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Michael O'Sullivan

Thank you, David. Good morning, everyone, and thank you for joining us. I would like to cover three topics this morning. Firstly, I will discuss our fourth-quarter results. Secondly, I will comment on our full-year 2024 results. And I will use these results to provide an update on the progress that we are making towards our longer-range financial goals.
Finally, I will talk about guidance for the year ahead. Then Kristin will provide additional financial details. Okay, let's start with our Q4 results. Comparable store sales for the fourth quarter increased 6%. This was well above our guidance of 0% to 2%. I would like to double-click on Q4 comp sales and provide additional color on two key factors that contributed to this strong performance.
Firstly, in early 2024, we embarked on a strategy to elevate our assortment. In some categories and at some price points, this involved a higher mix of well-known national brands. For sure, this higher mix was important, but this strategy was not just about brands.
In other categories or price points, we elevated the assortment in other ways, perhaps through higher quality or a higher weight of fabric or more up-to-date fashion or more embellishment. Depending on the category or price points, these are all characteristics that the customer uses to assess value.
Another very important aspect of this strategy was to identify items to remove from the assortment. One of our senior merchants uses the phrase, eliminate to elevate. This means pruning items from the assortment that do not deserve to be there because the quality or the fashion or the value is just not good enough. We want everything to count.
It is also very important to make the point that this elevation strategy was pursued within the framework of a good-better-best assortment. We went after opportunities to elevate the assortment at all price points, paying close attention to the need-a-deal as well as for want-to-deal shopper. We drove this elevation strategy throughout last year, but it was most evident and powerful in the fourth quarter.
I interpret our 6% comp sales growth in Q4 as just the customer telling us that they approved of this strategy and really loved our assortment. The second driver of our strong Q4 performance was that we were very nimble, flexible, and responsive to trend in Q4 and throughout the fall season. Let me illustrate this by talking about the quarterly trend last year.
In the summer, as we exited Q2, we were flying. We reported 5% comp growth for the quarter, and the trend continued to accelerate through back to school. Then it dropped off significantly due to unseasonably warm weather from mid-September onwards. These warmer temperatures hurt our sales of outerwear. And at that particular time of year, outerwear is a critical business for us.
The warm weather and the weak trend persisted until mid-November. And then our business took off as the customer began to shop for holiday. I cannot overstate how pleased I am with how well we reacted to this volatility in sales. We chased the trend in back-to-school categories in the summer, then pulled back very hard on cold weather businesses from mid-September onwards, and then chased holiday businesses in late November and December.
This nimble and rapid execution is the essence of off-price. It is an excellent illustration of what we are trying to achieve with Burlington 2.0. We know that we will never be able to predict the future. But what we can do, using the processes, tools, and capabilities that we have built, is to react quickly and effectively to whatever happens with external traffic and the sales trend.
I'm going to move on now and talk about our results for 2024 as a whole. I would like to discuss these results within the overall context of our longer-range financial objectives. Investors will recall that in November of 2023, we shared high-level financial goals for our business through 2028. We expect to grow total sales to approximately $16 billion and to increase our operating profit to about $1.6 billion during this period.
We are only one year into this five-year program, but we are very pleased and encouraged by our initial progress towards these goals. The headline is that in 2024, we achieved very strong total sales growth of 11%, and we expanded our operating margin by 100 basis points. As you will recall, there are three major drivers of our long-range model, new store openings, comp store sales growth, and operating margin expansion. I will now review the progress that we made on each of these major drivers in 2024.
