
Mens apparel
Kids apparel and baby
Outerwear

Fiscal 2023

Fiscal 2022

Fiscal 2021

21%
27%
20%
17%
12%
3%

22%
24%
21%
17%
12%
4%

23%
23%
20%
16%
14%
4%

2. Recent Accounting Pronouncements

There were no new accounting standards that had a material impact on the Company’s Consolidated

Financial Statements during Fiscal 2023.

Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update

(ASU) 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (ASU 2023-09) to

62

expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income
taxes paid. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, with early
adoption permitted and can be applied on either a prospective or retroactive basis. The Company is currently
determining the impact that ASU 2023-09 will have on its consolidated financial statement disclosures.

3. Restricted Cash and Cash Equivalents

At February 3, 2024 the Company had no restricted cash and cash equivalents. At January 28, 2023,

restricted cash and cash equivalents consisted of $6.6 million related to collateral for certain insurance contracts.

4. Property and Equipment

Property and equipment consist of:

Land
Buildings
Store fixtures and equipment
Software
Leasehold improvements

Construction in progress

Total property and equipment at cost
Less: accumulated depreciation and

amortization

Total property and equipment, net of
accumulated depreciation and
amortization

Useful Lives

N/A
20 to 40 Years
3 to 15 Years
3 to 10 Years
Shorter of
lease term or
useful life
N/A

(in thousands)

February 3,
2024

January 28,
2023

$

105,645
413,634
1,575,798
365,899

$

112,513
394,798
1,414,220
332,509

996,994
375,305

881,695
250,160

3,833,275

3,385,895

(1,952,950)

(1,717,890)

$ 1,880,325

$ 1,668,005

As of February 3, 2024 and January 28, 2023, assets, net of accumulated amortization of $17.1 million and

$13.6 million, respectively, held under finance leases amounted to approximately $21.8 million and
$25.3 million, respectively, and are included in the line item “Buildings” in the foregoing table. Amortization
expense related to finance leases is included in the line item “Depreciation and amortization” in the Company’s
Consolidated Statements of Income. The total amount of depreciation expense during Fiscal 2023, Fiscal 2022
and Fiscal 2021 was $273.5 million, $237.8 million and $218.1 million, respectively.

Internally developed software is amortized on a straight line basis over three to ten years and is recorded in

the line item “Depreciation and amortization” in the Company’s Consolidated Statements of Income.
Amortization of internally developed software amounted to $23.0 million, $21.2 million and $18.9 million during
Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively.

Landlord-owned assets represent leasehold improvements at certain stores for which the Company has paid
and derives a benefit, but the landlord has retained title. These assets are amortized over the lease term inclusive
of reasonably assured renewal options. Amortization of landlord-owned assets was $10.6 million, $11.4 million
and $12.2 million, during Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively, and was included in the line
item “Depreciation and amortization” in the Company’s Consolidated Statements of Income.

During Fiscal 2023, Fiscal 2022 and Fiscal 2021, the Company recorded impairment charges related to
property and equipment of $3.7 million, $20.1 million and $7.5 million, respectively. These charges are recorded

63

in the line item “Impairment charges—long-lived assets” in the Company’s Consolidated Statements of Income.
Refer to Note 6, “Impairment Charges,” for further discussion.

5. Intangible Assets

Intangible assets at February 3, 2024 and January 28, 2023 consist primarily of tradenames.

(in thousands)

February 3, 2024

January 28, 2023

Gross
Carrying
Amount

Accumulated
Amortization

Net
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net
Amount

Tradenames

$238,000

$—

$238,000

$238,000

$—

$238,000

6. Impairment Charges

Impairment charges recorded during Fiscal 2023, Fiscal 2022 and Fiscal 2021 amounted to $6.4 million,
$21.4 million and $7.7 million, respectively. Impairment charges are primarily related to declines in revenues
and operating results of certain stores in Fiscal 2023, Fiscal 2022, and Fiscal 2021, as well as sales of owned
properties in Fiscal 2022. Impairment charges during these periods related to the following:

Asset Categories

Store fixtures and equipment
Leasehold improvements
Operating lease assets
Buildings
Land
Other assets

Total

(in thousands)

Fiscal Years Ended

February 3,
2024

January 28,
2023

January 29,
2022

$2,471
1,272
2,623
—
—
1

$6,367

$ 2,981
2,097
1,286
8,687
4,968
1,383

$21,402

$3,163
3,330
202
970
—
83

$7,748

The Company recorded impairment charges related to store-level assets for 11 stores during Fiscal 2023, 16

stores during Fiscal 2022, and nine stores during Fiscal 2021.

Long-lived assets are measured at fair value on a non-recurring basis for purposes of calculating impairment
using the fair value hierarchy of ASC Topic No. 820 “Fair Value Measurements” (Topic No. 820). Refer to Note
15, “Fair Value of Financial Instruments,” for further discussion of the Company’s fair value hierarchy. The fair
value of the Company’s long-lived assets is calculated using a discounted cash-flow model that used level 3
inputs. In calculating future cash flows, the Company makes estimates regarding future operating results and
market rent rates, based on its experience and knowledge of market factors in which the retail location is located.
The assets impaired had a remaining carrying value after impairments of $73.0 million, $99.0 million, and
$63.4 million during Fiscal 2023, Fiscal 2022, and Fiscal 2021, respectively, primarily related to the right-of-use
assets.

64

7. Long Term Debt

Long term debt consists of:

Senior secured term loan facility (Term B-6 Loans), adjusted SOFR (with

a floor of 0.00%) plus 2.00%, matures on June 24, 2028
Convertible senior notes, 2.25%, mature on April 15, 2025
Convertible senior notes, 1.25%, mature on December 15, 2027
ABL senior secured revolving facility, SOFR plus spread based on
average outstanding balance, matures on December 22, 2026

Finance lease obligations
Unamortized deferred financing costs

Total debt
Less: current maturities

Long term debt, net of current maturities

Term Loan Facility

(in thousands)

February 3,
2024

January 28,
2023

$ 933,355
156,155
297,069

$ 942,012
507,687
—

—
29,069
(7,003)

—
33,447
(7,440)

1,408,645
(13,703)

1,475,706
(13,634)

$1,394,942

$1,462,072

On June 24, 2021, 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. This amendment also requires quarterly principal payments of
$2.4 million. In connection with the execution of the Ninth Amendment, the Company incurred fees of
$3.3 million, primarily related to legal and placement fees, which were recorded in the line item “Costs related to
debt issuances and amendments” in the Company’s Consolidated Statement of Income. Additionally, the
Company recognized a loss on the extinguishment of debt of $1.2 million, representing the write-off of
unamortized deferred financing costs and original issue discount, which was recorded in the line item “Loss on
extinguishment of debt” in the Company’s Consolidated Statement of Income.

The Term Loan Facility is collateralized by a first lien on the Company’s favorable leases, real estate and

property & equipment and a second lien on the Company’s inventory and receivables. On May 11, 2023, the
Company amended the Term Loan Credit Agreement to, effective as of June 30, 2023, change one of the
reference interest rates for borrowings under the Term Loan Facility from the Term Loan Adjusted LIBOR Rate
to the Adjusted Term SOFR Rate (as defined in the Term Loan Credit Agreement). The Adjusted Term SOFR
Rate includes a credit spread adjustment of 0.11% for an interest period of one-month’s duration, 0.26% for an
interest period of three-months’ duration and 0.43% for an interest period of six-months’ duration, with a floor of
0.00%. In connection with the execution of this amendment, the Company incurred fees of $0.1 million,
primarily related to legal fees, which were recorded in the line item “Costs related to debt amendments” in the
Company’s Consolidated Statement of Income.

Interest rates for the Term Loan Facility are based on: (i) for SOFR rate loans, a rate per annum equal to the

Adjusted Term SOFR Rate for the applicable interest period, plus an applicable margin; and (ii) for prime rate
loans, a rate per annum equal to the highest of (a) the variable annual rate of interest then announced by
JPMorgan Chase Bank, N.A. at its head office as its “prime rate,” (b) the federal reserve bank of New York rate
in effect on such date plus 0.50% per annum, and (c) the Adjusted Term SOFR Rate for the applicable class of
term loans for one-month plus 1.00%, plus, in each case, an applicable margin. As of February 3, 2024 and
January 28, 2023, the Company’s borrowing rate related to the Term Loan Facility was 7.4% and 6.4%,
respectively.

65

2025 Convertible Notes

On April 16, 2020, the Company issued $805.0 million of its 2.25% Convertible Senior Notes due 2025

(2025 Convertible Notes). The 2025 Convertible Notes are general unsecured obligations of the Company. The
2025 Convertible Notes bear interest at a rate of 2.25% per year, payable semi-annually in cash, in arrears, on
April 15 and October 15 of each year. The 2025 Convertible Notes will mature on April 15, 2025, unless earlier
converted, redeemed or repurchased.

On August 5, 2020, the FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts

in an Entity’s Own Equity” (ASU 2020-06), which simplifies the accounting for certain financial instruments
with characteristics of liabilities and equity, including convertible instruments. The Company elected to early
adopt this ASU as of the beginning of Fiscal 2021, using the modified retrospective method of transition. As a
result of adopting the guidance, the Company is no longer separating the Convertible Notes into debt and equity
components, and is instead accounting for it wholly as debt. Prior periods have not been restated.

During the second half of Fiscal 2021, the Company entered into separate, privately negotiated exchange
agreements with certain holders of the 2025 Convertible Notes. Under the terms of the exchange agreements, the
holders exchanged $232.7 million in aggregate principal amount of 2025 Convertible Notes held by them for a
combination of an aggregate of $199.8 million in cash and 513,991 shares of the Company’s common stock.
These exchanges resulted in aggregate pre-tax debt extinguishment charges of $124.6 million.

During the first quarter of Fiscal 2022, the Company entered into separate, privately negotiated exchange
agreements with certain holders of the 2025 Convertible Notes. Under the terms of the exchange agreements, the
holders exchanged $64.6 million in aggregate principal amount of 2025 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.

During the first quarter of Fiscal 2023, the Company entered into separate, privately negotiated exchange
agreements with certain holders of the 2025 Convertible Notes. Under the terms of the exchange agreements, the
holders exchanged $110.3 million in aggregate principal amount of 2025 Convertible Notes held by them for
$133.3 million in cash. These exchanges resulted in aggregate pre-tax debt extinguishment charges of
$24.6 million.

Prior to the close of business on the business day immediately preceding January 15, 2025, the 2025
Convertible Notes will be convertible at the option of the holders only upon the occurrence of certain events and
during certain periods. Thereafter, the 2025 Convertible Notes will be convertible at the option of the holders at
any time until the close of business on the second scheduled trading day immediately preceding the maturity
date. The 2025 Convertible Notes have an initial conversion rate of 4.5418 shares per $1,000 principal amount of
2025 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. The initial conversion price represents
a conversion premium of approximately 32.50% over $166.17 per share, the last reported sale price of the
Company’s common stock on April 13, 2020 (the pricing date of the offering) on the New York Stock Exchange.
During the first quarter of Fiscal 2021, the Company made an irrevocable settlement election for any conversions
of the 2025 Convertible Notes. Upon conversion, the Company will pay cash for the principal amount. For any
excess above principal, the Company will deliver shares of its common stock. The Company was not permitted to
redeem the 2025 Convertible Notes prior to April 15, 2023. From and after April 15, 2023, the Company is able
to redeem for cash all or any portion of the 2025 Convertible Notes, at its option, if the last reported sale price of
the Company’s common stock is equal to or greater than 130% of the conversion price for a specified period of
time, at a redemption price equal to 100% of the principal aggregate amount of the 2025 Convertible Notes to be
redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

Holders of the 2025 Convertible Notes may require the Company to repurchase their 2025 Convertible
Notes upon the occurrence of certain events that constitute a fundamental change under the indenture governing

66

the 2025 Convertible Notes at a purchase price equal to 100% of the principal amount thereof, plus accrued and
unpaid interest to, but excluding, the date of repurchase. In connection with certain corporate events or if the
Company issues a notice of redemption, it will, under certain circumstances, increase the conversion rate for
holders who elect to convert their 2025 Convertible Notes in connection with such corporate event or during the
relevant redemption period for such 2025 Convertible Notes. The effective interest rate is 2.8%.

