Q1 2006 Burlington Coat Factory Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Ladies and gentlemen, thank you for standing by. Welcome to the Burlington Coat Factory first-quarter fiscal 2006 results conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded Friday, October 7, 2005.

I would now like to turn the conference over to Bob LaPenta, Vice President, Chief Accounting Officer and Treasurer. Please go ahead.

BOB LAPENTA, CFO, CAO, BURLINGTON COAT FACTORY WAREHOUSE CORP.: Thank you, operator. Good morning.

Statements made in this conference that are forward-looking involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following -- deviation of actual from projected sales and earnings, the Company's ability to maintain selling margins, general economic conditions, changes in projected store openings, weather patterns, the Company's ability to control costs and expenses, and other factors that may be described in the Company's filing with the Securities and Exchange Commission. The Company does not undertake to publicly update or revise its forward-looking statements, even if experience or future changes make it clear that any projected results expressed or implied will not be realized.

I will first cover results of the first quarter ended August 27, 2005. Following these comments, we will be available to answer questions.

Per-share results -- during the three months ended August 27th, 2005, net loss was $0.36 per share, compared with net loss of a year ago of $0.42 a share.

Sales -- during the first quarter ended August 27, 2005, net sales were 650.8 million compared with sales of 574.2 million for the prior year's first quarter. Sales increased 13.4% for the quarter. Comparative store sales increased 8.9% for the same period. Comparative store sales increased 13.2% in June, 7.5% in July, and 5.6% in August.

Other revenue -- during the quarter, other revenue was 7.3 million, compared with 6.4 million a year ago. This increase is primarily due to increases in rental income and service charges.

Cost of sales -- during the quarter, cost of sales was 65.4% of net sales, compared with 64.8% for the same period last year. This percentage increase was primarily the result of a 20 basis point decrease in initial mark-up, a 20 basis point increase in markdowns, a 10 basis point increase in shrink reserve, and a 10 basis point increase in freight compared to the first quarter of a year ago.

Selling and administrative expenses -- during the quarter, selling and administrative expenses increased 19 million to 234.7 million. The increase in selling and administrative expenses in the quarter reflects the additional store expenses of 12 stores not open at last year's first quarter. As a percentage of net sales, selling and administrative expenses were 36% of sales, compared with 37.5% for the same period last year.

Payroll-related expenses declined 1.4% of net sales and occupancy-related expenses declined 0.3% of net sales.

Depreciation expense -- during the first quarter, depreciation expenses increased 1.3 million to 22.6 million for the quarter, compared with last year's first fiscal quarter. This increase in depreciation is due to increased levels of fixed assets related to stores opened, relocated and remodeled in fiscal year 2005.

Interest expense -- during the first quarter, interest expense remained unchanged at 1.8 million compared with last year's first quarter.

Other income, net -- other income, net, of 0.1 million at August 27, 2005 decreased by 0.7 million from last year's balance of 0.8 million. This decrease was primarily due to higher losses on disposal of fixed assets. Increases in interest income partially offset these losses on disposal of assets.

Loss from continuing operations before income tax benefit -- losses from continuing operations before income tax benefit were 25.9 million, compared with 29.3 million for last year's first quarter, a $3.4 million increase in the loss. This decrease was primarily from increases in comparative store sales during the quarter.

Income taxes -- the income tax benefit was 10 million, compared with 11.9 million during the prior-year first quarter. The effective tax rate for the first quarter was 38.7% compared with 40.6% a year ago.

Balance sheet review -- these values are stated in rounded millions. Inventory -- merchandise inventories at August 27th, 2005 were 772 million, a 6.1% increase over last year's level of 727.8 million. Comparative store inventories were up 1.2% at August 27, 2005.

Book value -- the Company's book value at the end of the current first quarter is 910.2 million or $20.33 per share, compared with this time last year of 825 million or $18.48 per share.

During the first quarter of fiscal 2006, the Company relocated three Burlington Coat Factory stores to new locations within their existing trading markets. As of the end of the fiscal quarter, the Company had 362 stores in operation in 42 states.

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