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Burlington Stores (BURL) in Good Shape, Q4 & '19 View Lifted

Zacks Equity Research
·4 min read

Burlington Stores, Inc. BURL has managed to stay afloat in the ever-evolving and competitive retail landscape. The company has made multiple changes to its business model to adapt to the ongoing changes in the retail space and stay relevant. Notably, this New Jersey-based company looks well poised, given its sound fundamentals and growth efforts. It has steadily increased vendor counts, made technological advancements, initiated better marketing approach and focused on improving assortment trends. To top it, management recently raised adjusted earnings per share (EPS) and sales view for the fourth quarter and fiscal 2019.

Simultaneously, management is seeking an amendment to its $961-million senior secured term loan credit facility, maturing in 2024. This move has been undertaken to cut the LIBOR interest rate margin to 1.75% from 2%, with a 0.00% LIBOR floor. Let’s delve deeper.

Updated View

Management now envisions fourth-quarter sales growth of 10.5%, up from the prior view of 9-10% growth. Comparable store sales (comps) are now projected to improve 3.9% compared with the 2-3% increase guided earlier. Adjusted EPS is now estimated in the band of $3.21-$3.23, up from the prior view of $3.12-$3.17. The updated EPS view also indicates growth of about 13-14% from $2.83 earned in the prior-year quarter.

For fiscal 2019, the company forecasts total sales growth of 9.3%, including comps growth of 2.7%. Earlier, management anticipated total sales increase of 8.8-9.1%, with comps growth of 2.1-2.4%. Moreover, adjusted EPS is now envisioned between $7.37 and $7.39, up from the prior range of $7.28-$7.33. The current EPS view suggests growth of about 14-15% from $6.44 earned in fiscal 2018.

As a result of the updated view, the current Zacks Consensus Estimate of $3.18 for the impending quarter and $7.34 for the fiscal are likely to witness upward revisions in the coming days.

Other Strengths

Notably, Burlington Stores has been doing quite well on the revenue front. The company’s revenues have not only outpaced estimates in four of the trailing six quarters but have also shown constant improvement over the past few quarters. Also, it boasts an impressive comps run with the fourth quarter emerging as the 28th successive quarter of comps growth.

In addition, the company is focusing on underpenetrated categories, particularly home, beauty and gifts, in order to make its business less weather-sensitive. Moreover, it is gradually expanding its store fleet. Also, the company intends to improve operating margin by augmenting sales, optimizing markdowns and effectively managing inventory.


 

Over the past six months, shares of this Zacks Rank #3 (Hold) company have surged 35.9%, outperforming the industry’s 19.4% rally.

Key Picks in Retail

Zumiez ZUMZ has an impressive long-term earnings growth rate of 12% and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ross Stores ROST has an expected long-term earnings growth rate of 10.5% and carries a Zacks Rank of 2 (Buy).

Costco Wholesale COST, also a Zacks Rank #2 stock, has an expected long-term earnings growth rate of 8.1%.

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Ross Stores, Inc. (ROST) : Free Stock Analysis Report
 
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
 
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Burlington Stores, Inc. (BURL) : Free Stock Analysis Report
 
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