Let's start with new store openings. Our long-range model projects an average of 100 net new stores each year, plus a couple of dozen relocations of older, oversized stores. In 2024, we opened 101 net new stores, but let me dissect that number a little further. Of course, there is no such thing as a net new store.
In 2024, we actually opened 147 new stores, 31 of these were relocations. And we also shuttered 15 mostly older and less productive locations. Mathematically, this equals 101 net new stores, but my point is that the full impact on the chain is much more significant. Our long-range goal is to grow and transform our store network. 147 gross new stores in 2024 represents strong progress on this transformation program.
Okay, let me comment on the performance of our new stores. There are a number of important relevant metrics that we track. For new stores, these include the sales volume in the opening year and the comp performance in the first few years once the store joins the comp base. For relocations, we focus on the comp sales and the productivity lift that we see in the new location.
We are pleased with how all of these metrics are tracking. I should add that when we approve a new location, we analyze the internal rate of return based on expected sales, profitability, and CapEx. The rate of return that we are achieving on new store openings and on relocations is very attractive.
I will finish up on our new store program by talking about the pipeline. Of course, at this point, our plan and our schedule for new store openings in 2025 is largely set. We feel confident in our ability to open 100 net new stores this year. For 2026, the pipeline is also shaping up nicely. It is early, but at this point, I feel good about our ability to also open 100 net new stores in 2026.
I'm going to move on now and talk about the second major driver of our long-range model, comp store sales growth. Our long-range model projects that through 2028, we should be able to achieve comp sales growth in the mid-single digits, in other words, between 4% and 6%.
We are pleased that in 2024, we achieved 4% comp growth, and this was on top of 4% comp growth in 2023. But we recognize that comp growth is the most difficult variable to project. There are internal and external drivers of the comp trend. We are confident about the internal drivers and our ability to execute. We have made huge improvements across our business in merchandising, stores, and supply chain.
I am also very bullish on the longer-term external prospects for the off-price segment and for our business in particular. Across retail, shoppers are voting for value. And we are very well positioned to deliver that value for our customers. But with that said, we recognize that the short-term outlook is uncertain, and it is important to plan and manage our business accordingly.
We will talk more about this in a moment when I discuss our thinking and our guidance for the year ahead. But before I get there, let me finish with the third major driver of our long-range model, operating margin expansion.
As a reminder, our long-range model calls for approximately 400 basis points of operating margin expansion between 2023 and 2028. We expect about half of this expansion to come from leverage on our projected double-digit top-line sales growth. And we expect the other half to come from opportunities unrelated to sales.
These opportunities fall into two buckets: firstly, higher merchant margin driven by better control and allocation of inventory leading to faster turns; and secondly, productivity improvements and other expense savings in our supply chain. As I said a moment ago, we achieved 100 basis points of operating margin expansion in 2024.
This was well ahead of our initial guidance of 10 to 50 basis points. Kristin will provide more details later in the call. But the major drivers of this expansion was stronger merchant margin from faster inventory turns, ahead of planned savings from supply chain productivity initiatives, and sales leverage on fixed costs.
Okay, enough about 2024. I would like to segue now to our 2025 outlook. As previewed in our third-quarter call last November, our 2025 guidance is for total sales growth of 6% to 8%, driven by 100 net new store openings plus comp store sales growth of 0% to 2%. Based on this comp sales range, we expect operating margin expansion of 0 to 30 basis points.
This 2025 guidance is consistent with our playbook. The outlook for 2025 is very uncertain with significant economic, political, and geopolitical risks that could affect consumers. Rather than trying to predict what is going to happen, our approach is to manage our business conservatively and then be ready to pull back or to chase the sales trend if it is stronger.
This approach served us well in 2024, and we hope for the same in 2025. At this point, I would like to turn the call over to Kristin. Kristin?