2027 Convertible Notes

On September 12, 2023, the Company closed the issuance of approximately $297.1 million aggregate
principal amount of its 1.25% Convertible Senior Notes due 2027 (2027 Convertible Notes) pursuant to separate,
privately negotiated exchange and subscription agreements with a limited number of holders of its 2025
Convertible Notes and certain investors, in each case pursuant to exemptions from registration under the
Securities Act of 1933. The Company exchanged approximately $241.2 million in aggregate principal amount of
the 2025 Convertible Notes for approximately $255.0 million in aggregate principal amount of the 2027
Convertible Notes. This exchange resulted in aggregate pre-tax debt extinguishment charges of $13.6 million.
The Company also issued approximately $42.1 million in aggregate principal amount of 2027 Convertible Notes
in a private placement to certain investors. An aggregate of up to 1,422,568 shares of common stock may be
issued upon conversion of the 2027 Convertible Notes, which number is subject to adjustment up to an aggregate
of 1,911,372 shares following certain corporate events that occur prior to the maturity date or if the Company
issues a notice of redemption, and which is also subject to certain anti-dilution adjustments.

The 2027 Convertible Notes bear interest at a rate of 1.25% per year, payable semi-annually in arrears on

June 15 and December 15 of each year, beginning on December 15, 2023. The 2027 Convertible Notes will
mature on December 15, 2027, unless earlier converted, redeemed or repurchased.

Prior to the close of business on the business day immediately preceding September 15, 2027, the 2027
Convertible Notes will be convertible at the option of the holders only upon the occurrence of certain events and
during certain periods. Thereafter, the 2027 Convertible Notes will be convertible at the option of the holders at
any time until the close of business on the second scheduled trading day immediately preceding the maturity
date. The 2027 Convertible Notes have an initial conversion rate of 4.8560 shares per $1,000 principal amount of
2027 Convertible Notes (equivalent to an initial conversion price of approximately $205.93 per share of the
Company’s common stock), subject to adjustment if certain events occur. The initial conversion price represents
a conversion premium of approximately 32.50% over $155.42 per share, the last reported sale price of the
Company’s common stock on September 7, 2023 on The New York Stock Exchange. Upon conversion, the
Company will pay cash up to the aggregate principal amount of 2027 Convertible Notes being converted, and
pay (and deliver, if applicable) cash, shares of the Company’s common stock or a combination thereof, at its
election, in respect of the remainder (if any) of the Company’s conversion obligation in excess of such aggregate
principal amount. The Company will not be able to redeem the 2027 Convertible Notes prior to December 20,
2025. On or after December 20, 2025 and prior to the 21st scheduled trading day immediately preceding
December 15, 2027, the Company will be able to redeem for cash all or any portion of the 2027 Convertible
Notes, at its option, if the last reported sale price of the Company’s common stock is equal to or greater than
130% of the conversion price for a specified period of time, at a redemption price equal to 100% of the aggregate
principal amount of the 2027 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but
excluding, the redemption date.

If the Company undergoes a fundamental change, subject to certain conditions, holders of the 2027
Convertible Notes may require the Company to repurchase for cash all or any portion of their 2027 New
Convertible Notes. The fundamental change repurchase price will be 100% of the aggregate principal amount of
the 2027 Convertible Notes to be repurchased plus any accrued and unpaid interest to, but excluding, the
fundamental change repurchase date. The effective interest rate is 1.7%.

67

Secured Notes

On April 16, 2020, BCFWC issued $300.0 million of 6.25% Senior Secured Notes due 2025 (Secured
Notes). The Secured Notes were senior, secured obligations of BCFWC, and interest was payable semiannually
in cash, in arrears, 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.

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. This redemption resulted in a pre-tax debt extinguishment charge of
$30.2 million in Fiscal 2021.

ABL Line of Credit

The aggregate amount of commitments under the Second Amended and Restated Credit Agreement (as

amended, supplemented and otherwise modified, the Amended ABL Credit Agreement) is $900.0 million
(subject to a borrowing base limitation) and, subject to the satisfaction of certain conditions, the Company can
increase the aggregate amount of commitments up to $1,200 million. The interest rate margin applicable under
the Amended ABL Credit Agreement in the case of loans drawn at the Secured Overnight Financing Rate
(SOFR) is 1.125% to 1.375% in the case of a daily SOFR rate or a term SOFR rate (in each case, plus a credit
spread adjustment of 0.10%), and 0.125% to 0.375% in the case of a prime rate, depending on the average daily
availability of the lesser of (a) the total commitments or (b) the borrowing base. The ABL Line of Credit is
collateralized by a first priority lien on the Company’s and each guarantor’s inventory, receivables, bank
accounts, and certain related assets and proceeds thereof (subject to certain exceptions), and a second priority lien
on the Company’s and each guarantor’s other assets and proceeds thereof (other than real estate and subject to
certain exceptions).

The Company believes that the Amended ABL Credit Agreement provides the liquidity and flexibility to

meet its operating and capital requirements over the remaining term of the ABL Line of Credit. Further, the
calculation of the borrowing base under the Amended ABL Credit Agreement allows for increased availability
with respect to inventory during the period from (i) August 1st through November 30th of each year or (ii) after
2023, a 120 day period selected by the Company commencing after February 15 of the applicable year and
ending on or before December 15 of such year.

On July 20, 2022, BCFWC entered into a Fourth Amendment to the Second Amended and Restated Credit
Agreement (the Amendment). The Amendment increased the aggregate principal amount of the commitments of
its current asset-based lending facility (the ABL Line of Credit) from $650.0 million to $900.0 million and
replaced the LIBOR-based interest rate benchmark provisions with interest rate benchmark provisions based on a
term secured overnight financing rate (SOFR) or a daily SOFR rate (in the case of daily SOFR, available for
borrowings up to $100 million, or up to the full amount of the commitments if the term SOFR rate is not
available). The applicable SOFR rate includes a credit spread adjustment of 0.10%.

On June 26, 2023, BCFWC entered into a Fifth Amendment to the Second Amended and Restated Credit

Agreement, which increased the sublimit for letters of credit thereunder from $150 million to $250 million. The
letter of credit sublimit will automatically be reduced to (i) $237.5 million on April 1, 2024, (ii) $225 million on
July 1, 2024, (iii) $212.5 million on October 1, 2024, and (iv) $200 million on January 1, 2025. BCFWC and the
agent may extend the foregoing dates under clauses (i) through (iii), as long as the sublimit is reduced to
$200 million no later than January 1, 2025.

At January 28, 2023, the Company had $795.7 million available under the ABL Line of Credit. The

Company did not have any borrowings during Fiscal 2022.

68

At February 3, 2024, the Company had $708.8 million available under the ABL Line of Credit. The

Company did not have any borrowings during Fiscal 2023.

Deferred Financing Costs

The Company had $2.1 million and $2.8 million in deferred financing costs associated with its ABL Line of

Credit as of February 3, 2024 and January 28, 2023, respectively, which are recorded in the line item “Other
assets” in the Company’s Consolidated Balance Sheets. In addition, the Company had $7.0 million and
$7.4 million of deferred financing costs associated with its Term Loan Facility and Convertible Notes, recorded
in the line item “Long term debt” in the Company’s Consolidated Balance Sheets as of February 3, 2024 and
January 28, 2023, respectively.

Amortization of deferred financing costs amounted to $3.2 million, $3.6 million and $5.3 million during
Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively, which was included in the line item “Interest expense” in
the Company’s Consolidated Statements of Income.

Amortization expense related to deferred financing costs as of February 3, 2024 for each of the next five

fiscal years and thereafter is estimated to be as follows:

Fiscal Years

2024
2025
2026
2027
2028
Thereafter

Total

(in thousands)

$3,034
2,387
2,160
1,384
105
—

$9,070

Deferred financing costs have a weighted average amortization period of approximately 3.4 years.

Scheduled Maturities

Scheduled maturities of the Company’s long term debt obligations, as they exist as of February 3, 2024, in

each of the next five fiscal years and thereafter are as follows:

Fiscal Years:
2024
2025
2026
2027
2028
Thereafter

Total
Less: unamortized discount
Less: unamortized deferred financing costs
Finance lease liabilities

Total debt

69

(in
thousands)
Total Debt

$

9,614
165,769
9,614
306,683
898,923
—

1,390,603
(4,024)
(7,003)
29,069

$1,408,645

8. Derivative Instruments and Hedging Activities

The Company accounts for derivatives and hedging activities in accordance with ASC Topic No. 815
“Derivatives and Hedging” (Topic No. 815). Topic No. 815 provides the disclosure requirements for derivatives
and hedging activities with the intent to provide users of financial statements with an enhanced understanding of:
(i) how and why an entity uses derivative instruments, (ii) how the entity accounts for derivative instruments and
related hedged items, and (iii) how derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the
Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value
of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in
derivative instruments.

As required by Topic No. 815, the Company records all derivatives on the balance sheet at fair value and

adjusts them to market on a quarterly basis. The accounting for changes in the fair value of derivatives depends
on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging
relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary
to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in
expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge
accounting generally provides for the matching of the timing of gain or loss recognition on the hedging
instrument with the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company
may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge
accounting does not apply or the Company elects not to apply hedge accounting.

The Company has used interest rate swap contracts to add stability to interest expense and to manage its

exposure to interest rate movements. The fair value of these contracts are determined using the market standard
methodology of discounted future variable cash flows. The variable cash flows of the interest rate swap contract
are determined using the market standard methodology of discounting the future expected cash receipts that
would occur if variable interest rates rise or fall compared to current levels in conjunction with the fixed cash
payments. The variable interest rates used in the calculation of projected receipts on the swap contracts are based
on an expectation of future interest rates derived from observable market interest rate curves and volatilities. In
addition, to comply with the provisions of Topic No. 820, credit valuation adjustments, which consider the
impact of any credit enhancements to the contracts, are incorporated in the fair values to account for potential
nonperformance risk. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk,
the Company has considered any applicable credit enhancements such as collateral postings, thresholds, mutual
puts, and guarantees.

In accordance with Topic No. 820, the Company made an accounting policy election to measure the credit

risk of its derivative financial instruments that are subject to master netting agreements on a net basis by
counterparty portfolio. There is no impact of netting because the Company only has the one derivative mentioned
above.

Although the Company has determined that the majority of the inputs used to value its derivative fall within
Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivative utilize Level 3
inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its
counterparties. However, as of February 3, 2024 and January 28, 2023, the Company has assessed the
significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions
and has determined that the credit valuation adjustment is not significant to the overall valuation of its derivative
portfolios. As a result, the Company classifies its derivative valuations in Level 2 of the fair value hierarchy.

The Company is exposed to certain risks arising from both its business operations and economic conditions.

The Company principally manages its exposures to a wide variety of business and operational risks through
management of its core business activities. The Company manages economic risks, including interest rate,

70

liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use
of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to
manage exposures that arise from business activities that result in the payment of future known and uncertain
cash amounts, the value of which are determined by interest rates. The Company uses derivative financial
instruments to manage differences in the amount, timing, and duration of the Company’s known or expected cash
payments principally related to the Company’s borrowings.

Cash Flow Hedges of Interest Rate Risk

On June 24, 2021, the Company terminated its previous interest rate swap, and entered into a new interest
rate swap, which hedges $450 million of the variable rate exposure on the Term Loan Facility at a blended rate of
2.19%. This derivative contract was designated as a cash flow hedge.

During the second quarter of Fiscal 2023, the Company amended its interest rate swap to be based on SOFR

rather than LIBOR, which resulted in an updated swap rate of 2.16%. This amendment was covered under the
guidance in ASU 2020-04, Reference Rate Reform (“ASC 848”) and did not impact the hedge accounting
relationship.

The amount of loss deferred for the previous interest rate swap was $26.9 million. The Company amortized

this amount from accumulated other comprehensive income into interest expense over the original life of the
previous interest rate swap, which had an original maturity date of December 29, 2023. The current interest rate
swap had a liability fair value at inception of $26.9 million. The Company is accreting this amount into
accumulated other comprehensive income as a benefit to interest expense over the life of the new interest rate
swap, which has a maturity date of June 24, 2028.

During Fiscal 2023, the Company’s derivative was used to hedge the variable cash flows associated with
existing variable-rate debt. The effective portion of changes in the fair value of derivatives designated and that
qualify as cash flow hedges are recorded in the line item “Accumulated other comprehensive income” on the
Company’s Consolidated Balance Sheets and are subsequently reclassified into earnings in the period that the
hedged forecasted transaction affects earnings. Amounts reported in accumulated other comprehensive income
related to the Company’s derivative contracts will be reclassified to interest expense as interest payments are
made on the Company’s variable-rate debt. As of February 3, 2024, the Company estimates that $15.4 million
will be reclassified as a reduction to interest expense during the next twelve months.

