Burlington (NYSE:BURL) Reports Q1 In Line With Expectations, Stock Soars

Radek Strnad /
2024/05/30 6:51 am EDT

Off-price retail company Burlington Stores (NYSE:BURL) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 10.5% year on year to $2.36 billion. It made a non-GAAP profit of $1.35 per share, improving from its profit of $0.84 per share in the same quarter last year.

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Burlington (BURL) Q1 CY2024 Highlights:

  • Revenue: $2.36 billion vs analyst estimates of $2.34 billion (small beat)
  • EPS (non-GAAP): $1.35 vs analyst estimates of $1.05 (28.9% beat)
  • EPS (non-GAAP) Guidance for CY2024 raised to $7.55 at the midpoint, above analyst estimates of $7.42
  • Gross Margin (GAAP): 43.7%, up from 42.4% in the same quarter last year
  • Free Cash Flow was -$115.5 million compared to -$173.6 million in the same quarter last year
  • Locations: 1,021 at quarter end, up from 933 in the same quarter last year
  • Same-Store Sales rose 2% year on year (beat vs. expectations of +1.5% year on year, +4% in the same quarter last year)
  • Market Capitalization: $12.8 billion

BURLINGTON, N.J., May 30, 2024 (GLOBE NEWSWIRE) -- Burlington Stores, Inc. (NYSE: BURL), a nationally recognized off-price retailer of high-quality, branded apparel, footwear, accessories, and merchandise for the home at everyday low prices, today announced its results for the first quarter ended May 4, 2024. Michael O’Sullivan, CEO, stated, “We are very pleased with how our sales trends developed in the first quarter. The quarter got off to a slow start in February, likely due to disruptive weather and delayed tax refunds, but then our sales trend picked up. Comparable store sales increased 4% during the months of March and April combined. This resulted in a 2% comparable store sales increase for the quarter which was at the high end of our guidance range.”

Founded in 1972 as a discount coat and outerwear retailer, Burlington Stores (NYSE:BURL) is now an off-price retailer that has broadened into general apparel, footwear, and home goods.

Discount Retailer

Discount retailers understand that many shoppers love a good deal, and they focus on providing excellent value to shoppers by selling general merchandise at major discounts. They can do this because of unique purchasing, procurement, and pricing strategies that involve scouring the market for trendy goods or buying excess inventory from manufacturers and other retailers. They then turn around and sell these snacks, paper towels, toys, clothes, and myriad other products at highly enticing prices. Despite the unique draw and lure of discounts, these discount retailers must also contend with the secular headwinds of online shopping and challenged retail foot traffic in places like suburban strip malls.

Sales Growth

Burlington is larger than most consumer retail companies and benefits from economies of scale, giving it an edge over its competitors.

As you can see below, the company's annualized revenue growth rate of 8% over the last five years was mediocre as it opened new stores and expanded its reach.

Burlington Total Revenue

This quarter, Burlington's year-on-year revenue growth clocked in at 10.5%, and its $2.36 billion in revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 9.2% over the next 12 months, a deceleration from this quarter.

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Same-Store Sales

A company's same-store sales growth shows the year-on-year change in sales for its brick-and-mortar stores that have been open for at least a year, give or take, and e-commerce platform. This is a key performance indicator for retailers because it measures organic growth and demand.

Burlington's demand has been shrinking over the last eight quarters, and on average, its same-store sales have declined by 2.3% year on year. This performance is quite concerning and the company should reconsider its strategy before investing its precious capital into new store buildouts.

Burlington Year On Year Same Store Sales Growth

In the latest quarter, Burlington's same-store sales rose 2% year on year. This growth was a deceleration from the 4% year-on-year increase it posted 12 months ago, showing the business is still performing well but lost a bit of steam.

Key Takeaways from Burlington's Q1 Results

This was a beat and raise quarter. We were impressed by how significantly Burlington blew past analysts' EPS expectations this quarter. We were also glad its full-year earnings guidance was raised and exceeded Wall Street's estimates. On the other hand, its earnings forecast for next quarter missed analysts' expectations. Zooming out, we think this was still a very good quarter. The stock is up 9.8% after reporting and currently trades at $220 per share.

So should you invest in Burlington right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.