Burlington Stores (BURL -2.26%), an off-price retail chain known for offering branded merchandise at significant discounts, recently released its third-quarter 2024 earnings on November 26, 2024. The company reported an adjusted earnings per share (EPS) of $1.55, in line with analyst expectations. Despite this, revenue was $2.53 billion, missing the estimated $2.55 billion. This slight shortfall was attributed to adverse weather conditions that affected consumer spending patterns. Overall, the quarter reflected solid earnings growth and operational effectiveness, although revenue growth faced some headwinds.
| Metric | Q3 2024 | Q3 2024 Estimate | Q3 2023 | Y/Y Change |
|---|---|---|---|---|
| Adjusted EPS | $1.55 | $1.55 | $1.10 | +41.0% |
| Revenue ($M) | $2,526 | $2,552 | $2,285 | +10.6% |
| Gross Margin Rate | 43.9% | N/A | 43.2% | +0.7 pp |
| Net Income ($M) | $91 | N/A | $49 | +85.7% |
| Comparable Store Sales Growth | 1% | N/A | 6% | -5 pp |
Source: Analyst estimates for the quarter provided by FactSet.
Overview of Burlington Stores
Burlington Stores is a prominent off-price retailer, offering clothing, shoes, and home products at a discount. Its business model centers on a "treasure hunt" experience, encouraging frequent visits by value-conscious customers. As of early 2024, it operates over 1,000 stores, with a long-term goal of reaching 2,000 locations. Recent business focuses have included expanding its store count, enhancing merchandising and inventory management, and improving operational efficiency—all key success factors for the retailer.
NYSE: BURL
Key Data Points
The company remains committed to its store expansion strategy, targeting a broad geographic footprint and capitalizing on its flexible purchasing model. Burlington's operational strategy also incorporates optimizing logistics capabilities—integral to maintaining low prices and product availability.
Quarterly Highlights and Developments
During the third quarter of 2024, Burlington recorded notable achievements. The company maintained an adjusted EPS of $1.55, meeting expectations through effective cost management amidst revenue hurdles. Despite a revenue miss compared to the $2.55 billion estimate, total sales grew 10.6% year-over-year to $2.53 billion. CEO Michael O'Sullivan attributed the sales slowdown to unseasonably warm weather impacting demand for cold-weather merchandise.
Gross margin improved to 43.9% from 43.2% one year earlier, thanks to lower markdowns and more favorable freight costs. The adjusted EBIT margin increased by 80 basis points, indicating significant operational improvements. Additionally, net income nearly doubled to $91 million from $49 million in the prior-year quarter, indicating a robust performance in profitability.
The company's inventory management enhanced margins with inventories rising 8% to $1.44 billion. Nonetheless, comparable store inventories saw a 2% decline, reinforcing its effective inventory control strategy. "Our agile operation puts us in a solid inventory position," emphasized CEO O'Sullivan.
Lastly, Burlington's liquidity at the end of the quarter was a substantial $1.71 billion, underscoring its financial health. It extended its term loan facility to 2031 under improved conditions, reflecting a strong financial position.
Looking Ahead
For Fiscal Year 2024, Burlington projects a total sales increase of 9% to 10%, with comparable store sales expected to grow approximately 2%. Its adjusted EPS is anticipated to be in the range of $7.76 to $7.96. The company remains cautiously optimistic, balancing growth potential against external uncertainties such as economic factors and weather impacts.
In the quarters ahead, Burlington plans to continue its expansion, improve operational efficiencies, and closely monitor market trends. Investors should pay attention to Burlington's ability to navigate consumer spending shifts and manage cost pressures, ensuring sustained profitability and competitive positioning in the off-price retail space.