As of February 3, 2024, the Company had the following outstanding interest rate derivative that was

designated as a cash flow hedge of interest rate risk:

Interest Rate Derivative

Interest rate swap contract

Tabular Disclosure

Number of
Instruments

Notional Aggregate
Principal Amount

Interest
Swap
Rate

Maturity Date

One

$450.0 million

2.16% June 24, 2028

The tables below present the fair value of the Company’s derivative financial instruments on a gross basis,

as well as their classification on the Company’s Consolidated Balance Sheets:

Derivatives Designated as Hedging Instruments

Interest rate swap contracts

71

(in thousands)
Fair Values of Derivative Instruments

February 3, 2024

January 28, 2023

Balance
Sheet
Location

Fair
Value

Balance
Sheet
Location

Fair
Value

Other assets

$29,075 Other assets

$29,152

The following table presents the unrealized gains deferred to accumulated other comprehensive income
resulting from the Company’s derivative instruments designated as cash flow hedging instruments for each of the
reporting periods.

Interest Rate Derivatives:

Unrealized gains, before taxes
Income tax expense

Unrealized gains, net of taxes

(in thousands)
Fiscal Year Ended

February 3,
2024

January 28,
2023

January 29,
2022

$14,243
(3,783)

$ 37,864
(10,138)

$10,914
(2,983)

$10,460

$ 27,726

$ 7,931

The following table presents information about the reclassification of losses from accumulated other
comprehensive income into earnings related to the Company’s derivative instruments designated as cash flow
hedging instruments for each of the reporting periods.

Component of Earnings:

Interest (benefit) expense
Income tax expense (benefit)

Net reclassification into earnings

9. Capital Stock

Common Stock

(in thousands)

Fiscal Year Ended

February 3,
2024

January 28,
2023

January 29,
2022

$(7,749)
2,074

$(5,675)

$ 7,479
(2,016)

$ 5,463

$14,608
(3,965)

$10,643

As of February 3, 2024, the total amount of the Company’s authorized capital stock consisted of
500,000,000 shares of common stock, par value $0.0001 per share, and 50,000,000 shares of undesignated
preferred stock, par value of $0.0001 per share.

The Company’s common stock is not entitled to preemptive or other similar subscription rights to purchase

any of the Company’s securities. The Company’s common stock is neither convertible nor redeemable. Unless
the Company’s Board of Directors determines otherwise, the Company will issue all of the Company’s capital
stock in uncertificated form.

Preferred Stock

The Company does not have any shares of preferred stock issued or outstanding. The Company’s Board of

Directors has the authority to issue shares of preferred stock from time to time on terms it may determine, to
divide shares of preferred stock into one or more series and to fix the designations, preferences, privileges, and
restrictions of preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption,
liquidation preference, sinking fund terms, and the number of shares constituting any series or the designation of
any series to the fullest extent permitted by the General Corporation Law of the State of Delaware. The issuance
of the Company’s preferred stock could have the effect of decreasing the trading price of the Company’s
common stock, restricting dividends on the Company’s capital stock, diluting the voting power of the Company’s
common stock, impairing the liquidation rights of the Company’s capital stock, or delaying or preventing a
change in control of the Company.

72

Dividend Rights

Each holder of shares of the Company’s capital stock will be entitled to receive such dividends and other
distributions in cash, stock or property as may be declared by the Company’s Board of Directors from time to
time out of the Company’s assets or funds legally available for dividends or other distributions. These rights are
subject to the preferential rights of any other class or series of the Company’s preferred stock.

Treasury Stock

The Company accounts for treasury stock under the cost method.

During Fiscal 2023, the Company acquired 62,894 shares of common stock from employees for
approximately $11.3 million to satisfy their minimum statutory tax withholdings related to the vesting of
restricted stock awards, which was recorded in the line item “Treasury stock” on the Company’s Consolidated
Balance Sheets, and the line item “Purchase of treasury shares” on the Company’s Consolidated Statements of
Cash Flows.

Share Repurchase Program

On February 16, 2022, the Company’s Board of Directors authorized the repurchase of up to $500.0 million
of common stock, which was authorized to be executed through February 2024. As of the end of Fiscal 2023, the
Company had $115.4 million remaining under this share repurchase authorization.

On August 15, 2023, the Company’s Board of Directors authorized the repurchase of up to an additional

$500.0 million of common stock, which is authorized to be executed through August 2025. As of the end of
Fiscal 2023, the Company had $500.0 million remaining under this share repurchase authorization.

These repurchase programs are funded using the Company’s available cash and borrowings under the ABL

Line of Credit.

During Fiscal 2023, the Company repurchased 1,354,031 shares of common stock for $231.9 million under

its share repurchase program.

73

10. Net Income Per Share

Basic net income per share is calculated by dividing net income by the weighted-average number of

common shares outstanding. Dilutive net income per share is calculated by dividing net income by the weighted-
average number of common shares and potentially dilutive securities outstanding during the period using the
treasury stock method for the Company’s stock option, restricted stock and restricted stock unit awards, and the
if-converted method for the 2025 Convertible Notes and 2027 Convertible Notes.

Basic net income per share
Net income

(in thousands, except per share data)

Fiscal Year Ended

February 3,
2024

January 28,
2023

January 29,
2022

$339,649

$230,123

$408,839

Weighted average number of common

shares—basic

64,672

65,637

66,588

Net income per common share—basic

$

5.25

$

3.51

$

6.14

Diluted net income per share
Net income

Shares for basic and diluted net income per share:
Weighted average number of common

$339,649

$230,123

$408,839

shares—basic

64,672

65,637

66,588

Assumed exercise of stock options and vesting

of restricted stock

Assumed conversion of convertible debt

Weighted average number of common

shares—diluted

245
—

264
—

685
853

64,917

65,901

68,126

Net income per common share—diluted

$

5.23

$

3.49

$

6.00

Approximately 1,524,000 shares, 1,068,000 shares and 177,000 shares were excluded from diluted net
income per share for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively, since their effect was anti-dilutive.

11. Stock-Based Compensation

On May 18, 2022, the Company’s stockholders approved the Company’s 2022 Omnibus Incentive Plan (the
2022 Plan). The 2022 Plan provides for the granting of stock options, restricted stock and other forms of awards
to key employees and directors of the Company or its affiliates.

The Company accounts for awards issued under the Plans in accordance with Topic No. 718. As of
February 3, 2024, there were 5,214,963 shares of common stock available for issuance under the Company’s
2022 Omnibus Incentive Plan.

74

Non-cash stock compensation expense is as follows:

Type of Non-Cash Stock Compensation

Restricted stock unit grants(a)
Stock option grants(a)
Performance stock unit grants(a)

Total(b)

(in thousands)

Fiscal Year Ended

February 3,
2024

January 28,
2023

January 29,
2022

$43,037
19,502
21,409

$83,948

$37,749
19,274
10,457

$67,480

$30,525
18,909
9,112

$58,546

(a)

Included in the line item “Selling, general and administrative expenses” in the Company’s Consolidated
Statements of Income.

(b) The amounts presented in the table above exclude the effect of income taxes. The tax benefit related to the
Company’s non-cash stock compensation was $15.5 million, $12.5 million and $10.3 million during Fiscal
2023, Fiscal 2022 and Fiscal 2021, respectively.

Stock Options

Options granted during Fiscal 2023, Fiscal 2022 and Fiscal 2021, were all service-based awards granted

under the Plans at the following exercise prices:

Fiscal 2023
Fiscal 2022
Fiscal 2021

Exercise Price Ranges

From

To

$118.58
$115.65
$219.08

$234.15
$236.93
$342.03

All awards granted during Fiscal 2023, Fiscal 2022 and Fiscal 2021 generally vest in either one-fourth
annual increments or one-third annual increments (subject to continued employment through the applicable
vesting date). The final exercise date for any option granted is the tenth anniversary of the grant date. Options
granted during Fiscal 2023, Fiscal 2022 and Fiscal 2021 become exercisable if the grantee’s employment is
terminated without cause or, in some instances, the recipient resigns with good reason, within a certain period of
time following a change in control. Unless determined otherwise by the plan administrator, upon cessation of
employment other than for cause, the majority of options that have not vested will terminate immediately, and
unexercised vested options will be exercisable for a period of 60 to 180 days.

As of February 3, 2024, the Company had 1,356,258 options outstanding to purchase shares of common
stock, and there was $37.3 million of unearned non-cash stock-based option compensation that the Company
expects to recognize as expense over a weighted average period of 2.6 years. The awards are expensed on a
straight-line basis over the requisite service period.

75

Stock option transactions during Fiscal 2023 are summarized as follows:

Options outstanding, January 28, 2023

Options granted
Options exercised(a)
Options forfeited

Weighted
Average
Exercise
Price Per
Share

$193.31
184.75
119.64
220.99

Number of
Shares

1,218,101
372,885
(157,003)
(77,725)

Options outstanding, February 3, 2024

1,356,258

$197.90

(a) Options exercised during Fiscal 2023 had a total intrinsic value of $11.7 million.

The following table summarizes information about the stock options vested and expected to vest during the

contractual term, as well as options exercisable:

Options vested and expected to vest

Options exercisable

Weighted
Average
Remaining
Contractual
Life (Years)

7.1

5.7

Weighted
Average
Exercise
Price

$197.90

$191.08

Aggregate
Intrinsic
Value
(in millions)

$22.8

$16.0

Options

1,356,258

676,270

During Fiscal 2023, the fair value of each stock option granted was estimated on the date of grant using the

Black Scholes option pricing model. The fair value of each stock option granted during Fiscal 2023 was
estimated using the following assumptions on a weighted average basis:

Risk-free interest rate
Expected volatility
Expected life (years)
Contractual life (years)
Expected dividend yield
Grant date fair value of options issued

Fiscal Year
Ended
February 3, 2024

3.5%
41.9%
4.0
10.0
0%
$68.72

The expected dividend yield was based on the Company’s expectation of not paying dividends in the near

term. To evaluate its volatility factor, the Company uses the historical volatility of its stock price over the
expected life of the options. The risk free interest rate was based on the U.S. Treasury rates for U.S. Treasury
zero-coupon bonds with maturities similar to those of the expected term of the awards being valued. The
expected life of the options was estimated using historical exercise rates.

Restricted Stock Awards

Restricted stock awards granted during Fiscal 2023 were all service-based awards. The fair value of each

unit of restricted stock granted during Fiscal 2023 was based upon the closing price of the Company’s common
stock on the grant date. Most of the awards outstanding as of February 3, 2024 have graded vesting provisions
that generally vest in one-fourth annual increments (subject to continued employment through the applicable
vesting date). Certain awards outstanding as of February 3, 2024 cliff vest at the end of a designated service
period, ranging from two years to four years from the grant date. Awards granted to non-employee members of

76

the Company’s Board of Directors vest 100% on the first anniversary of the grant date. Following a change of
control, all unvested restricted stock awards shall remain unvested, provided, however, that 100% of such shares
shall vest if, following such change of control, the employment of the recipient is terminated without cause or, in
some instances, the recipient resigns with good reason, within a certain period of time following a change in
control.

As of February 3, 2024, there was approximately $74.8 million of unearned non-cash stock-based

compensation related to restricted stock awards that the Company expects to recognize as expense over a
weighted average period of 2.4 years. The awards are expensed on a straight-line basis over the requisite service
periods.

Award grant, vesting and forfeiture transactions during Fiscal 2023 are summarized as follows:

Non-vested awards outstanding, January 28, 2023
Awards granted
Awards vested (a)
Awards forfeited

Non-vested awards outstanding, February 3, 2024

Number
of
Shares

477,441
306,405
(176,004)
(36,890)

570,952

Weighted
Average Grant
Date Fair
Value Per
Award

$222.90
183.25
212.14
222.43

$204.97

(a) Restricted stock awards vested during Fiscal 2023 had a total intrinsic value of $30.8 million.

Performance Share Units

The Company grants performance-based restricted stock units to its senior executives. Vesting of the

performance stock units granted in Fiscal 2021 is based on continued service and the achievement of
pre-established adjusted EBIT margin expansion and sales compounded annual growth rate (CAGR) goals (each
weighted equally) over a three-year performance period. Vesting of the performance stock units granted in Fiscal
2022 and Fiscal 2023 are based on continued service and the achievement of specified pre-established adjusted
net income per share growth over a three-year performance period, as applicable for each grant. Based on the
Company’s achievement of these goals, each award may be earned up to 200% of the target award. In the event
that actual performance is below threshold, no award will be made. Compensation costs recognized on the
performance stock units are adjusted, as applicable, for performance above or below the target specified in the
award.