Kristin Wolfe

Thank you, Michael, and good morning, everyone. In the fourth quarter, total sales grew 10% and comp sales grew 6%, well above the high end of our guidance. Our adjusted EBIT margin expanded 10 basis points versus last year. This was 60 basis points above the high end of our guidance. The gross margin rate for the fourth quarter was 42.9%, an increase of 30 basis points versus last year.
This was driven by a 10-basis-point increase in merchandise margin due to better-than-expected storage results and lower markdowns, partially offset by lower markup due to higher, better brand penetration. Freight expenses decreased 20 basis points.
Product sourcing costs were $217 million versus $197 million in the fourth quarter of 2023. Product sourcing costs were flat as a percentage of sales versus last year, as leverage on supply chain expenses and buying costs were offset by higher incentive costs and higher asset protection costs. Adjusted SG&A costs in Q4 were 20 basis points higher than last year. This excludes the impact of expenses associated with bankruptcy acquired leases. These were worth approximately $5 million this year and $6 million last year.
In Q4, we achieved sales leverage on corporate G&A expenses, but this leverage was offset by higher incentive comp and the timing of advertising costs. Q4 adjusted EBIT margin was 11.1%, 10 basis points above last year, well above our guidance for a decrease of 50 to 80 basis points. Our adjusted earnings per share in Q4 was $4.13, again, well above the high end of our guidance. This represents a 12% increase versus the prior year.
At the end of the quarter, comparable store inventories were down 3% versus the end of the fourth quarter in 2023. Our reserve inventory was 46% of our total inventory versus 39% of our inventory last year. We are pleased with the quality of the merchandise and the value that we have in reserve. We ended the quarter in a very strong liquidity position, with approximately $1.8 billion in total liquidity, which consisted of $995 million in cash and $827 million in availability on our ABL.
We had no borrowings outstanding at the end of the quarter on the ABL. During the quarter, we repurchased $61 million in common stock, bringing our annual share repurchases to $242 million. At the end of Q4, we had $263 million remaining on our share repurchase authorization that expires in August of 2025. In Q4, we opened five net new stores, bringing our store count at the end of the quarter to 1,108 stores.
This includes eight new store openings, one relocation, and two closings. As Michael noted, for the full year, we opened 147 new stores while relocating 31 stores and closing 15 stores, adding 101 net new stores to our fleet. I will now move on to discuss our full-year 2024 results.
In fiscal 2024, total sales increased 11%, on top of 10% in 2023. Comp store sales increased 4%, on top of 4% in 2023. Our operating margin for the full year expanded by 100 basis points. Merchandise margin increased by 60 basis points. Freight improved by 20 basis points. Supply chain costs leveraged by 50 basis points, and we achieved 20 basis points of leverage on fixed expenses.
This operating margin expansion was partially offset by deleverage driven by investments in store payroll, higher incentive costs, and higher depreciation in fiscal 2024. Before I turn to guidance, I would like to provide an update on our supply chain strategy and capital expenditures. On our November call, we talked about the strategic rationale for owning rather than leasing our most productive distribution centers.
Our vision for future DC capacity is one designed to better support our off-price operating model and more highly automated. As a reminder, historically, we have leased our distribution centers, which made sense at the time when our balance sheet was much more leveraged.
We now have the balance sheet strength to own rather than lease. Ownership gives us greater control over the design of these buildings. It also allows us to leverage this capital investment as we grow over time and to avoid significant rent increases at each lease renewal.
With that said, I'm pleased to share that in the fourth quarter, we exercised the purchase option on our 2-million-square-foot Savannah, Georgia, DC that is on target to be opened in 2026. Given the progress we have made during the construction process, we exercised this purchase option in January, a few months earlier than originally planned.
As a result, CapEx for FY24 increased to $844 million, above our previous guidance of $750 million. Additionally, we have also recently opportunistically negotiated the purchase of our most efficient, most automated West Coast DC, our Cactus facility in Riverside, California. This deal will have CapEx implications for FY25, which I will review.
I'll first move to our 2025 guidance. This guidance excludes approximately $13 million in 2025 versus $16 million in 2024 in expenses associated with bankruptcy acquired leases. For 2025, we expect total sales growth in the range of 6% to 8%. This assumes 100 net new store openings. We anticipate that most of these stores will open in the latter half of the year.
We are forecasting comp store sales to increase in the range of flat to 2% and our adjusted EBIT margin to be in the range of flat to an increase of 30 basis points versus last year. We expect the major drivers of this expansion to be higher merchandise margin and productivity savings from supply chain initiatives. All this results in adjusted earnings per share guidance in the range of $8.70 to $9.30, an expected increase of 4% to 11%.
Capital expenditures, net of landlord allowances, are expected to be approximately $950 million in fiscal 2025. The increase in CapEx for FY25 is driven by the purchase of our currently leased Cactus DC in Southern California. This purchase is scheduled to close later this month.
When combining our FY24 actual and FY25 guidance, total capital expenditures are higher than we previously indicated by about $200 million. This variance is entirely driven by the opportunistic purchase of the Cactus DC. This purchase had not previously been contemplated in our long-range model.
I would like to move on to guidance for the first quarter of 2025. This Q1 guidance excludes approximately $6 million each in 2025 and in 2024 in expenses associated with bankruptcy acquired leases. We expect total sales to increase 5% to 7%. Comp store sales are -- seem to be flattish for Q1.
We are expecting adjusted EBIT margin to be in the range of down 50 to down 90 basis points over the first quarter of 2024. This results in an adjusted EPS outlook in the range of $1.30 to $1.45 versus last year's first-quarter adjusted EPS of $1.42.
I will now turn the call back to Michael.

