Burlington Stores Inc. said Monday that it stands by its financial statements and denies claims made in a report from short seller Spruce Point Capital Management. "The report, which is filled with innuendo and baseless allegations, is based on flawed, inaccurate and misleading analysis," Burlington said in a statement. Spruce Point said in a report issued Nov. 3 that there are accounting and business issues that "could be signaling a slowdown in future financial results." Among them, a change in optimal store size, down to 40,000 to 50,000 square feet from 80,000 square feet and the presentation of gross margin "in a non-standard way by excluding store occupancy costs and depreciation of certain fixed assets." The activist investor also said it's concerned about Burlington's inventory accounting, recent management turnover and that "a subtle change to management's Annual Incentive Plan for 2016 also may signal the unsustainability of its earnings growth," the report said. Burlington shares are inactive in premarket trading, but up 61.4% for the year so far. The S&P 500 Index is up 2% for 2016 to date.
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