As of February 3, 2024, there was approximately $32.9 million of unearned non-cash stock-based
compensation related to performance share units that the Company expects to recognize as expense over a
weighted average period of 1.9 years. The awards are expensed on a straight-line basis over the requisite service
periods.

77

Performance share unit transactions during Fiscal 2023 are summarized as follows:

Non-vested awards outstanding, January 28, 2023
Awards granted
Awards vested(a)
Awards forfeited

Non-vested awards outstanding, February 3, 2024

Weighted
Average Grant
Date Fair
Value Per
Award

$226.05
185.27
186.50
197.72

$217.29

Number of
Shares

196,300
116,080
(29,017)
(56,446)

226,917

(a) Performance-based stock awards vested during Fiscal 2023 had a total intrinsic value of $5.9 million.

12. Lease Commitments

The Company’s leases primarily consist of stores, distribution facilities and office space under operating

and finance leases that will expire principally during the next 30 years. The leases typically include renewal
options at five-year intervals and escalation clauses. Lease renewals are only included in the lease liability to the
extent that they are reasonably assured of being exercised. The Company’s leases typically provide for
contingent rentals based on a percentage of gross sales. Contingent rentals are not included in the lease liability,
and they are recognized as variable lease cost when incurred.

The following is a schedule of the Company’s future lease payments:

Fiscal Year

2024
2025
2026
2027
2028
Thereafter

Total future minimum lease payments
Amount representing interest

Total lease liabilities

Less: current portion of lease liabilities

(in thousands)

Operating
Leases

$ 586,885
593,102
553,462
512,571
464,877
1,505,185

4,216,082
(819,893)

3,396,189
(411,395)

Finance
Leases

$ 5,733
3,604
3,640
3,640
3,447
20,787

40,851
(11,782)

29,069
(4,089)

Total long term lease liabilities

$2,984,794

$ 24,980

Weighted average discount rate
Weighted average remaining lease term (years)

5.6%
7.9

5.8%
11.8

The above schedule excludes approximately $696.3 million for 84 stores and one warehouse that the
Company has committed to open or relocate but has not yet taken possession of the space. The discount rates
used in valuing the Company’s leases are not readily determinable, and are based on the Company’s incremental
borrowing rate on a fully collateralized basis.

The Company has entered into a lease agreement for a new distribution center in Ellabell, GA, which is
expected to commence in May 2025. The Company does not have control of the asset during construction, but it
is involved in the design and construction of the related asset. Additionally, the lease agreement has a purchase
option, which can be exercised beginning after the earlier of (a) substantial completion of construction or (b) the
date the Company commences business operations in the premises.

78

The following is a schedule of net lease costs for the years indicated:

Finance lease cost:

Amortization of finance lease asset(a)
Interest on lease liabilities(b)

Operating lease cost(c)
Variable lease cost(c)

Total lease cost
Less all rental income(d)

Total net rent expense(e)

(in thousands)

Fiscal Year Ended

February 3,
2024

January 28,
2023

January 29,
2022

$

3,506
1,858
587,214
235,223

$

4,210
2,561
523,980
205,876

$

4,554
3,111
468,349
188,035

827,801
(5,733)

736,627
(5,650)

664,049
(5,771)

$822,068

$730,977

$658,278

(a)

(b)
(c)

Included in the line item “Depreciation and amortization” in the Company’s Consolidated Statements of
Income.
Included in the line item “Interest expense” in the Company’s Consolidated Statements of Income.
Includes real estate taxes, common area maintenance, insurance and percentage rent. Included in the line
item “Selling, general and administrative expenses” in the Company’s Consolidated Statements of Income.
Included in the line item “Other revenue” in the Company’s Consolidated Statements of Income.

(d)
(e) Excludes an immaterial amount of short-term lease cost.

Supplemental cash flow disclosures related to leases are as follows:

(in thousands)
Fiscal Year Ended

February 3,
2024

January 28,
2023

January 29,
2022

Cash paid for amounts included in the measurement

of lease liabilities:

Cash payments arising from operating lease

liabilities(a)

$595,028

$525,098

$509,971

Cash payments for the principal portion of

finance lease liabilities(b)

Cash payments for the interest portion of

finance lease liabilities(a)

Supplemental non-cash information:

Operating lease liabilities arising from

obtaining right-of-use assets

$

$

4,378

1,858

$

$

4,455

2,561

$

$

4,073

3,111

$611,569

$712,688

$516,545

(a)
(b)

Included within operating activities in the Company’s Consolidated Statements of Cash Flows.
Included within financing activities in the Company’s Consolidated Statements of Cash Flows.

13. Employee Retirement Plans

The Company maintains separate defined contribution 401(k) retirement savings and profit-sharing plans

covering employees in the United States and Puerto Rico who meet specified age and service requirements. The
discretionary profit-sharing component (which the Company has not utilized since 2005 and has no current plans
to utilize) is entirely funded by the Company, and the Company also makes additional matching contributions to
the 401(k) component of the plans. Participating employees can voluntarily elect to contribute a percentage of
their earnings to the 401(k) component of the plans (up to certain prescribed limits) through a cash or deferred
(salary deferral) feature qualifying under Section 401(k) of the Internal Revenue Code (401(k) Plan).

79

The Company recorded $15.6 million, $15.6 million and $11.4 million of 401(k) Plan match expense during

Fiscal 2023, Fiscal 2022 and Fiscal 2021 respectively, which is included in the line item “Selling, general and
administrative expenses” on the Company’s Consolidated Statements of Income.

14. Income Taxes

Income before income taxes was as follows for Fiscal 2023, Fiscal 2022 and Fiscal 2021:

Domestic
Foreign

(in thousands)

Year Ended

January 28,
2023

$297,440
10,069

January 29,
2022

$533,906
11,392

February 3
2024

$454,491
11,282

Total income (loss) before income taxes

$465,773

$307,509

$545,298

Income tax expense (benefit) was as follows for Fiscal 2023, Fiscal 2022 and Fiscal 2021:

Current:

Federal
State
Foreign

Subtotal

Deferred:

Federal
State
Foreign

Subtotal

(in thousands)

Year Ended

January 28,
2023

January 29,
2022

February 3
2024

$ 85,834
16,150
3,477

$ 86,299
13,494
3,024

$ 69,146
11,546
3,815

105,461

102,817

84,507

12,583
7,311
769

20,663

(28,980)
2,796
753

(25,431)

32,217
19,272
463

51,952

Total income tax expense (benefit)

$126,124

$ 77,386

$136,459

The tax rate reconciliations were as follows for Fiscal 2023, Fiscal 2022 and Fiscal 2021:

Tax at statutory rate
State income taxes, net of federal benefit
Excess tax benefit from stock compensation
Tax credits
Non-deductible expenses
Loss from extinguishment of convertible debt
Other

Effective tax rate

Fiscal Year Ended

February 3
2024

January 28,
2023

January 29,
2022

21.0%
4.5
0.2
(1.2)
1.7
1.8
(0.9)

27.1%

21.0%
5.3
(0.2)
(2.2)
2.1
0.9
(1.7)

25.2%

21.0%
4.0
(4.8)
(1.6)
2.0
4.4
—

25.0%

80

The tax effects of temporary differences are included in deferred tax accounts as follows:

Non-current deferred tax assets and liabilities:
Property and equipment basis adjustments
Operating lease liability
Operating lease asset
Intangibles—indefinite-lived
Employee benefit compensation
State net operating losses (net of federal benefit)
Tax credits
Other
Valuation allowance

(in thousands)

February 3, 2024

January 28, 2023

Tax
Assets

Tax
Liabilities

Tax
Assets

Tax
Liabilities

$ — $ 236,711
872,903
—
—
27,194
5,726
10,774
—
(11,425)

—
805,610
63,892
—
—
—
24,116
—

$ — $ 231,426
830,029
—
—
21,303
11,323
11,132
—
(13,060)

—
764,446
63,871
—
—
—
3,770
—

Total non-current deferred tax assets and liabilities

$905,172

$1,130,329

$860,727

$1,063,513

Net deferred tax liability

$ 225,157

$ 202,786

As of February 3, 2024, the Company has a deferred tax asset related to net operating losses of $5.7 million,

inclusive of $5.4 million of state net operating losses which will expire at various dates between 2024 and 2041
and $0.3 million of deferred tax assets recorded for Puerto Rico net operating loss carry-forwards that will expire
in 2025. As of February 3, 2024, the Company had tax credit carry-forwards of $10.8 million, inclusive of state
tax credit carry-forwards of $10.4 million that will begin to expire in 2024 and $0.4 million of Puerto Rico
alternative minimum tax (AMT) credits that have an indefinite life.

As of January 28, 2023, the Company had a deferred tax asset related to net operating losses of

$11.3 million, inclusive of $11.0 million of state net operating losses, and $0.3 million of deferred tax assets
recorded for Puerto Rico net operating loss carry-forwards. As of January 28, 2023, the Company had tax credit
carry-forwards of $11.1 million, inclusive of state tax credit carry-forwards of $10.4 million, and $0.7 million of
Puerto Rico AMT credits.

The Company believes that it is more likely than not that the benefit from certain state net operating loss
carry forwards and credits will not be realized. In recognition of this risk, the Company has provided a valuation
allowance of $1.3 million on state net operating losses and $9.8 million on state tax credit carry forwards. In
addition, the Company believes that it is more likely than not that the benefit from Puerto Rico net operating loss
carry-forwards will not be realized. As a result, it has provided for a full valuation allowance of $0.3 million. If
the Company’s assumptions change and it determines it will be able to realize these net operating losses or
credits, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets as of February 3,
2024 will be recorded to the Company’s Consolidated Statement of Income. As of January 28, 2023, the
Company provided a total valuation allowance of $13.1 million, inclusive of $3.3 million of valuation allowance
related to state net operating losses, $9.5 million related to tax credit carry-forwards and $0.3 million related to
Puerto Rico.

81

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (exclusive of

interest and penalties) is as follows:

Balance at January 30, 2021
Additions for tax positions of the current year
Additions for tax positions of prior years
Reduction for tax positions of prior years
Settlements
Lapse of statute of limitations

Balance at January 29, 2022
Additions for tax positions of the current year
Additions for tax positions of prior years
Reduction for tax positions of prior years
Settlements
Lapse of statute of limitations

Balance at January 28, 2023
Additions for tax positions of the current year
Additions for tax positions of prior years
Reduction for tax positions of prior years
Settlements
Lapse of statute of limitations

Balance at February 3, 2024

(in thousands)

Gross
Unrecognized
Tax Benefits,
Exclusive of
Interest and
Penalties

$6,340
—
—
(783)
—
(770)

4,787
—
—
(782)
—
(72)

3,933
—
—
(783)
—
(18)

$3,132

As of February 3, 2024, the Company reported total unrecognized benefits of $3.1 million, of which
$2.5 million would affect the Company’s effective tax rate if recognized. As a result of previous positions taken
and current period activity, the Company recorded a net benefit of $0.8 million of interest and penalties during
Fiscal 2023 in the line item “Income tax expense” in the Company’s Consolidated Statements of Income.
Cumulative interest and penalties of $7.0 million are recorded in the line item “Other liabilities” in the
Company’s Consolidated Balance Sheet as of February 3, 2024. The Company recognizes interest and penalties
related to unrecognized tax benefits as part of income taxes. Within the next twelve months, the Company does
not expect any significant changes in its unrecognized tax benefits.

As of January 28, 2023, the Company reported total unrecognized benefits of $3.9 million, of which
$3.1 million would affect the Company’s effective tax rate if recognized. As a result of previous positions taken,
the Company recorded a net benefit of $0.9 million of interest and penalties during Fiscal 2022 in the line item
“Income tax expense” in the Company’s Consolidated Statements of Income. Cumulative interest and penalties
of $8.0 million are recorded in the line item “Other liabilities” in the Company’s Consolidated Balance Sheets as
of January 28, 2023.

The Company files tax returns in the U.S. federal jurisdiction, Puerto Rico, and various state jurisdictions.