Michael O'Sullivan

Thank you, Kristin. Before I turn the call over to questions, I would like to reinforce a few of the key points that we have discussed this morning. Firstly, we are pleased with our Q4 results. These results were well above the high end of guidance.
They were driven by, number one, our strategy to elevate value across categories and price points; and number two, our effectiveness in responding to sudden unexpected shifts in the external sales trend throughout the fall season.
Secondly, we are pleased and encouraged with the progress that we made in 2024 towards our long-range financial goals: 11% total sales growth, 4% comp store sales growth, 100 basis points of margin expansion. We are just one year into our long-range model, but we are tracking well on each of the key drivers of this model.
Thirdly, the 2025 outlook is uncertain. And in this environment, we are planning and managing our business conservatively. This is consistent with our playbook, and it should put us in the best possible position to react to whatever happens externally.
I would now like to turn the call over for your questions.

Question and Answer Session

Operator

(Operator Instructions) Matthew Boss, JPMorgan.

Matthew Boss

Thanks, and congrats on a really great fourth quarter.

Operator

Thank you.

Matthew Boss

So, Michael, could you elaborate on sales trends that you've seen so far in the first quarter? In particular, the comp guidance for the first quarter appears more conservative than the remainder of the year. If you could share what is driving that?

Michael O'Sullivan

Sure. Good morning, Matt. Thank you for the question. In February, our first-quarter trend started out weaker than we had planned or expected. Now I think that's consistent with what you've heard from other retailers who've reported. But let me offer some detailed commentary on what the potential drivers of that weakness might be.
I think I've said before that the first quarter is typically the most volatile and unpredictable quarter of the year. There are two factors that typically drive that volatility. Firstly, weather; the weather, especially in February and March, can vary a lot from one year to the next. And secondly, the timing of tax refunds. Our customer, as you know, is very sensitive to the timing of tax refunds, specifically, earned income tax credit and child tax credit.
Now, of course, whenever we see a weaker-than-expected trend, we slice and dice the sales data to identify what might be going on. For the first few weeks of February, we didn't have to look very hard. It was clear from the underlying sales data that the weakness in the trend was concentrated in two specific regions, the Midwest and the Northeast.
Those regions are obviously very important to us. And in February, they experienced unfavorable weather. I should add, as the weather began to normalize later in the month, we saw the sales trend pick up.
Now as for the timing of tax refunds, in February, the distribution of tax refund payments fell well behind last year. And we think that that delay also contributed to some of the weakness in the sales trend that we saw during the month. Again, as refunds caught up later in February, the sales trend strengthened.
So we believe that the weak trend in February can largely be attributed to the usual suspects, weather and the timing of tax refunds. But in our business, at least in the short term, it pays to be neurotic. Could there be something else going on? We have not seen anything in the data to suggest this, at least not yet. But that said, we recognize that there are a lot of things happening externally.
And at this point, we don't know if or when those things might have an effect on our customer. We haven't seen it yet. But of course, there is risk. We're only four weeks into the quarter. We need to get further along and see how the sales trend develops.
So turning to guidance, given that weaker-than-expected start to the quarter, we're being a little more cautious about our Q1 guidance. That's the reason why we're guiding to a flattish comp versus 0% to 2% for the full year.

Matthew Boss

Great color. And then maybe just a follow-up on your first-quarter margin guide, looks a bit lower relative to the year. Kristin, could you just walk through the drivers of margin contraction in the first quarter in the cadence of margin expansion by quarter through the year?

Kristin Wolfe

Sure. Good morning, Matt. It's a good question. Let me provide a little bit more context. And last year, in fiscal 2024, our biggest EBIT margin increase was in the first quarter. It was up 170 basis points. Our EBIT margin increases then moderated as the year unfolded, largely due to clearance level comparisons and the timing of certain freight and supply chain savings.
But for fiscal '25, we anticipate the reverse of this trend will be true, with the most challenging margin comparison here in the first quarter. We then expect margin comparison to improve as the year unfolds, and we actually expect the biggest year-over-year improvement in the fourth quarter.
So put another way, if you were to look at our margin expansion on a two-year basis, generally, it'd be fairly consistent across quarters. But to your question, more specifically on Q1, there are a couple of factors I want to explain more on.
First, merchandise margin is expected to be a driver of EBIT margin improvement in fiscal 2025. But in the first quarter, we're not expecting much help for merch margin. This is due to some modest mark-on pressure from increased better brands and timing of some markdowns.
The second factor in Q1 is on supply chain. We will anniversary some DC lease renewal increases in the back half of '25. And the fixed cost deleverage in supply chain is most pronounced in the first quarter. And I should add that while we expect to continue to drive cost savings and supply chain, we expect most of these savings will come through later in this year.
And then the last point on Q1 is that we have deleverage on fixed costs based on our comp sales assumption of flattish or minus 1% to plus 1%. And that deleverage is exacerbated by the fact that Q1 is our lowest sales volume quarter of the fiscal year.
So all these factors make Q1 by tough -- our toughest EBIT margin comparison and outlook for the fiscal year. As I look to the balance of the year, we do expect comp store sales to be flat to plus 2%. And about 75% of our new stores are scheduled to open in the second half of the year. So total sales growth is lower in the first half of the year relative to the back half.
So taking all this together, we expect pretty modest EBIT margin expansion in the second quarter. And then for the third quarter, EBIT margin improvement should look more like our annual guidance. And finally, for the fourth quarter, we expect that will be our most significant EBIT margin improvement in '25.

