Burlington Stores' stock jumps after profit beat, as gross margin keeps improving

By Tomi Kilgore

Gross margin improves for fifth straight quarter, inventory continues to decline

Shares of Burlington Stores Inc. climbed toward a one-year high Thursday, after the discount apparel retailer reported fiscal fourth-quarter profit and sales that rose above expectations, as gross margin continued to improve and inventories fell.

The company also provided an upbeat sales growth outlook for the current fiscal year, with Chief Executive Michael O'Sullivan saying he was "confident" of margin expansion for the year.

The stock (BURL) jumped 4.9% in premarket trading, putting it on track to open around the highest closing prices seen since March 6, 2023.

For the quarter to Feb. 3, net income rose to $227.5 million, or $3.53 a share, from $185.2 million, or $2.83 a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share increased 25% to $3.69, well above the FactSet consensus of $3.31.

Total revenue grew 13.9% to $3.13 billion, above the FactSet consensus of $3.07 billion, as same-store sales rose 2% to beat expectations of 1% growth.

Gross margin improved to 42.6% from 40.7%, to mark the fifth straight quarter of improvement.

The value of merchandise inventories as of Feb. 3 was $1.09 billion, down 8% from last year, to mark the fourth straight quarter of reported reductions.

For fiscal 2024, the company expects adjusted EPS of $7.00 to $7.60, which surrounds the FactSet consensus of $7.11, and expects total sales growth of 9% to 11%, while the current FactSet sales consensus of $10.51 billion implies an 8% rise.

"Looking ahead to 2024, we remain confident in the comparable-store sales and margin assumptions we shared in November," CEO O'Sullivan said. "There is a lot of uncertainty in the external environment, so we are planning our business flexibly, and we are ready to chase if the sales trend is stronger."

In November, the Chief Financial Officer Kristin Wolfe said on the post-earnings call with analysts, according to a FactSet transcript, that the company was expects to capture 50 basis points, or 0.5 percentage points, of margin expansion.

The stock has rallied 18.3% over the past three months through Wednesday, while the S&P 500 has gained 11.3%.

-Tomi Kilgore

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03-07-24 0857ET

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