The Company is open to examination by the IRS under the applicable statutes of limitations for Fiscal Years
2020 through 2023. The Company or its subsidiaries’ state and Puerto Rico income tax returns are open to audit
for Fiscal Years 2019 through 2023 with a few exceptions, under the applicable statutes of limitations. There are
ongoing state audits in several jurisdictions, and the Company has accrued for possible exposures as required
under Topic No. 740. The Company does not expect the settlement of these audits to have a material impact to its
financial results.

82

15. Fair Value of Financial Instruments

The Company accounts for fair value measurements in accordance with Topic No. 820 which defines fair
value, establishes a framework for measurement and expands disclosure about fair value measurements. Topic
No. 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date (exit price), and classifies the inputs
used to measure fair value into the following hierarchy:

Level 1: Quoted prices for identical assets or liabilities in active markets.

Level 2: Quoted market prices for similar assets or liabilities in active markets; quoted prices for
identical or similar assets or liabilities in markets that are not active; and model-derived
valuations whose inputs are observable or whose significant value drivers are observable.

Level 3: Pricing inputs that are unobservable for the assets and liabilities, and include situations

where there is little, if any, market activity for the assets and liabilities.

The inputs into the determination of fair value require significant management judgment or estimation.

The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate fair value

due to the short-term nature of these instruments.

Refer to Note 8, “Derivative Instruments and Hedging Activities,” for further discussion regarding the fair

value of the Company’s interest rate swap contract.

Refer to Note 6, “Impairment Charges,” for further discussion regarding the fair value of the Company’s

long-lived assets after impairment.

Financial Assets

The fair values of the Company’s financial assets and the hierarchy of the level of inputs as of February 3,

2024 and January 28, 2023 are summarized below:

Level 1

Cash equivalents (including restricted cash equivalents)

$657,292

$548,986

(in thousands)

Fair Value Measurements at

February 3,
2024

January 28,
2023

83

Financial Liabilities

The fair values of the Company’s financial liabilities are summarized below:

Term B-6 Loans
2025 Convertible Notes
2027 Convertible Notes
ABL Line of Credit(a)

Total debt(b)

(in thousands)

February 3, 2024

January 28, 2023

$

Principal
Amount

937,379
156,155
297,069
—

$

Fair
Value

934,450
169,384
342,384
—

$

Principal
Amount

946,994
507,687
—
—

$

Fair
Value

938,708
619,409
—
—

$1,390,603 $1,446,218 $1,454,681 $1,558,117

(a) To the extent the Company has any outstanding borrowings under the ABL Line of Credit, the fair value

would approximate its reported value, because the interest rate is variable and reflects current market rates,
due to its short term nature.

(b) The table above excludes finance lease obligations, debt discount and deferred debt costs.

The fair values presented herein are based on pertinent information available to management as of the
respective year end dates. The estimated fair values of the Company’s debt are classified as Level 2 in the fair
value hierarchy, and are based on current market quotes received from inactive markets. Although management
is not aware of any factors that could significantly affect the estimated fair value amounts, such amounts have not
been comprehensively revalued for purposes of these financial statements since that date, and current estimates
of fair value may differ from amounts presented herein.

16. Commitments and Contingencies

Legal

In the course of business, the Company is party to class or collective actions alleging violations of federal
and state wage and hour and other labor statutes, representative claims under the California Private Attorneys’
General Act and various other lawsuits and regulatory proceedings from time to time including, among others,
commercial, product, employee, customer, intellectual property and other claims. Actions against us are in
various procedural stages. Many of these proceedings raise factual and legal issues and are subject to
uncertainties. While no assurance can be given as to the ultimate outcome of these matters, the Company
believes that the final resolution of these actions will not have a material adverse effect on the Company’s results
of operations, financial position, liquidity or capital resources.

Letters of Credit

The Company had irrevocable letters of credit in the amounts of $75.8 million and $51.1 million as of

February 3, 2024 and January 28, 2023, respectively.

Letters of credit outstanding as of February 3, 2024 and January 28, 2023 amounted to $75.8 million and

$47.4 million, respectively, guaranteeing performance under various lease agreements, insurance contracts, and
utility agreements. The Company also had outstanding letters of credit arrangements in the aggregate amount of
$3.7 million at January 28, 2023, related to certain merchandising agreements, and none at February 3, 2024.
Based on the terms of the agreement governing the ABL Line of Credit, the Company had the ability to enter into
letters of credit up to $174.2 million and $98.9 million as of February 3, 2024 and January 28, 2023, respectively.

84

Inventory Purchase Commitments

The Company had $1,304.5 million of purchase commitments related to goods that were not received as of

February 3, 2024.

Death Benefits

In November 2005, the Company entered into agreements with three of the Company’s former executives
whereby, upon each of their deaths, the Company will pay $1.0 million to each respective designated beneficiary.

85

Schedule I

CONDENSED FINANCIAL INFORMATION
OF REGISTRANT

Parent Company Information
Burlington Stores, Inc.

Condensed Statements of Income and Comprehensive Income

REVENUES:

Total revenue

COSTS AND EXPENSES:
Interest expense, net

Total costs and expenses

Income before provision for income tax

Provision for income tax

Earnings from equity investment, net of income taxes

Net income

Other comprehensive income, net of tax:
Interest rate derivative contracts:

Net unrealized gains arising during the period
Net reclassification into earnings during the period

Total comprehensive income

Fiscal Years Ended

February 3,
2024

January 28,
2023

January 29,
2022

(in thousands)

$ — $ — $ —

—

—

—

—

—

—

—

—

—

—

—

—

$339,649

$230,123

$408,839

$339,649

$230,123

$408,839

10,460
(5,675)

27,726
5,463

7,931
10,643

$344,434

$263,312

$427,413

See Notes to Condensed Financial Statements

86

CONDENSED FINANCIAL INFORMATION
OF REGISTRANT

Parent Company Information
Burlington Stores, Inc.

Condensed Balance Sheets

ASSETS:
Cash and cash equivalents

Total current assets
Investment in subsidiaries

Total assets

LIABILITIES AND STOCKHOLDERS’

EQUITY:

Current liabilities

Long term debt
Commitments and contingencies
Total stockholders’ equity

As of

February 3,
2024

January 28,
2023

(in thousands)

$

50

$

192

50
1,444,273

192
1,296,408

$1,444,323

$1,296,600

$

—

$

—

447,391

501,695

996,932

794,905

Total liabilities and stockholders’ equity

$1,444,323

$1,296,600

See Notes to Condensed Financial Statements

87

CONDENSED FINANCIAL INFORMATION
OF REGISTRANT

Parent Company Information
Burlington Stores, Inc.

Condensed Statements of Cash Flows

OPERATING ACTIVITIES:
Net cash provided by operating activities

INVESTING ACTIVITIES:
Net contribution from subsidiaries

Net cash provided by investing activities

FINANCING ACTIVITIES:
Proceeds from long term debt—2027 Convertible Notes
Principal payment on long term debt— 2025 Convertible Notes
Purchase of treasury shares
Proceeds from stock option exercises

Net cash used in financing activities

(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Fiscal Years Ended

February 3,
2024

January 28,
2023

January 29,
2022

(in thousands)

$

— $

— $

—

313,713

374,233

428,888

313,713

374,233

428,888

297,069
(386,519)
(243,188)
18,783

—
(78,240)
(316,896)
20,592

—

(201,695)
(266,628)
39,887

(313,855)

(374,544)

(428,436)

(142)
192

(311)
503

$

50

$

192

$

452
51

503

See Notes to Condensed Financial Statements

88

CONDENSED FINANCIAL INFORMATION
OF REGISTRANT

Parent Company Information
Burlington Stores, Inc.

Note 1. Basis of Presentation

Burlington Stores, Inc. (the Parent Company) is a holding company that conducts substantially all of its
business operations through its subsidiaries. Capitalized terms not otherwise defined in this Schedule I shall have
the meanings ascribed to them in the Notes to Consolidated Financial Statements. The Parent Company’s ability
to pay dividends on Parent Company’s common stock will be limited by restrictions on the ability of Parent
Company’s subsidiaries to pay dividends or make distributions under the terms of current and future agreements
governing the indebtedness of Parent Company’s subsidiaries. In addition to other baskets under the agreements
governing its indebtedness, the Parent Company and its subsidiaries are permitted to make dividends and
distributions under the Term Loan Facility so long as there is no event of default and the consolidated leverage
ratio of the Parent Company and its subsidiaries does not exceed 3.50 to 1.00, and under the ABL Line of Credit
as long as certain restricted payment conditions are satisfied.

The accompanying Condensed Financial Statements include the accounts of the Parent Company and, on an
equity basis, its consolidated subsidiaries and affiliates. Accordingly, these Condensed Financial Statements have
been presented on a “parent-only” basis. Under a parent-only presentation, the Parent Company’s investments in
its consolidated subsidiaries are presented under the equity method of accounting. Other than debt related costs,
the Parent Company incurs certain corporate costs which are borne by the Parent Company’s subsidiaries. Such
costs are not significant. These parent-only financials statements are not the general-purpose financial statements
of Burlington Stores, Inc., and they should be read in conjunction with Burlington Stores, Inc.’s audited
Consolidated Financial Statements included elsewhere herein.

Note 2. Dividends

As discussed above, the terms of current and future agreements governing the indebtedness of the Parent

Company and its subsidiaries include, or may include, limitations on the ability of such subsidiaries and the
Parent Company to pay dividends, subject to certain exceptions set forth in such agreements.

Note 3. Stock-Based Compensation

Non-cash stock compensation expense of $83.9 million, $67.5 million and $58.5 million has been pushed

down to Parent Company’s subsidiaries for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively.

Note 4. Long Term Debt

On April 16, 2020, the Parent Company issued $805.0 million of 2025 Convertible Notes. The 2025

Convertible Notes have an initial conversion rate of 4.5418 shares per $1,000 principal amount of 2025
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. The 2025 Convertible Notes are
general unsecured obligations of the Parent Company.

The 2025 Convertible Notes bear interest at a rate of 2.25% per year, payable semi-annually in cash, in

arrears on April 15 and October 15 of each year, beginning on October 15, 2020. The 2025 Convertible Notes
will mature on April 15, 2025, unless earlier converted, redeemed or repurchased.

During the second half of Fiscal 2021, the Parent Company entered into separate, privately negotiated
exchange agreements with certain holders of the 2025 Convertible Notes. Under the terms of the exchange

89

agreements, the holders exchanged $232.7 million in aggregate principal amount of 2025 Convertible Notes held
by them for a combination of an aggregate of $199.8 million in cash and 513,991 shares of the Company’s
common stock. These exchanges resulted in aggregate pre-tax debt extinguishment charges of $124.6 million.

During the first quarter of Fiscal 2022, the Parent Company entered into separate, privately negotiated exchange

agreements with certain holders of the 2025 Convertible Notes. Under the terms of the exchange agreements, the
holders exchanged $64.6 million in aggregate principal amount of 2025 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.

During the first quarter of Fiscal 2023, the Parent Company entered into separate, privately negotiated exchange

agreements with certain holders of the 2025 Convertible Notes. Under the terms of the exchange agreements, the
holders exchanged $110.3 million in aggregate principal amount of 2025 Convertible Notes held by them for
$133.3 million in cash. These exchanges resulted in aggregate pre-tax debt extinguishment charges of $24.6 million.

On September 12, 2023, the Parent Company closed the issuance of approximately $297.1 million aggregate

principal amount of our 2027 Convertible Notes pursuant to separate, privately negotiated exchange and
subscription agreements with a limited number of holders of our 2025 Convertible Notes and certain investors, in
each case pursuant to exemptions from registration under the Securities Act of 1933. The Parent Company
exchanged approximately $241.2 million in aggregate principal amount of the 2025 Convertible Notes for
approximately $255.0 million in aggregate principal amount of the 2027 Convertible Notes. The Parent Company
also issued approximately $42.1 million in aggregate principal amount of 2027 Convertible Notes in a private
placement to certain investors. An aggregate of up to 1,422,568 shares of common stock may be issued upon
conversion of the 2027 Convertible Notes, which number is subject to adjustment up to an aggregate of
1,911,372 shares following certain corporate events that occur prior to the maturity date or if we issue a notice of
redemption, and which is also subject to certain anti-dilution adjustments.

The 2027 Convertible Notes bear interest at a rate of 1.25% per year, payable semi-annually in arrears on

June 15 and December 15 of each year, beginning on December 15, 2023. The 2027 Convertible Notes will
mature on December 15, 2027, unless earlier converted, redeemed or repurchased.