Matthew Boss

Thanks for all the color. Best of luck.

Kristin Wolfe

Thanks, Matt.

Operator

Ike Boruchow, Wells Fargo.

Ike Boruchow

Hey. Hi. Good morning. Congrats, Michael, Kristin, David. I guess, Michael, for you, a good strong finish to '24, of course. I guess, I'm wondering if you can break down your comp trend for 2024, especially in the fourth quarter in terms of maybe how much you think might be coming from trade-down shoppers versus existing customers.

Michael O'Sullivan

Well, good morning, Ike. It's a good question. As you know, we think of our customers in two major buckets, two major segments. And let me start with the first of those, the need-a-deal customer. That customer is typically lower income, and they are very focused on value. This is a very important segment of customers for us.
In fact, it's difficult for us to drive comp sales growth without this customer. For Q4, as I look at our stores that were in -- that are in lower-income trade areas, these were actually the strongest performing stores in the chain. And that tells me we are doing very well with the need-a-deal customer.
Now in the prepared remarks, I talked about our strategy to elevate our assortment within a good-better- best framework. And that meant elevating the value at all price points. Now of course, it's difficult to offer well-known national brands at lower or opening price points.
So our merchants had to work very hard to deliver value through other means, such as great quality or strong fashion or other attributes that the customer cares about. My assessment is that they -- we did a very good job delivering great value to the need-a-deal shopper in Q4 and throughout 2024. And that was a clear driver of our comp growth.
But let me turn now to the want-a-deal customer, the second sort of segment, if you like. As I just said, for Q4, our stores that are in lower-income trade areas were the strongest-performing stores in the chain. But we also saw a very healthy mid-single-digit comp store sales growth in moderate- and higher-income trade areas. We believe that that comp growth in those stores was driven by the trade-down customer.
Now in addition to comp performance of stores based upon the income level of the trade area, there are other indicators that sort of further demonstrate that trade-down trend. For example, you can look at the performance of our business by price point.
As we've disclosed in the past, our average unit retail, our average ticket is about $10. In Q4, we saw a mid-single-digit percentage increase in that average retail versus last year. And the strongest comp sales growth rates in Q4 were in price buckets well above $10. Again, that's the trade-down customer.
So tying all that together, I would say that we are very pleased with the strength of our business, with our core need-a-deal shoppers. And we're also very pleased with our success in attracting the want-a-deal or the trade-down shopper. To achieve a 6% comp store sales growth in Q4, we had to deliver great value to both of those important segments of customers, and that's what we did.

Ike Boruchow

Got it. Super helpful. And then, Michael, if I can do one more. Just -- we've tried this with some of our companies in the space. But I guess, on the topic of broader policy changes that are likely to happen in 2025, things like tariffs, tighter immigration controls, I mean, can you comment on how do you see these policy changes affecting your customer? And maybe what are the biggest risks as you kind of look out in that regard?

