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Burlington Stores' (BURL) 2.0 & Store-Growth Plans Bode Well

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Burlington Stores, Inc. (BURL - Free Report) appears quite promising, thanks to its robust business model, successful execution of the Burlington 2.0 strategy and store-expansion endeavors. The company is smoothly progressing on its Burlington 2.0 initiative, which aims at improving the execution of the off-price model. Benefiting from such catalysts, this presently Zacks Rank #1 (Strong Buy) stock has surged 80.2%, surpassing the industry’s 35.2% rally over the course of a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Delving Deeper

The Burlington 2.0 initiative is significantly contributing to the company’s overall performance. Via this strategy, the company focuses on three aspects, namely marketing, merchandising and store prototype. Under the marketing aspect, it looks to communicate a stronger and more direct off-price value message and deliver the same in a more cost-effective manner. The company’s marketing program is expected to leverage its reach and expenditure in the coming years.

With respect to merchandising, management is making investments to boost its assortments and merchandising capabilities. Coming to its store-related efforts, the company is committed to store expansion including the latest store prototypes. It had earlier raised its long-term store target to 2,000 stores from 1,000, given the smaller store format enabled by the Burlington 2.0 strategy.

During the second half of fiscal 2021, Burlington Stores expects to launch 43 net new stores. The company is encouraged by a 25,000-square foot store prototype. This smaller prototype is likely to represent the majority of the company’s store openings. Through this, it aims to operate with leaner in-store inventory levels.

Over the past years, the retailer has also made several changes in its business model to adapt to the ongoing changes in the industry. It increased vendor counts, made technological advancements, initiated better marketing approach and focused on localized assortments to drive overall growth across its business.

What’s More?

The successful execution of the core Burlington 2.0 plan aided the company to deliver a stellar first-quarter fiscal 2021 performance. Both the top and the bottom line surpassed the Zacks Consensus Estimate as well as improved year over year. Results also bettered the first-quarter fiscal 2019 numbers. Comparable-store sales (comps) were impressive during the first quarter.

Gains from stimulus checks, rapid pace of vaccination, pent-up consumer demand and solid execution have been fueling comps over time. As a result, management raised internal baseline comp sales guidance to a positive 10% for the fiscal second quarter. It further stated that if the comp trend during the fiscal second quarter surpasses 10%, it will have the ability to pursue a higher sales trend. Growth in new store and non-comp sales along with the comp baseline assumption of 7% will boost nearly 20% sales growth for fiscal 2021.

The confidence in the stock is more strengthened by upward revisions in the company’s earnings estimates. The Zacks Consensus Estimate for fiscal 2021 earnings stands at $8.75 while the same for fiscal 2022 is pegged at $10.28, having moved 0.7% north over the past seven days for both the fiscal years.

More Key Picks in Retail

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Dollar General (DG - Free Report) has a long-term earnings growth rate of 11.3% and a Zacks Rank #2 (Buy) at present.

Ross Stores (ROST - Free Report) , presently a Zacks #2 Ranked stock, has a long-term earnings-growth rate of 10%.