BCFWC and Burlington Merchandising Corporation, a Delaware corporation, wholly owned subsidiaries of

the Company, have entered into a promissory note, in which they jointly and severally have promised to pay to
the Parent an amount equal to the principal of the 2025 Convertible Notes and 2027 Convertible Notes. In
connection with the promissory note, there was a $453.2 million and $507.7 million intercompany note
receivable as of February 3, 2024 and January 28, 2023, respectively, related to the cash transferred to Parent
subsidiaries for the Convertible Notes, which is included in the line item “Investment in subsidiaries” in the
Condensed Balance Sheets. The interest rate and repayment terms of the intercompany note receivable are
consistent with that of the 2025 Convertible Notes and 2027 Convertible Notes.

Included in the Condensed Statements of Income and Comprehensive Income is the following for each of

the periods indicated:

Convertible notes interest expense
Intercompany note receivable interest expense
Loss on extinguishment of convertible notes
Gain on extinguishment of intercompany note

receivable

Interest expense, net

(in thousands)
Fiscal Year Ended

February 3,
2024

January 28,
2023

January 29,
2022

$(10,875)
10,875
(38,274)

$(14,281)
14,281
(14,657)

$ (20,055)
20,055
(124,639)

38,274

14,657

124,639

$ —

$ —

$

—

Refer also to Note 7 to the Consolidated financial statements.

90

Note 5. Capital Stock

Treasury Stock

The Parent Company accounts for treasury stock under the cost method.

During Fiscal 2023, the Parent Company acquired 62,894 shares of common stock from employees for

approximately $11.3 million to satisfy their minimum statutory tax withholdings related to the vesting of
restricted stock awards, which was recorded in the line item “Purchase of treasury shares” on the Parent
Company’s Condensed Statements of Cash Flows.

Share Repurchase Program

On February 16, 2022, the Parent Company’s Board of Directors authorized the repurchase of up to an
additional $500.0 million of common stock, which was authorized to be executed through February 2024. As of
the end of Fiscal 2023, the Parent Company had $115.4 million remaining under this share repurchase
authorization.

On August 15, 2023, the Parent Company’s Board of Directors authorized the repurchase of up to an
additional $500 million of common stock, which is authorized to be executed through August 2025. As of the
end of Fiscal 2023, the Parent Company had $500.0 million remaining under this share repurchase authorization.

During Fiscal 2023, the Parent Company repurchased 1,354,031 shares of common stock for $231.9 million

under its share repurchase program.

91

BURLINGTON STORES, INC.
Schedule II—Valuation and Qualifying Accounts and Reserves
(All amounts in thousands)

Description

Year ended February 3, 2024

Balance at
Beginning
of Period

Charged
to Costs &
Expenses

Charged
to Other
Accounts(1)

Accounts
Written Off
or
Deductions(2)

Balance at
End of
Period

Allowance for doubtful accounts
Valuation allowances on deferred tax assets

$ 1,252
$13,060

$1,209
$ —

$ —
$(1,635)

Year ended January 28, 2023

Allowance for doubtful accounts
Valuation allowances on deferred tax assets

$ 3,305
$12,864

$ 291
$ —

$ —
$

196

Year ended January 29, 2022

Allowance for doubtful accounts
Valuation allowances on deferred tax assets

$ 4,855
$12,957

$ 185
$ —

$ —
$

(93)

$ 148
$ —

$2,344
$ —

$1,735
$ —

$ 2,313
$11,425

$ 1,252
$13,060

$ 3,305
$12,864

Notes:

(1) Amounts related to valuation allowances on deferred taxes are charged to income tax expense.
(2) Actual allowances.

92

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management team, under the supervision and with the participation of our principal executive officer

and our principal financial officer, evaluated the effectiveness of the design and operation of our disclosure
controls and procedures as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, as of
the last day of the fiscal period covered by this Annual Report, February 3, 2024. The term disclosure controls
and procedures means our controls and other procedures that are designed to ensure that information required to
be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that information required to
be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and
communicated to management, including our principal executive and principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on
this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure
controls and procedures were effective as of February 3, 2024.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial
reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and Rule 15d-15(f) under the
Exchange Act as a process designed by, or under the supervision of, the issuer’s principal executive and principal
financial officers, or persons performing similar functions, and effected by the issuer’s Board of Directors,
management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with GAAP and includes those
policies and procedures that:

•

•

•

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the issuer;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with GAAP, and that receipts and expenditures of the issuer are
being made only in accordance with authorizations of management and directors of the issuer; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use
or disposition of the issuer’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

In accordance with the internal control reporting requirement of the SEC, management completed an

assessment of the adequacy of our internal control over financial reporting as of February 3, 2024. In making this
assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control—Integrated Framework (2013).

Based on this assessment and the criteria in the COSO framework, management has concluded that, as of

February 3, 2024, our internal control over financial reporting was effective.

93

Deloitte & Touche LLP, the independent registered public accounting firm that audited and reported on our

consolidated financial statements contained herein, has audited the effectiveness of our internal control over
financial reporting as of February 3, 2024, and has issued an attestation report on the effectiveness of our internal
control over financial reporting included herein.

Changes in Internal Control Over Financial Reporting

During the fourth quarter of Fiscal 2023, there were no changes in our internal control over financial
reporting that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.

94

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Burlington Stores, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Burlington Stores, Inc. and subsidiaries (the
“Company”) as of February 3, 2024 based on criteria established in Internal Control — Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion,
the Company maintained, in all material respects, effective internal control over financial reporting as of February 3,
2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated financial statements as of and for the year ended February 3, 2024, of
the Company and our report dated March 15, 2024 expressed an unqualified opinion on those financial
statements and included an explanatory paragraph regarding the Company’s adoption of (ASU) 2020-06,
“Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.”

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an
opinion on the Company’s internal control over financial reporting based on our audit. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Morristown, New Jersey
March 15, 2024

95

Item 9B. Other Information.

During the fiscal quarter ended February 3, 2024, no director or officer of the Company adopted, modified
or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is
defined in Item 408 of Regulation S-K.

96

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

Part III

Item 10. Directors, Executive Officers and Corporate Governance

For the information required by this Item 10, see “Election of Directors,” “Information About Our Executive

Officers,” “Corporate Governance,” and “Board Committees,” in the Proxy Statement for our 2024 Annual
Meeting of Stockholders (the “Proxy Statement”), which information is incorporated herein by reference. The
Proxy Statement will be filed within 120 days of the close of our 2023 fiscal year.

Item 11. Executive Compensation

For the information required by this Item 11, see “Executive Compensation” and “Director Compensation”

in the Proxy Statement, which information (excluding the information under the subheading “Pay Versus
Performance”) is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters

For the information required by this Item 12, see “Ownership of Securities” and “Securities Authorized for

Issuance Under Equity Compensation Plans” in the Proxy Statement, which information is incorporated herein by
reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

For the information required by this Item 13, see “Certain Relationships and Related Person Transactions”

and “Corporate Governance” in the Proxy Statement, which information is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

For the information required by this Item 14, see “Principal Accountant Fees and Services” and “Policy on

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services” in the Proxy Statement, which
information is incorporated herein by reference.

97

Item 15. Exhibits and Financial Statement Schedules

(a) Documents Filed as Part of this Report

PART IV

(1) Financial Statements. The Consolidated Financial Statements filed as part of this Annual Report are listed
on the Index to Consolidated Financial Statements on page 41 of this Annual Report.

(2) Financial Statement Schedules. Schedule I—Condensed Financial Information of Registrant filed as part of
this Annual Report is starting on page 71. Schedule II—Valuation and Qualifying Accounts filed as part of this
Annual Report is set forth on page 77 of this Annual Report. All other financial statement schedules have been
omitted here because they are not applicable, not required, or the information is shown in the Consolidated
Financial Statements or notes thereto.

(3) Exhibits Required by Item 601 of Regulation S-K.

The following is a list of exhibits required by Item 601 of Regulation S-K and filed as part of this Annual

Report. Exhibits that previously have been filed are incorporated herein by reference. Exhibits filed prior to June
2013 are incorporated herein by reference to filings of Burlington Coat Factory Investments Holdings, Inc. (File
No. 333-137916-110).

Exhibit
Number

3.1

3.2

4.1

4.2

4.3

10.1

Incorporated by Reference

Exhibit Description

Form

Filing Date

Amended and Restated Certificate of
Incorporation of Burlington Stores, Inc.

Registration Statement on
Form S-1/A

September 10, 2013

Amended and Restated Bylaws of Burlington
Stores, Inc.

Quarterly Report on
Form 10-Q

November 22, 2022

Annual Report on
Form 10-K

Current Report on
Form 8-K

March 13, 2020

April 16, 2020

Current Report on
Form 8-K

September 18, 2023

Current Report on
Form 8-K

February 24, 2011

Description of the Registrant’s Securities.

Indenture (including the form of Convertible
Note), dated as of April 16, 2020, between
Burlington Stores, Inc. and Wilmington Trust,
National Association

Indenture, dated as of September 12, 2023,
between the Company and Wilmington Trust,
National Association, as trustee (including form
of 1.25% Convertible Senior Notes due 2027)

Credit Agreement, dated February 24, 2011, by
and among Burlington Coat Factory Warehouse
Corporation, as borrower, the facility
guarantors signatory thereto, JPMorgan Chase
Bank, N.A., as administrative agent and as
collateral agent, Goldman Sachs Lending
Partners LLC, the lenders party thereto, and J.P.
Morgan Securities LLC, Goldman Sachs
Lending Partners LLC, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Wells Fargo
Securities, LLC, as joint lead arrangers and
joint bookrunners.

98

Incorporated by Reference

Form

Current Report on
Form 8-K

Filing Date

May 17, 2012

Current Report on
Form 8-K

February 21, 2013

Current Report on
Form 8-K

May 22, 2013

Current Report on
Form 8-K

August 18, 2014

Current Report on
Form 8-K

July 29, 2016

Current Report on
Form 8-K

November 21, 2017

Current Report on
Form 8-K

November 8, 2018

Exhibit
Number

10.1.1

10.1.2

10.1.3

10.1.4

10.1.5

10.1.6

10.1.7

Exhibit Description

Amendment No. 1, dated May 16, 2012, to the
Credit Agreement, dated February 24, 2011, by
and among Burlington Coat Factory Warehouse
Corporation, the lenders party thereto,
JPMorgan Chase Bank, N.A., as administrative
agent and as collateral agent, and the other
parties thereto.

Amendment No. 2, dated February 15, 2013, to
the Credit Agreement, dated February 24, 2011,
by and among Burlington Coat Factory
Warehouse Corporation, the lender parties
thereto, JPMorgan Chase Bank, N.A., as
administrative agent and as collateral agent, and
the other parties thereto.

Amendment No. 3, dated May 17, 2013, to the
Credit Agreement, dated February 24, 2011, by
and among Burlington Coat Factory Warehouse
Corporation, the lenders party thereto,
JPMorgan Chase Bank, N.A., as administrative
agent and as collateral agent.

Amendment No. 4, dated August 13, 2014, to
the Credit Agreement, dated February 24, 2011,
by and among Burlington Coat Factory
Warehouse Corporation, the lenders party
thereto, JPMorgan Chase Bank, N.A., as
administrative agent and as collateral agent.

Amendment No. 5, dated July 29, 2016, to the
Credit Agreement, dated February 24, 2011, by
and among Burlington Coat Factory Warehouse
Corporation, the lenders party thereto,
JPMorgan Chase Bank, N.A., as administrative
agent and as collateral agent.

Amendment No. 6 to the Credit Agreement,
dated November 17, 2017, to the Credit
Agreement, dated February 24, 2011, by and
among Burlington Coat Factory Warehouse
Corporation, the lenders party thereto,
JPMorgan Chase Bank, N.A., as administrative
agent and as collateral agent.

Amendment No. 7 to the Credit Agreement,
dated November 2, 2018, to the Credit
Agreement, dated February 24, 2011, by and
among Burlington Coat Factory Warehouse
Corporation, the lenders party thereto,
JPMorgan Chase Bank, N.A., as administrative
agent and as collateral agent.

99

Incorporated by Reference

Form

Current Report on
Form 8-K

Filing Date

March 3, 2020

Current Report on
Form 8-K

June 25, 2021

Quarterly Report on
Form 10-Q

May 25, 2023

Current Report on
Form 8-K

September 9, 2011

Current Report on
Form 8-K

August 18, 2014

Exhibit
Number

10.1.8

10.1.9

10.1.10

10.2

10.2.1

Exhibit Description

Amendment No. 8 to the Credit Agreement,
dated February 26, 2020, to the Credit
Agreement, dated February 24, 2011, by and
among Burlington Coat Factory Warehouse
Corporation, the lenders party thereto,
JPMorgan Chase Bank, N.A., as administrative
agent and as collateral agent.