Michael O'Sullivan

Sure, sure. Yeah, it's a good question, Ike. It's a question we've thought a lot about. But let me share some of our thinking. Let me preface my answer by saying, we are very optimistic about our business over the next two to three years.
But we recognize that in the short term, there are risks. And frankly, the sales trend is likely to be choppy. There are a lot of things going on in terms of potential policy changes, including the things you mentioned. But at this point, I don't think anyone can confidently or accurately forecast what it all means. With that said, let me make a couple of points.
Firstly, my experience has been that, generally, uncertainty and disruption tend to be good for off-price. But the key thing for us as an off-price retailer is to remain nimble and flexible so we can react more effectively to whatever happens. That is what we are doing. We're being cautious, and we're tightly controlling our open-to-buy.
Secondly, if I think about specific policy changes, for example, tighter immigration control, higher import tariffs, both of which you mentioned, but also changes in the tax code, changes in federal benefits, it's true, some of these things could have a negative impact on our customers. But some of them could be very positive. I think it all depends on the scale and the specifics. And we just don't know those yet.
And apart from individual policy changes themselves, I think a lot depends on what happens in the overall economy. So what happens to inflation, what happens to our wages, what happens to trade-down shoppers, and what happens to regular-price competitors and apparently the rest of retail?
Look, I'm -- I describe myself as a rational optimist. I could easily paint a scenario for our business that's very positive over the next couple of years: lower taxes on hourly workers, lower energy prices, lower corporate taxes, and strong availability of off-price merchandise due to disruption from tariffs. We've just reported 6% comp store sales growth for Q4, and we see a lot of reasons to be excited and optimistic about our business in the years ahead.
But that said, we realize it may not be a straight upward sloping line. We anticipate that in the short term, things could be volatile. There are external risks. For example, higher tariffs, which you mentioned, could drive up inflation, and that could hurt discretionary spending.
But this is a -- it's a complex issue. There are a lot of variables that means -- that that might or might not happen, which brings me back to my earlier point. As a business, we need to focus on what we can control. And that means planning our business cautiously, being nimble, flexible, and ready to react. And that's the approach that we're taking.

Ike Boruchow

Got it. Thanks so much. Good luck.

Michael O'Sullivan

Thanks, Ike.

Operator

Lorraine Hutchinson, Bank of America.

Lorraine Maikis

Thank you. Good morning. My first question is for Kristin. Your 2025 full-year guidance is 0 to 30 basis points of operating margin expansion on that 0 to 2 comp. For 2025, you guided 10 to 50 basis points on a similar comp range. Can you remind us of why you're guiding to lower expansion this year?

Kristin Wolfe

Good morning, Lorraine. Yeah, thanks for the question. You're right. We did initially guide 2024 EBIT margins originally up 10 to 50 basis points. However, as we talked about in our prepared remarks, we ended 2024 with EBIT margins up 100 basis points. And this upside was due to exceeding our sales plan and driving expense leverage, but also higher-than-planned merch margin improvement and faster-than-planned supply chain expense savings.
In our long-range model, we discussed 200 basis points of margin opportunities that were unrelated to sales. Those were driven by higher merch margin, and freight and supply chain savings. In fiscal 2024, merch margin increased 60 basis points, supply chain efficiencies and productivity gains drove 50 basis points of leverage, and freight levered 20 basis points.
So essentially, we made faster progress than we expected in fiscal 2024. And we still expect to harvest the 200 basis points of savings, although for this year, in fiscal '25, we factored in a more measured pace of progress. We are expecting the 30 basis points of margin improvement on a 2% comp to be driven by merch margin improvement and additional leverage from supply chain efficiencies.
We're being a bit more cautious on freight as we want to plan conservatively based on the uncertainty. But those are the two key drivers of the 30 basis points in 2025, again, at a more measured pace than we saw in '24. And finally, it's worth calling out -- last point I'll make here is that for every 100 basis points of comp above a 2% comp, we would expect 10 to 15 basis points of incremental EBIT margin expansion.

Lorraine Maikis

Thank you. And then my second question is about the purchase of the DCs. What are the implications of higher CapEx for debt levels and stock buybacks?

David Glick

Thanks, Lorraine. It's David. I'll take that question, fair question. You've heard us talk about the strategic importance of owning and controlling really our most modern and technologically advanced distribution centers as we transform our supply chain over the next several years. And buying the Savannah and the California DCs are really two important steps in that transformation.
And as Kristin indicated earlier, those purchases did increase our level of CapEx in 2024 and 2025. We just invested $844 million in 2024. And as you know, we're now planning to invest $950 million in our growth in fiscal 2025.
Also, Kristin commented in her prepared remarks that those DC purchases did increase our CapEx levels over those two years, I just cited, 2024 and 2025, by about $200 million versus our original plan. And that increase is really attributable to the purchase of the California DC. We had planned all along to buy the Savannah DC.
And if you think back to September, we did increase our term loan by about $300 million to fund the Savannah DC purchase. And we will evaluate whether or not we want to raise that to fund the California DC investment. But it is important to put all this into the overall context of the debt levels on our balance sheet. What do I mean by that?
First, we are retiring the $156 million outstanding in 2025 converts, which will be paid down with cash in April. And secondly, capitalized operating leases attributable to leased DCs are already captured on the balance sheet. So if we do choose to add some additional debt to finance the California DC purchase, we think the resulting increase in our leverage ratios would be very modest.
And finally, probably to the crux of your question as far as share repurchases, we believe it's important to return excess cash to our shareholders on a consistent basis. So we would expect that practice to continue this year in fiscal 2025, with repurchases similar to the levels we executed in each of fiscal 2023 and fiscal 2024.

