Burlington Stores, Inc. (NYSE: BURL) is a retailer of branded apparel. It operates retail stores across the US. The company sells fashion-focused clothing for men, women, and youth. It also sells accessories, gifts, toys, baby products, home products, beauty products, and footwear. The company’s stock jumped 10% during early trading on November 21, 2023, after it released its earnings report.
Burlington Stores Earnings Report
In its Q3 2023 earnings report, Burlington Stores reported a comparable store sales rise of 6%, aligning with its guidance of 5%-7%. Revenue was up 12%, compared to Q3 2022 figures, to $2.285 billion. The reported EPS for the quarter was $0.98, aligning with its $0.86-$1.01 guidance. Its EPS performed better than the predicted $0.97 EPS by 0.67%. However, revenue fell short of expectations by 0.33%.
CEO Michael O’Sullivan noted that Q3 performance was better than expected despite the unexpected warm weather in October. He further stated that the company had a strong performance in August and September, which accounted for the 6% growth in comparable store sales.
The CEO added that they had a solid start in November due to the cooler weather. O’Sullivan is confident of a strong Holiday season performance.
The company’s outlook for Q4 is that total sales will grow 5%-7%. Its outlook assumes that comparable store sales remain in the -2%-0% range to those of Q4 2022. Burlington Stores predicts an adjusted EPS of $3.04-$3.19 for Q4, higher than the $2.96 adjusted EPS for Q4 2022. For FY23, the company predicts total sales to grow 11%. Additionally, it predicts an adjusted EPS of $5.52-$5.67 for the full year.
The CEO said that in 2024, their outlook is 11% growth compared to 2023. He said the expected 2% growth in comparable sales for 2024 and 100 new stores they will open would drive the growth. However, they will issue the formal guidance for 2024 in March 2024.
BURL Stock Performance
Following the release of the impressive number in the Q3 earnings report, BURL stock jumped 10% during morning trading on November 21, 2023. As of November 22, 2023, 10:00 AM EST, the stock is up 3.95% from the previous close, trading at $171.58 per share.
The current rise is a major change from the last major movement when it dropped 9.6% of its value after the release of Q2 2023 results in August. At the time, the company lowered its FY23 EPS and revenue guidance, which caused some investors to get jittery. In the report, management stated that lower-income shoppers, who account for the bulk of their sales, were under severe economic pressure. Since then, its outlook has improved.
While it had a great Q3, the stock is still down 16.76% year-to-date. Its current price of $171.58 per share is a significant discount on its 52-week high of $239.94. The price is above its 50-day and 200-day moving averages of $129.91 and $167.90, respectively.
Revamped Strategy
Part of its bounce-back strategy has entailed acquiring leases for stores in great locations after bankruptcies by other retailers such as Bed Bath & Beyond. Consequently, its brand and store base has expanded, helping to grow sales.
The company’s recent earnings report surpassed expectations, while revenue aligned with its guidance. Its Q4 guidance is also higher than the analysts’ expectations, restoring investor confidence in its stock.
Burlington Stores Stock Forecast
Stock analysts give BURL stock a high price target of $250 and a low of $137. Its average price target is $204.59, an upside of 20.31% on the current price. They give the stock a measured moderate buy rating, indicating that it will outperform the market in the next 12 months.
Should You Buy BURL Stock?
Burlington Stores (BURL) stock is in the Consumer Cyclical category, prone to macroeconomic pressures. Its customer base is lower-income shoppers, the hardest hit by inflation and rising interest rates.
Consequently, it is worth monitoring how the economy performs to understand how it could affect BURL stock. The stock’s moderate buy rating is accurate based on recent figures and its aggressive offensive plan to boost sales.
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