Amendment No. 9, dated as of June 24, 2021,
to the Credit Agreement dated as of
February 24, 2011, by and among Burlington
Coat Factory Warehouse Corporation,
JPMorgan Chase Bank, N.A., as administrative
agent, and the lenders and facility guarantors
party thereto.

Amendment No. 10, dated as of May 11, 2023,
to the Credit Agreement dated as of
February 24, 2011, by and among Burlington
Coat Factory Warehouse Corporation,
JPMorgan Chase Bank, N.A., as administrative
agent, and the lenders and facility guarantors
party thereto.

Second Amended and Restated Credit
Agreement, dated September 2, 2011, among
Burlington Coat Factory Warehouse
Corporation, as lead borrower, the borrowers
named therein and the facility guarantors party
thereto, Bank of America, N.A., as
administrative agent and as collateral agent,
Wells Fargo Capital Finance, LLC and
JPMorgan Chase Bank, N.A., as co-syndication
agents, and Suntrust Bank and U.S. Bank,
National Association, as co-documentation
agents, the lenders named therein, Merrill
Lynch, Pierce, Fenner & Smith Incorporated
and Wells Fargo Capital Finance, LLC, as joint
lead arrangers, and Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Wells Fargo
Capital Finance, LLC, as joint bookrunners.

First Amendment to Second Amended and
Restated Credit Agreement, dated August 13,
2014, by and among Burlington Coat Factory
Warehouse Corporation, as lead borrower, the
other borrowers party thereto, the facility
guarantors thereto, the lenders party thereto
and Bank of America, N.A., as administrative
agent and collateral agent.

100

Exhibit
Number

10.2.2

10.2.3

10.2.4

10.2.5

10.2.6

10.2.7

10.3

10.4

Exhibit Description

Second Amendment to Second Amended and
Restated Credit Agreement, dated June 29,
2018, by and among Burlington Coat Factory
Warehouse Corporation, as lead borrower, the
other borrowers party thereto, the facility
guarantors thereto, the lenders party thereto and
Bank of America, N.A., as administrative agent
and collateral agent.

Consent and Technical Modification
Agreement, dated December 3, 2018, by and
between Burlington Coat Factory Warehouse
Corporation, as lead borrower, and Bank of
America, N.A., as administrative agent

Consent and Technical Modification
Agreement, dated as of April 7, 2020, by and
between Burlington Coat Factory Warehouse
Corporation and Bank of America, N.A.

Third Amendment to Second Amended and
Restated Credit Agreement, dated as of
December 22, 2021, by and among Burlington
Coat Factory Warehouse Corporation, as lead
borrower, the other borrowers party thereto, the
facility guarantors party thereto, each lender
party thereto, and Bank of America, N.A., as
administrative agent and collateral agent.

Fourth Amendment to Second Amended and
Restated Credit Agreement, dated as of July 20,
2022, by and among Burlington Coat Factory
Warehouse Corporation, as lead borrower, the
other borrowers party thereto, the facility
guarantors party thereto, each lender party
thereto, and Bank of America, N.A., as
administrative agent and collateral agent.

Fifth Amendment to Second Amended and
Restated Credit Agreement, dated as of June 26,
2023, by and among Burlington Coat Factory
Warehouse Corporation, as lead borrower, the
other borrowers party thereto, the facility
guarantors party thereto, each lender party
thereto, and Bank of America, N.A., as
administrative agent and collateral agent.

Guaranty, dated April 13, 2006, by the facility
guarantors party thereto in favor of Bank of
America, N.A., as administrative Agent and
Bank of America, N.A., as Collateral Agent.

Security Agreement, dated April 13, 2006, by
and among each of the borrowers party thereto,
each of the facility guarantors party thereto, and
Bank of America, N.A., as collateral agent.

101

Incorporated by Reference

Form

Current Report on
Form 8-K

Filing Date

July 2, 2018

Annual Report on
Form 10-K

March 20, 2019

Quarterly Report on
Form 10-Q

May 29, 2020

Current Report on
Form 8-K

December 22, 2021

Current Report on
Form 8-K

July 22, 2022

Quarterly Report on
Form 10-Q

August 24, 2023

Registration Statement on
Form S-4

October 10, 2006

Registration Statement on
Form S-4

October 10, 2006

Exhibit
Number

10.5

10.6

10.7+

10.7.1+

10.7.2+

10.8+

10.9+

10.10+

10.11+

Exhibit Description

Form

Filing Date

Incorporated by Reference

Intellectual Property Security Agreement,
dated April 13, 2006, by and among each of
the borrowers party thereto, each of the facility
guarantors party thereto, and Bank of America,
N.A., as collateral agent.

Pledge Agreement, dated April 13, 2006, by
and between Burlington Coat Factory
Holdings, Inc., Burlington Coat Factory
Investments Holdings, Inc., Burlington Coat
Factory Warehouse Corporation, Burlington
Coat Factory Realty Corp., Burlington Coat
Factory Purchasing, Inc., K&T Acquisition
Corp., Burlington Coat Factory of New York,
LLC, Burlington Coat Factory Warehouse of
Baytown, Inc., Burlington Coat Factory of
Texas, Inc., as the pledgors, and Bank of
America, N.A., as collateral agent.

Amended and Restated Employment
Agreement, dated July 28, 2015, by and among
Burlington Coat Factory Warehouse
Corporation and Jennifer Vecchio.

Amendment, dated May 19, 2017, to the
Amended and Restated Employment
Agreement, dated July 28, 2015, by and among
Burlington Coat Factory Warehouse
Corporation and Jennifer Vecchio.

Amendment No. 2, dated March 12, 2021, to
the Amended and Restated Employment
Agreement, dated July 28, 2015, by and among
Burlington Coat Factory Warehouse
Corporation and Jennifer Vecchio.

Registration Statement on
Form S-4

October 10, 2006

Registration Statement on
Form S-4

October 10, 2006

Quarterly Report on
Form 10-Q

August 31, 2015

Current Report on
Form 8-K

May 22, 2017

Annual Report on
Form 10-K

March 15, 2021

Employment Agreement, dated as of April 23,
2019, by and between Burlington Stores, Inc.
and Michael O’Sullivan.

Current Report on
Form 8-K

Employment Agreement dated May 24, 2022
by and between Burlington Stores, Inc. and
Kristin Wolfe.

Current Report on
Form 8-K

April 23, 2019

May 26, 2022

Form of Directors and Officers
Indemnification Agreement.

Registration Statement on
Form S-1/A

September 10, 2013

Burlington Stores, Inc. 2013 Omnibus
Incentive Plan, as amended and restated
May 17, 2017.

Current Report on
Form 8-K

May 22, 2017

10.12+

Burlington Stores, Inc. 2022 Omnibus
Incentive Plan

Current Report on
Form 8-K

May 24, 2022

102

Exhibit
Number

10.13+

10.14+

10.15+

10.16+

10.17+

10.18+

10.19+

10.20+

Exhibit Description

Form of Non-Qualified Stock Option
Agreement between Burlington Stores, Inc. and
Employees with Employment Agreements or
Subject to the Executive Severance Plan
pursuant to Burlington Stores, Inc. 2013
Omnibus Incentive Plan, as amended and
restated May 17, 2017 (for grants made from
and after May 2017 and prior to May 2019).

Form of Non-Qualified Stock Option
Agreement between Burlington Stores, Inc. and
Employees without Employment Agreements
pursuant to Burlington Stores, Inc. 2013
Omnibus Incentive Plan, as amended and
restated May 17, 2017 (for grants made from
and after May 2017 and prior to May 2019).

Form of Performance-Based Restricted Stock
Unit Award Notice and Agreement between
Burlington Stores, Inc. and award recipients
pursuant to the Burlington Stores, Inc. 2013
Omnibus Incentive Plan, as amended and
restated May 17, 2017 (for grants made from
and after May 2019).

Form of Restricted Stock Unit Award Notice
and Agreement between Burlington Stores, Inc.
and award recipients pursuant to the Burlington
Stores, Inc. 2013 Omnibus Incentive Plan, as
amended and restated May 17, 2017 (for grants
made from and after May 2019).

Form of Stock Option Award Notice and
Agreement between Burlington Stores, Inc. and
award recipients pursuant to the Burlington
Stores, Inc. 2013 Omnibus Incentive Plan, as
amended and restated May 17, 2017 (for grants
made from and after May 2019).

Form of Restricted Stock Unit Award Notice
and Agreement between Burlington Stores, Inc.
and Kristin Wolfe pursuant to the Burlington
Stores, Inc. 2022 Omnibus Incentive Plan (for
Make-Whole RSU Award).

Form of Stock Option Award Notice and
Agreement between Burlington Stores, Inc. and
Kristin Wolfe pursuant to the Burlington
Stores, Inc. 2022 Omnibus Incentive Plan (for
Make-Whole Option Award).

Form of Stock Option Award Notice and
Agreement between Burlington Stores, Inc. and
award recipients pursuant to the Burlington
Stores, Inc. 2022 Omnibus Incentive Plan.

103

Incorporated by Reference

Form

Current Report on
Form 8-K

Filing Date

May 22, 2017

Current Report on
Form 8-K

May 22, 2017

Quarterly Report on
Form 10-Q

June 3, 2019

Quarterly Report on
Form 10-Q

June 3, 2019

Quarterly Report on
Form 10-Q

June 3, 2019

Current Report on
Form 8-K

May 26, 2022

Current Report on
Form 8-K

May 26, 2022

Quarterly Report on
Form 10-Q

August 25, 2022

Exhibit
Number

10.21+

10.22+

10.23+

10.24+

10.25+

10.26+

10.27+

10.28+

10.29+

Exhibit Description

Form of Stock Option Award Notice and
Agreement between Burlington Stores, Inc. and
award recipients pursuant to the Burlington
Stores, Inc. 2022 Omnibus Incentive Plan (for
grants made to certain merchandising and
planning associates).

Form of Restricted Stock Unit Award Notice
and Agreement between Burlington Stores, Inc.
and award recipients pursuant to the Burlington
Stores, Inc. 2022 Omnibus Incentive Plan.

Form of Restricted Stock Unit Award Notice
and Agreement between Burlington Stores, Inc.
and award recipients pursuant to the Burlington
Stores, Inc. 2022 Omnibus Incentive Plan (for
grants made to certain merchandising and
planning associates).

Form of Performance-Based Restricted Stock
Unit Award Notice and Agreement between
Burlington Stores, Inc. and award recipients
pursuant to the Burlington Stores, Inc. 2022
Omnibus Incentive Plan.

Form of Performance-Based Restricted Stock
Unit Award Notice and Agreement between
Burlington Stores, Inc. and award recipients
pursuant to the Burlington Stores, Inc. 2022
Omnibus Incentive Plan (for grants made to
certain merchandising and planning associates).

Form of Restricted Stock Unit Award Notice
and Agreement between Burlington Stores, Inc.
and award recipients pursuant to the Burlington
Stores, Inc. 2022 Omnibus Incentive Plan (for
special grants made to certain merchandising
and planning associates).

Form of Stock Option Award Notice and
Agreement between Burlington Stores, Inc. and
award recipients pursuant to the Burlington
Stores, Inc. 2022 Omnibus Incentive Plan (for
special grants made to certain merchandising
and planning associates).

Form of Restricted Stock Unit Award Notice
and Agreement between Burlington Stores, Inc.
and award recipients pursuant to the Burlington
Stores, Inc. 2022 Omnibus Incentive Plan (for
special grants made to all other associates).

Form of Stock Option Award Notice and
Agreement between Burlington Stores, Inc. and
award recipients pursuant to the Burlington
Stores, Inc. 2022 Omnibus Incentive Plan (for
special grants made to all other associates).