Lorraine Maikis

Thank you.

Operator

John Kernan, TD Cowen.

John Kernan

Hey, good morning, Michael, Kristin, David. Thanks for taking the question.

Kristin Wolfe

Good morning.

John Kernan

Kristin, any additional color about category and regional performance in Q4, as well as how traffic and ticket drove the 6% comp increase in the quarter? I think Michael talked earlier about trade-down shoppers and need-a-deal shoppers both demonstrating strength. It seems like traffic and ticket would have both been positive drivers. Is that a fair statement?

Kristin Wolfe

Yes, John. Thanks for the question. Yeah, to your last point, comp was driven by both an increase in transactions as well as higher average transaction value. The strongest metrics you implied were higher traffic, and we did see higher AUR, while conversion and units per transaction were flattish. So it was really traffic and AUR in the quarter.
In terms of category performance, there was relative strength in accessories, in beauty, and in home. But that said, all major categories really comped well, including apparel in the mid-single digits in Q4. And then you also asked about regional performance, regional trends. The Southeast and Southwest were above the chain, but regional strength was really broad-based with every region comping up at least mid-single digits.

John Kernan

That's helpful. And maybe, Kristin, one follow-up. Michael talked about weather and regional dynamics into Q1. Is there any detail on how weather may have driven the business in Q4? Obviously, the 6% comp was one of the better holiday comps we've seen in a while.

Kristin Wolfe

Yeah. Thanks. You're right. Michael touched on this a little bit in the other parts of the call. But in terms of Q4, if I put it all together, weather did have a negative impact on our sales trend, particularly at the beginning of the quarter as we saw that unseasonably warm weather continue from October into November.
And then the other weather impact in the quarter was in January, with disruptive winter storms and then add to this, the California wildfires also contributed. So there was some disruption in January. If I step back and look at Q4, overall, our cold weather businesses underperformed the chain.
Most of that underperformance was driven by that warmer weather in November, and it's a really important part of our mix in November. And we quantify the negative impact of this was worth about a point of comp in the quarter overall.

John Kernan

Okay, got it. Thank you.

Kristin Wolfe

Thanks, John.

Operator

Alex Straton, Morgan Stanley.

Alex Straton

Thanks so much for taking the question. Two for me. One for Kristin. I was just wondering if you could give us some more color on the components of the 15% inventory increase. It was nice to see as the comp store inventories were down 3%. But can you talk about the discrepancy there and then any key drivers?

Kristin Wolfe

Yeah, Alex, good morning. It's a good question. So overall inventory was up 15% at the end of Q4. This was driven really by adding 101 net new stores, but also higher levels of reserve inventory. In the store, on a comparable store basis, inventory in stores were down 3%, as you noted.
This compared pretty favorably to our 6% comp increase. And we continue to drive faster turns, which is a very healthy sign of our business. And while it could vary from quarter to quarter, so it may not always be this way, we generally expect to manage our comp store inventory levels below last year's level, as we still see opportunity to turn our inventory faster.
And then last point I'll make -- it's an important point here -- is a driver of that 15% increase was our reserve inventory. We saw higher reserve penetration at 46% of total inventory versus 39% last year. And the buying environment has been strong, and our merchants took advantage of great reserve buying opportunities. And we feel really good about the values and the content of our reserve inventory.

Alex Straton

Great. And maybe a follow-up just for Michael. There's obviously a lot going on with store closings across retail. Could you just update us on how many store leases Burlington has acquired from retailers going through a bankruptcy process?

