Burlington Stores, Inc. has astounded investors with its exceptional second-quarter fiscal 2024 results, surpassing sales and earnings expectations. The company’s upward trajectory has been further buoyed by an increased fiscal 2024 outlook, attributable to its robust operational performance.
Burlington Stores’ Strategic Initiatives Fuel Growth
Burlington Stores’ success can be attributed to its strategic focus on enhancing growth and profitability, particularly through an aggressive expansion of its retail footprint. By optimizing its product mix with a stronger emphasis on premium brands, the company aims to attract a wider customer base and solidify its value proposition.
Moreover, Burlington Stores is diligently fine-tuning its supply chain operations by incorporating automation in its distribution centers. These operational enhancements, coupled with improved inventory management strategies leading to faster turnover and reduced markdowns, have significantly bolstered the company’s bottom line.
Exceptional Q2 Financial Performance
In the second quarter, Burlington Stores reported adjusted earnings of $1.20 per share, significantly outperforming the Zacks Consensus Estimate of 95 cents. This remarkable result represents a doubling of earnings compared to the same period in the previous year. Excluding the impact of Bed Bath & Beyond leases acquisition, earnings stood at $1.24 per share, up from 63 cents in the prior-year period.
Total revenues surged by 13.4%, reaching $2,465.5 million—exceeding the Zacks Consensus Estimate of $2,421 million. Comparable store sales demonstrated a solid 5% increase year over year, with net sales hitting $2,461.2 million and other revenues at $4.3 million.
Margin Analysis
Burlington Stores’ gross margin expanded to 42.8%, an increase of 110 basis points from the second quarter of fiscal 2023, surpassing expectations. Notably, the merchandise margin gained 90 bps on account of reduced markdowns, while freight expenses improved by 20 bps due to lower rates and cost-saving measures.
The company reported a 13.7% rise in adjusted selling, general, and administrative expenses, which totaled $667.1 million. Product sourcing costs increased to $192 million, attributed to supply-chain efficiencies from ongoing distribution center initiatives.
Burlington Stores’ Store Expansion and Financial Overview
During the second quarter, Burlington Stores significantly expanded its retail presence by opening 36 net new stores, bringing the total store count to 1,057 by the end of the period. The company plans to continue this growth momentum by opening around 100 net new stores and relocating approximately 30 locations in fiscal 2024.
As of the close of the quarter, Burlington Stores had cash and cash equivalents of $659.9 million, $1.23 billion in long-term debt, and stockholders’ equity amounting to $1.07 billion. The company maintained $1.48 billion in liquidity with $660 million in unrestricted cash and $816 million available under its ABL facility.
Fiscal 2024 Guidance and Market Performance
For the remainder of fiscal 2024, Burlington Stores anticipates healthy sales growth and improved EBIT margins. The company’s revised forecasts for the year signal a more bullish outlook, with expected sales and profitability surpassing earlier estimates.
Amid these developments, Burlington Stores’ stock has gained 11.3% over the last three months, outpacing the industry’s 7.7% growth.
Stocks Worth Considering
Investors may also consider Boot Barn Holdings, Inc. (BOOT), Deckers Outdoor Corporation, and Steven Madden, Ltd. (SHOO), which present promising investment opportunities within the retail sector.
Boot Barn, rated Zacks Rank #1 (Strong Buy), exhibits strong growth potential with positive estimates for fiscal 2025 earnings and sales. Deckers Outdoor, a Zacks Rank #2 (Buy) company, has shown remarkable earnings surprises and growth outlook. Steven Madden, holding a Zacks Rank #2, also provides a compelling investment case with solid anticipated growth in earnings and sales.