104

Incorporated by Reference

Form

Quarterly Report on
Form 10-Q

Filing Date

August 25, 2022

Quarterly Report on
Form 10-Q

August 25, 2022

Quarterly Report on
Form 10-Q

August 25, 2022

Quarterly Report on
Form 10-Q

August 25, 2022

Quarterly Report on
Form 10-Q

August 25, 2022

Quarterly Report on
Form 10-Q

August 25, 2022

Quarterly Report on
Form 10-Q

August 25, 2022

Quarterly Report on
Form 10-Q

August 25, 2022

Quarterly Report on
Form 10-Q

August 25, 2022

Exhibit
Number

10.30+

10.31

10.32

10.33

10.34

10.35+

10.36+

Exhibit Description

Form

Filing Date

Incorporated by Reference

Quarterly Report on
Form 10-Q

August 25, 2022

Current Report on
Form 8-K

April 16, 2020

Current Report on
Form 8-K

April 16, 2020

Current Report on
Form 8-K

April 16, 2020

Current Report on
Form 8-K

April 16, 2020

Quarterly Report on
Form 10-Q

August 27, 2020

Quarterly Report on
Form 10-Q

May 27, 2021

Form of Restricted Stock Unit Award Notice
and Agreement between Burlington Stores, Inc.
and non-employee directors pursuant to the
Burlington Stores, Inc. 2022 Omnibus Incentive
Plan.

Security Agreement, dated as of April 16, 2020,
among Burlington Coat Factory Warehouse
Corporation, the Grantors party thereto and
Wilmington Trust, National Association, in its
capacity as collateral agent under the Indenture

Intellectual Property Security Agreement, dated
as of April 16, 2020, among Burlington Coat
Factory Warehouse Corporation, the Grantors
party thereto and Wilmington Trust, National
Association, in its capacity as collateral agent
under the Indenture

Pledge Agreement, dated as of April 16, 2020,
among Burlington Coat Factory Warehouse
Corporation, the Grantors party thereto and
Wilmington Trust, National Association, in its
capacity as collateral agent under the Indenture

ABL Intercreditor Agreement, dated as of
April 16, 2020, among Burlington Coat Factory
Warehouse Corporation, the Guarantors party
thereto, the Bank of America, N.A., in its
capacity as administrative agent and collateral
agent under the ABL Facility, JPMorgan Chase
Bank, N.A., as administrative agent and
collateral agent under the Term Loan Facility,
and Wilmington Trust, National Association, in
its capacity as collateral agent and trustee under
the Indenture

Form of Restricted Stock Unit Award Notice
and Agreement between Burlington Stores, Inc.
and award recipients pursuant to the Burlington
Stores, Inc. 2013 Omnibus Incentive Plan, as
amended and restated May 17, 2017 (for special
grants made from and after May 20, 2020).

Form of Restricted Stock Unit Award Notice
and Agreement between Burlington Stores, Inc.
and award recipients pursuant to the Burlington
Stores, Inc. 2013 Omnibus Incentive Plan, as
amended and restated May 17, 2017 (for grants
made to certain merchandising and planning
associates from and after May 3, 2021).

105

Exhibit
Number

10.37+

10.38+

10.39+

10.40+

10.41+

10.42+

10.43+

10.44+

10.45+

Exhibit Description

Form

Incorporated by Reference

Quarterly Report on
Form 10-Q

Filing Date

May 27, 2021

Form of Stock Option Award Notice and
Agreement between Burlington Stores, Inc. and
award recipients pursuant to the Burlington
Stores, Inc. 2013 Omnibus Incentive Plan, as
amended and restated May 17, 2017 (for grants
made to certain merchandising and planning
associates from and after May 3, 2021).

Form of Performance-Based Restricted Stock
Unit Award Notice and Agreement between
Burlington Stores, Inc. and award recipients
pursuant to the Burlington Stores, Inc. 2013
Omnibus Incentive Plan, as amended and
restated May 17, 2017 (for grants made to
certain merchandising and planning associates
from and after May 3, 2021).

Burlington Stores, Inc. Executive Severance
Plan (Merchandising & Planning) (Effective
March 26, 2021).

Burlington Stores, Inc. Executive Severance
Plan (Amended and Restated Effective
March 26, 2021).

Quarterly Report on
Form 10-Q

May 27, 2021

Quarterly Report on
Form 10-Q

May 27, 2021

Quarterly Report on
Form 10-Q

May 27, 2021

Employment Agreement dated July 12, 2021 by
and between Burlington Stores, Inc. and Travis
Marquette.

Current Report on
Form 8-K

July 15, 2021

Current Report on
Form 8-K

July 15, 2021

Current Report on
Form 8-K

July 15, 2021

Annual Report on
Form 10-K

Annual Report on
Form 10-K

March 16, 2022

March 16, 2022

Form of Restricted Stock Unit Award Notice
and Agreement between Burlington Stores, Inc.
and Travis Marquette pursuant to the
Burlington Stores, Inc. 2013 Omnibus Incentive
Plan, as amended and restated May 17, 2017
(for Make-Whole RSU Award).

Form of Stock Option Award Notice and
Agreement between Burlington Stores, Inc. and
Travis Marquette pursuant to the Burlington
Stores, Inc. 2013 Omnibus Incentive Plan, as
amended and restated May 17, 2017 (for Make-
Whole Option Award).

Offer Letter with Michael Allison dated
March 9, 2021.

Form of Performance-Based Restricted Stock
Unit Award Notice and Agreement between
Burlington Stores, Inc. and award recipients
pursuant to the Burlington Stores, Inc. 2013
Omnibus Incentive Plan, as amended and
restated May 17, 2017 (for grants made from
and after November 9, 2021).

106

Incorporated by Reference

Form

Annual Report on
Form 10-K

Filing Date

March 16, 2022

Annual Report on Form
10-K

March 16, 2022

Exhibit
Number

10.46+

10.47+

21.1†

23.1†

31.1†

31.2†

32.1†

32.2†

97.1†

101.INS†

Exhibit Description

Form of Performance-Based Restricted Stock
Unit Award Notice and Agreement between
Burlington Stores, Inc. and award recipients
pursuant to the Burlington Stores, Inc. 2013
Omnibus Incentive Plan, as amended and
restated May 17, 2017 (for grants made to
certain merchandising and planning
associates from and after November 9, 2021).

Form of Restricted Stock Unit Award Notice
and Agreement between Burlington Stores,
Inc. and award recipients pursuant to the
Burlington Stores, Inc. 2013 Omnibus
Incentive Plan, as amended and restated
May 17, 2017 (for special grants made to
certain merchandising and planning
associates).

List of Subsidiaries of Burlington Stores, Inc.

Consent of Deloitte & Touche LLP.

Certification of Principal Executive Officer
required by Rule 13a-14(a) or Rule 15d-14(a)
of the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

Certification of Principal Financial Officer
required by Rule 13a-14(a) or Rule 15d-14(a)
of the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

Certification of Principal Executive Officer
pursuant to 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.

Certification of Principal Financial Officer
pursuant to 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.

Burlington Stores, Inc. Policy on
Recoupment of Incentive Compensation

Inline XBRL Instance Document – the
instance document does not appear in
Interactive Data File, because its XBRL tags
are embedded within the Inline XBRL
document.

101.SCH†

Inline XBRL Taxonomy Extension Schema
Document

107

Exhibit
Number

101.CAL†

101.DEF†

101.LAB†

101.PRE†

104†

Exhibit Description

Form

Filing Date

Incorporated by Reference

Inline Taxonomy Extension Calculation
Linkbase Document

Inline XBRL Taxonomy Extension
Definition Linkbase Document

Inline XBRL Taxonomy Extension Label
Linkbase Document

Inline XBRL Taxonomy Extension
Presentation Linkbase Document

Cover Page Interactive Data File (formatted
as inline XBRL and contained in Exhibit
101)

+
†

Indicates management contract or compensatory plan or arrangement.
Filed or furnished herewith.

Item 16. Form 10-K Summary

None.

108

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant

has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

BURLINGTON STORES, INC.

By:

/s/ Michael O’Sullivan
Michael O’Sullivan
Chief Executive Officer

Date: March 15, 2024

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by

the following persons on behalf of the registrant and in the capacities indicated on the 15th day of March 2024.

Signature

Title

/s/ Michael O’Sullivan

Michael O’Sullivan

/s/ Kristin Wolfe
Kristin Wolfe

/s/ Jeffrey Laub

Jeffrey Laub

/s/ Ted English
Ted English

/s/ Michael Goodwin

Michael Goodwin

/s/ Jordan Hitch

Jordan Hitch

/s/ John Mahoney
John Mahoney

/s/ William McNamara

William McNamara

/s/ Jessica Rodriguez
Jessica Rodriguez

/s/ Laura Sen

Laura Sen

/s/ Paul Sullivan

Paul Sullivan

/s/ Mary Ann Tocio

Mary Ann Tocio

Chief Executive Officer and Director
(Principal Executive Officer)

Chief Financial Officer
(Principal Financial Officer)

Chief Accounting Officer
(Principal Accounting Officer)

Director

Director

Director

Director

Director

Director

Director

Director

Director

109

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[THIS PAGE INTENTIONALLY LEFT BLANK]

[THIS PAGE INTENTIONALLY LEFT BLANK]

BOARD OF DIRECTORS

MANAGEMENT TEAM

JOHN J. MAHONEY
Retired Vice Chairman
Staples, Inc.
Chairman of the Board of Directors

TED ENGLISH *1, 3
Executive Chairman
Bob’s Discount Furniture

MICHAEL GOODWIN *3
Former Senior Vice President,
Chief Information Technology Officer
PetSmart, Inc.

JORDAN HITCH *1, 2
Former Managing Director
Bain Capital
Chair of the Compensation Committee

WILLIAM P. MCNAMARA *2
Retired President
Macy’s Reinvent Strategies
Macy’s, Inc.

MICHAEL O’SULLIVAN
Chief Executive Officer
Burlington Stores, Inc.

JESSICA RODRIGUEZ *2
Former Chief Marketing Officer and
President of Entertainment
Univision Communications Inc.

LAURA J. SEN *3
Former Non-Executive Chairman
& Chief Executive Officer
BJ’s Wholesale Club, Inc.

PAUL J. SULLIVAN *3
Retired Partner
PricewaterhouseCoopers LLP
Chair of the Audit Committee

MARY ANN TOCIO *1,2
Retired President and
Chief Operating Officer
Bright Horizons Family Solutions, Inc.
Chair of the Nominating and
Corporate Governance Committee

*Board Committees
1 Compensation
2 Nominating and Corporate Governance
3 Audit

MICHAEL O’SULLIVAN
Chief Executive Officer

JENNIFER VECCHIO
Group President and Chief
Merchandising Officer

TRAVIS MARQUETTE
President and Chief Operating Officer

GAYLE AERTKER
Executive Vice President,
Store Development

ANTOINETTE CARTER
Executive Vice President of
Merchandising

VARADHEESWARAN CHENNAKRISHNAN
Executive Vice President,
Chief Information Officer

CONNIE DROGE
Executive Vice President of Stores
and Asset Protection

MAUREEN GRGUREV
Executive Vice President of Merchandising

MICHAEL HASKELL
Executive Vice President of Merchandising

SEAN MCGRATH
Executive Vice President of Merchandising

MATTHEW PASCH
Executive Vice President and
Chief Human Resources Officer

ELIOT ROSENFIELD
Executive Vice President of Merchandising

GREG SHULTZ
Executive Vice President and
Chief Supply Chain Officer

KRISTIN WOLFE
Executive Vice President and
Chief Financial Officer

CORPORATE AND
STOCKHOLDER INFORMATION

ANNUAL MEETING
The Company’s 2024 Annual Meeting of
Stockholders will take place at 8:00 a.m.
Eastern Time on May 22, 2024

STOCK EXCHANGE LISTING
New York Stock Exchange
Trading Symbol — BURL

INDEPENDENT REGISTERED CERTIFIED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
Morristown, New Jersey

INVESTOR RELATIONS
Investors, analysts and others seeking
information about the company are asked
to visit our investor relations website at
www.BurlingtonInvestors.com
or to contact:

David Glick
Group Senior Vice President of Investor
Relations and Treasurer
(855) 973-8445
Info@BurlingtonInvestors.com

A copy of our Annual Report for the fiscal
year ended February 3, 2024 as filed with
the Securities and Exchange Commission
on Form 10-K, quarterly reports on Form
10-Q, and current reports on Form 8-K
can be accessed on our investor relations
website under the SEC Filings section or can
be mailed upon request.

TRANSFER AGENT AND REGISTRAR
(for registered stockholders)
Equiniti Trust Company, LLC
6201 15th Avenue
Brooklyn, New York 11219
(800) 937-5449

BENEFICIAL STOCKHOLDERS
(Shares held by your broker in the name
of the brokerage house) should direct
questions to your broker