Burlington Stores Inc (BURL) Reports Solid Q3 2023 Results Amidst Retail Challenges
Comparable store sales grew by 6%, surpassing the lower end of guidance.
Adjusted EPS reached $0.98, beating the projected range of $0.86 to $1.01.
Net income increased to $49 million, with a significant jump from the previous year's $17 million.
Total sales rose by 12% compared to the same quarter last year.
Burlington Stores Inc (NYSE:BURL) released its 8-K filing on November 21, 2023, detailing its financial results for the third quarter ended October 28, 2023. The company reported a robust performance with a 6% increase in comparable store sales, which was within the guided range of 5% to 7%. The off-price retailer also saw a rise in net income to $49 million, or $0.75 per diluted share, on a GAAP basis. Adjusted EPS was reported at $0.98, exceeding the company's guidance range of $0.86 to $1.01, and reaching $1.10 when excluding expenses related to the acquisition of Bed Bath & Beyond leases.
Financial Highlights and Performance
Total sales for the quarter increased by 12% year-over-year to $2,285 million, with comparable store sales contributing a 6% rise. Gross margin rate improved by 200 basis points to 43.2%, driven by a 150 basis points increase in merchandise margin and a 50 basis points improvement in freight expense. Selling, general and administrative expenses (SG&A) were up by 50 basis points as a percentage of net sales, reaching 36.2%. Adjusted SG&A also saw a 50 basis points increase to 27.3%.
Adjusted EBITDA for the quarter was $176 million, marking a significant increase from $123 million in the same period last year. Adjusted EBIT also rose to $99 million, up from $55 million in the third quarter of Fiscal 2022. The effective tax rate for the quarter was 27.4%, compared to 26.4% in the previous year.
Balance Sheet and Cash Flow
Burlington Stores Inc (NYSE:BURL) ended the quarter with merchandise inventories of $1,329 million, an 8% decrease from the end of the third quarter of Fiscal 2022. The company maintained a strong liquidity position with $1,440 million, including $616 million in unrestricted cash and $824 million in availability on its ABL facility. Total debt stood at $1,412 million, with no borrowings on its ABL facility.
During the third quarter, the company repurchased 348,948 shares of its common stock for $52 million, leaving $718 million remaining under its share repurchase authorizations.
Outlook and Future Expectations
CEO Michael OSullivan expressed satisfaction with the quarter's performance and optimism for the holiday season, despite acknowledging the uncertainty in the external environment. For Fiscal 2023, Burlington Stores Inc (NYSE:BURL) expects total sales to increase by approximately 11%, with comparable store sales projected to rise around 3%. The company also anticipates opening approximately 80 net new stores and achieving an Adjusted EBIT margin increase of 70 to 80 basis points versus last year.
For the fourth quarter of Fiscal 2023, the company forecasts total sales to increase in the range of 5% to 7%, with comparable store sales expected to be in the range of -2% to 0%. Adjusted EPS is projected to be in the range of $3.04 to $3.19, compared to $2.83 in diluted EPS and $2.96 in Adjusted EPS last year.
Burlington Stores Inc (NYSE:BURL) continues to focus on strategic initiatives that are expected to drive significant sales and earnings growth in the coming years. The full financial details and reconciliations of non-GAAP financial measures can be found in the company's 8-K filing.
Investors and those interested in the retail sector can find more information and stay updated on Burlington Stores Inc (NYSE:BURL)'s performance by visiting GuruFocus.com.
Explore the complete 8-K earnings release (here) from Burlington Stores Inc for further details.
This article first appeared on GuruFocus.
