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Why Is Burlington Stores (BURL) Down 1.3% Since Last Earnings Report?

·4-min read

A month has gone by since the last earnings report for Burlington Stores (BURL). Shares have lost about 1.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Burlington Stores due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Burlington Stores’ Q3 Earnings & Revenues Beat

Burlington Stores reported robust third-quarter fiscal 2021 results. The top and the bottom line beat the Zacks Consensus Estimate and compared favorably with the respective year-ago tallies.

Insight Into the Headlines

Burlington Stores delivered adjusted earnings of $1.36 per share, surpassing the Zacks Consensus Estimate of $1.27. The bottom line also increased from the year-ago quarter’s reported figure of 29 cents per share but decreased from $1.53 recorded in third-quarter fiscal 2019.

Total revenues of $2,304 million surged 38.2% year over year and 29.3% from the third-quarter fiscal 2019 figure. Net sales increased nearly 30% from the third-quarter fiscal 2019 number to $2,300 million while Other revenues decreased 33.3% to $4.4 million. The Zacks Consensus Estimate stood below at $2,285 million for the reported quarter.

Comparable-store sales (comps) grew 16% from the third-quarter fiscal 2019 reading.

Margins

Gross margin was 41.4% in the reported quarter, down 100 basis points (bps) from the third-quarter fiscal 2019 actuals. Merchandise margins grew 80 bps, more than offset by a 180-bps rise in freight expense. Also, increased supply-chain costs were deterrents.

Adjusted EBITDA rose 6.5% from the third-quarter fiscal 2019 tally to $205 million. The metric also showed an increase from adjusted EBITDA of $113.5 million recorded in the third quarter of fiscal 2020.

Adjusted EBIT was flat with the figure registered in the third quarter of fiscal 2019 at $140.3 million. The metric also showed a sharp jump from adjusted EBIT of $58.6 million during the third quarter of fiscal 2020. Adjusted EBIT margin fell 120 bps from the third-quarter fiscal 2019 finals.

Other Financial Aspects

The company ended the reported quarter with cash and cash equivalents of $1,185.4 million, long-term debt of $1,614.6 million and stockholders’ equity of $716.8 million. It exited the fiscal third quarter with $1,726 million of liquidity, including $1,185 million of unrestricted cash and $541 million available under its ABL facility.

Burlington Stores ended the quarter with $1,629 million of outstanding total debt, which comprises $953 million under its Term Loan Facility, $645 million of Convertible Notes and no borrowings under its ABL Facility.

Merchandise inventories were $1059.7 million, up 5.6% from the third-quarter fiscal 2019 tally. Comparable store inventories fell 24% from the level recorded in the same quarter of fiscal 2019. Reserve inventory accounted for 30% of the total inventory at the end of the reported quarter.

Outlook

Management did not provide any specific sales and earnings view for fiscal 2021 (the 52 weeks ending Jan 29, 2022) due to the prevalent pandemic uncertainty and the pace of recovery of customer demand. Burlington Stores anticipates witnessing significant freight and supply-chain cost pressures through the fiscal fourth quarter.

Capital expenditures, net of landlord allowances for fiscal 2021, are likely to be roughly $425 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, Burlington Stores has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Burlington Stores has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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