Michael O'Sullivan

Yeah, well, good morning, Alex. It's a good question. As you'll recall, in 2023, we acquired leases for 64 Bed Bath & Beyond stores through the bankruptcy process. We opened about half of those stores in 2023 and the balance in 2024.
So they were an important source of some of our new store openings last year. And then late last year, we were able to secure an additional 39 stores from a handful of other retailers that were going through a bankruptcy process. We're very pleased about these new store locations.
Overall, these retail bankruptcies have given us access to locations and strip malls that we might not otherwise have been able to get into. The 39 locations that I referenced a moment ago are included in our new store opening plan of 100 net new stores for 2025. So we're excited about those locations.

Alex Straton

Thanks. Good luck.

Michael O'Sullivan

Thanks, Alex.

Operator

Brooke Roach, Goldman Sachs.

Brooke Roach

Good morning, and thank you for taking our question. Michael, I'm curious about your view of the potential changes that might be made to the de minimis exception for small package imports. If these proposed changes go through, are they likely to slow the growth of companies like Shein and others? And would this be positive for Burlington?

Michael O'Sullivan

Good morning, Brooke. Thank you for the question. I guess, the way I would answer that, I would say stepping back, our world view is that we operate in a very large and fragmented competitive space. There are many companies and retail formats that compete in the categories that we sell, department stores, specialty stores, fast fashion, online retailers, et cetera.
Now some of those companies are growing, and some of them aren't. But we know that we, at Burlington, need to earn our living every day. We need to be able to compete successfully with this broad competitive set by offering great value to shoppers.
Now the data shows that we've achieved very strong growth over the last couple of years. In 2024, we grew total sales by 11%. That was on top of 10% in 2023. The overall market is not growing at anything like those kinds of rates. So empirically, it's clear that we, at Burlington, are taking significant market share.
So all a long way of coming back to your question on Shein, based on the growth numbers that I've just cited, it certainly doesn't look like the growth of Shein over the last few years has had much impact on us. So conversely, will the elimination of the de minimis exception impact Shein? And if it does, will that be a benefit to us?
I guess, my answer is, I guess, conceptually, yes, but I wouldn't expect the impact to be very material. I suspect that this is a much bigger issue for other e-commerce or for fast fashion or for specialty retailers than it is for us.

Brooke Roach

Great. And then my second question, you hinted at this earlier in another response to another question. Could you update us on your view on off-price merchandise availability today?

Michael O'Sullivan

Sure. Yeah, it's a good question, a very important question. There's not much new to call out here, I would say. And as you've heard from other off-price retailers, availability in the channel, I would say, is very strong. Of course, there are always categories, brands, and styles that are easier to get hold of or more difficult to get hold off. That's just the nature of off-price supply.
But overall, our merchant team has, I think, gotten really good at finding terrific off-price deals. Q4 was a good illustration of that. We came into the quarter with actually a weaker-than-expected trend in early November, driven by weather.
And with our comp guidance of flat to 2% for the quarter, we then, from mid-November onwards, we chased. Our merchants worked with our vendor partners, and we were able to chase to 6% comp growth, again, from a slow start.
So stepping back, I would say I feel very good about our vendor partnerships. Our partnerships with vendors are mutually respectful and mutually beneficial. We help our vendors build their businesses, and we're happy to do that. And they help us to build ours.
There aren't many retailers that are consistently growing top-line sales at double-digit rates every year. Our vendors know that. And so our growth and our growth potential, I think, have really helped us to expand, develop, and deepen our vendor network over the last few years.
There is one final point I think I should touch on, though, and that's around tariffs and the potential impact of tariffs on off-price merchandise supply. Right now, things are very dynamic. It feels like there's new -- there are new developments every day -- literally every day on tariffs. That's creating a lot of uncertainty.
It's likely that that uncertainty is going to drive disruption in supply chains across retail, as merchandise that was ordered months ago starts to arrive and is hit with a tariff. And that disruption, I would say, is likely to create a buying opportunity for off-price. So off-price availability is good right now, and I think the chances are it's going to get better in the months ahead.

Alex Straton

Great. Thanks so much. Best of luck going forward.

Michael O'Sullivan

Thank you.

Operator

Thank you. I'd now like to hand back the call over to Michael O'Sullivan, CEO. Please go ahead.

Michael O'Sullivan

Let me close by thanking everyone on this call for your interest in Burlington Stores. We look forward to talking to you again in May to discuss our first-quarter 2025 results. Thank you for your time today.

Operator

Thank you for attending today's call. You may now disconnect.