Will Strategic Initiative Aid Burlington Stores' (BURL) Growth?
Burlington Stores, Inc. BURL stock seems well positioned for growth owing to the successful execution of its Burlington 2.0 strategy and its store-growth efforts. The main objective of the 2.0 initiative is to significantly improve the execution of the off-price model and offer great value to consumers. The company has also been progressing well in its store-expansion efforts for a while now.
Moving forward, the consensus mark for BURL’s fiscal 2023 earnings per share of $6.11 suggests a year-over-year growth of 43.4%. The consensus estimate for the next fiscal year’s sales of $9.86 billion mirrors a 13.3% rise from the last fiscal year.
Detailing Growth Efforts
To drive top-line growth, Burlington Stores is focused on store expansion. The company’s store-related efforts, including smaller store prototypes, have been on track. Management stated earlier that it has the potential to expand the store base to 2,000 stores.
During the fourth quarter of fiscal 2022, BURL inaugurated 34 net stores, taking the total store base to 927. This comprised 39 store openings, five relocations and no closings. For fiscal 2023, the company expects to open 70 to 80 net new stores. BURL believes that it can grow its new store program and help it to open 500 to 600 net new stores in the following five years.
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Moving to the 2.0 initiative, Burlington Stores focuses on offering great customer value by effectively managing liquidity, chasing sales, buying opportunistically and having more operational flexibility. Under the operational aspect, it wants to achieve more flexibility via a faster and more responsive supply chain and a more flexible store staffing model. This initiative is expected to drive the company’s top line and operating margin growth.
Additionally, Burlington Stores has made multiple changes to its business model to adapt to the ongoing changes in the industry. The company’s off-price model is helping customers to get nationally branded, fashionable, high-quality as well as right-priced products.
Management also believes that it still has a significant opportunity to drive growth, improve profitability and achieve its off-price Full Potential plan. BURL remains optimistic about the outlook for fiscal 2023 and expects both the top line and bottom line to grow year over year. For fiscal 2023, the company expects total sales to increase in the range of 12% to 14%, which includes 2% from the 53rd week and adjusted earnings per share in the bracket of $5.50-$6.00, up from $4.26 recorded in the year-ago period.
Burlington has been facing higher supply chain expenses and competitive pressures for a while now. The company expects to incur $560 million in capital expenditures net of landlord allowances in fiscal 2023.
Nevertheless, the upsides mentioned above will likely help Burlington to battle such hurdles.
Shares of this Zacks Rank #3 (Hold) company have rallied 77.5%, outperforming the industry’s 6.6% growth over the past six months.
3 Key Picks
Some top-ranked stocks are Inter Parfums IPAR, The Kroger Co. KR and Deckers Outdoor Corporation DECK.
IPAR has an expected long-term earnings growth rate of 15% and a trailing four-quarter earnings surprise of 36.2%, on average. Inter Parfums currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Inter Parfums’ current financial year sales suggests growth of 10.8% from the year-ago reported numbers.
The Kroger Co. operates in the thin-margin grocery industry. It currently carries a Zacks Rank of 2 (Buy). KR has a trailing four-quarter earnings surprise of 9.8%, on average.
The Zacks Consensus Estimate for Kroger’s current financial year sales and earnings suggests growth of 2.5% and 6.2%, respectively, from the prior-year reported numbers.
Deckers Outdoor, a leading designer, producer and brand manager of innovative, niche footwear, currently carries a Zacks Rank of 2. DECK has a trailing four-quarter earnings surprise of 31%, on average.
The Zacks Consensus Estimate for Deckers’ current financial year sales and earnings suggests growth of 12.2% and 13.6%, respectively, from the corresponding year-ago reported figures.
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