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Burlington Stores (BURL) Q1 Earnings Miss Mark, Sales Rise Y/Y

Burlington Stores, Inc. BURL reported results for first-quarter fiscal 2023, wherein sales and earnings lagged the Zacks Consensus Estimate. However, both the top line and the bottom line increased year over year.

Over the past three months, this Zacks Rank #4 (Sell) stock has lost 26%, compared with the industry's decline of 3.5%.

Insight into the Headlines

Burlington Stores delivered adjusted earnings of 84 cents per share, missing the Zacks Consensus Estimate of earnings of 93 cents per share. However, the bottom line surged 55.6% from 54 cents a share recorded in the year-ago fiscal period.

Burlington Stores, Inc. Price, Consensus and EPS Surprise

Burlington Stores, Inc. Price, Consensus and EPS Surprise
Burlington Stores, Inc. Price, Consensus and EPS Surprise

Burlington Stores, Inc. price-consensus-eps-surprise-chart | Burlington Stores, Inc. Quote

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Total revenues of $2,137 million came below the consensus estimate of $2,187 million but increased 10.7% from the last fiscal year’s quarterly reported figure. Further, the company’s comparable store sales jumped 4% from the year-ago period.

Margins

The gross margin was 42.3% in the reported quarter, up 130 basis points (bps) from the first-quarter fiscal 2022 actuals. Freight expenses improved 150 bps, partly offset by a 20-bps merchandise margin decline, driven by increased markdowns.

Adjusted selling, general and administrative (SG&A) expenses, as a rate of sales, was 26.5%, improving 20 bps from the first-quarter fiscal 2022 actuals. Product sourcing costs included in SG&A expenses came in at $187 million, up from $157 million recorded in the first quarter of fiscal 2022. Product sourcing costs represent the processing goods expenses via supply chain and buying costs.

Adjusted EBITDA increased 70 bps from the fourth quarter of fiscal 2021 to $342 million. Adjusted EBIT was $157 million, up from $125 million in first-quarter fiscal 2022. Adjusted EBIT margin increased 80 bps from the fourth quarter of fiscal 2021 finals.

Other Financial Aspects

The company ended the reported quarter with cash and cash equivalents of $532.4 million, long-term debt of $1,350.4 million and a stockholders’ equity of $801.5 million. BURL exited the fiscal first quarter with $1,372 million of liquidity, including $532 million of unrestricted cash and $840 million available under its ABL facility.

Burlington Stores ended the quarter with $1,364 million of outstanding total debt comprising $945 million under its Term Loan Facility, $397 million of Convertible Notes and no borrowings under its ABL Facility.

Merchandise inventories were $1,231 million, down from $1,257 million reported in the first quarter of fiscal 2022. Comparable store inventories grew 10% from the level recorded in the same quarter of fiscal 2022. Reserve inventory accounted for 44% of the total inventory at the end of the reported quarter.

Burlington Stores bought back 245,414 shares for $51 million under its share repurchase plan in the fiscal first quarter. As of Apr 29, 2023, BURL had $296 million remaining under the share repurchase authorization.

Outlook

For fiscal 2023, comparable sales are anticipated to increase in the range of 3-5% against the 13% decrease reported during fiscal 2022. Net sales are expected to grow 12-14%, including an approximately 2% rise from the extra 53rd week, against a 7% fall in fiscal 2022.

Adjusted EBIT margin is now expected to increase 80-120 bps for the full fiscal. Adjusted earnings per share (EPS) are envisioned in the bracket of $5.50-$6.00, compared with adjusted EPS of $4.26 recorded in the last fiscal year.

In fiscal 2023, management intends to open 70 to 80 net new stores and projects capital expenditures, net of landlord allowances, of $560 million.

For the second quarter of fiscal 2023, total sales are projected to increase 8-10% and comps are expected to rise 2-4% from the year-ago period. Adjusted EBIT margin is likely to be up by 10-50 bps from the last fiscal year’s quarterly reading and adjusted EPS are forecast in the range of 35-40 cents. Burlington Stores’ adjusted earnings were 35 cents per share in the second quarter of fiscal 2022.

Solid Picks in Retail

We have highlighted three top-ranked stocks, namely Abercrombie & Fitch ANF, Urban Outfitters URBN and Hibbett Sports HIBB.

Abercrombie & Fitch, a leading casual apparel retailer, 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 Abercrombie & Fitch’s current financial-year sales and EPS suggests growth of 2.1% and 472%, respectively, from the year-ago reported figures. ANF delivered a negative trailing four-quarter earnings surprise of 141.2%.

Urban Outfitters, a retailer of fashion apparel, accessories and footwear, currently carries a Zacks Rank #2 (Buy). URBN delivered break-even earnings in the last reported quarter.

The Zacks Consensus Estimate for Urban Outfitters’ current financial-year sales and EPS suggests growth of 4% and 40.6%, respectively, from the year-ago reported figures.

Hibbett, a sporting goods retailer, currently carries a Zacks Rank of 2. The company has a negative trailing four-quarter earnings surprise of 13.9%, on average.

The consensus estimate for Hibbett’s current financial-year sales suggests growth of 5.7% from the year-ago reported figure.

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Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report

Hibbett, Inc. (HIBB) : Free Stock Analysis Report

Burlington Stores, Inc. (BURL) : Free Stock Analysis Report

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