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Why Is Burlington Stores (BURL) Down 1.5% Since Last Earnings Report?
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A month has gone by since the last earnings report for Burlington Stores (BURL - Free Report) . Shares have lost about 1.5% in that time frame, outperforming 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 Miss Mark, Sales Fall Y/Y
Burlington Stores reported dismal results for third-quarter fiscal 2022, wherein sales and earnings missed the Zacks Consensus Estimate, and compared unfavorably with the respective prior-fiscal year’s quarterly tallies. Margins were also soft in the reported fiscal quarter.
Insight Into the Headlines
Burlington Stores delivered adjusted earnings of 43 cents per share, lagging the Zacks Consensus Estimate of 52 cents. Also, the bottom line fell sharply from $1.36 a share recorded in the year-ago fiscal period.
Total revenues of $2,040.7 million tumbled 11.4% from the last fiscal year’s quarterly reported figure. Net sales decreased 11.5% from the third-quarter fiscal 2021 number to $2,035.9 million, while Other revenues increased 9.1% to $4.8 million. The Zacks Consensus Estimate stood at $2,052 million for the reported quarter.
Comps dropped 17% from the year-ago fiscal quarter’s reading against a rise of 16% seen in the third quarter of fiscal 2021. BURL’s three-year geometric comp stack came in at a negative 3%.
Margins
Gross margin was 41.2% in the reported quarter, down 20 bps from the third-quarter fiscal 2021 actuals. Merchandise margins declined 90 bps, partly offsetting a 70-bps improvement in freight expenses. The decline in the merchandise margin was induced by aggressive markdowns.
Adjusted SG&A as a rate of sales was 26.7%, increasing 140 bps from the third-quarter fiscal 2021 actuals. Product sourcing costs included in SG&A came in at $178 million, up from $173 million recorded in the third quarter of fiscal 2021. Product sourcing costs represent the processing goods expenses via supply-chain and buying costs.
Adjusted EBITDA decreased 40% from the third-quarter fiscal 2021 tally to $123 million. As a rate of sales, the metric decreased 290 bps. Adjusted EBIT was $55 million, down from $140.3 million in third-quarter fiscal 2021. Adjusted EBIT margin fell 340 bps from the third-quarter fiscal 2021 finals.
Other Financial Aspects
Burlington Stores ended the reported quarter with cash and cash equivalents of $428.6 million, long-term debt of $1,464.6 million and a stockholders’ equity of $638.7 million. BURL exited the fiscal third quarter with $1,279 million of liquidity, including $429 million of unrestricted cash and $850 million available under its ABL facility.
Burlington Stores ended the quarter with $1,487 million of outstanding total debt comprising $949 million under its Term Loan Facility, $508 million of Convertible Notes and no borrowings under its ABL Facility.
Merchandise inventories were $1,445.1 million, up 41.5% from the third-quarter fiscal 2021 tally. Comparable store inventories grew 8% from the level recorded in the same quarter of fiscal 2021. Reserve inventory accounted for 31% of the total inventory at the end of the reported quarter.
Burlington Stores bought back 370,599 shares for $51 million under its share repurchase plan in the fiscal third quarter. As of Oct 29, 2022, BURL had $399 million remaining under the share repurchase authorization.
For fiscal 2022, management projects capital expenditures, net of landlord allowances, of $510 million.
Outlook
For fiscal 2022, comps are likely to fall 14-15% compared with a decline of 13-15% predicted earlier and a 15% rise in fiscal 2021. This implies a three-year geometric comps stack of down 1-2% from the fiscal 2019 level.
Adjusted EBIT margin is now expected to decrease 370-400 bps for the full fiscal compared with a decline of 360-410 bps projected previously. Adjusted earnings per share are envisioned in the bracket of $3.77-$4.07 compared with the earlier view of $3.70-$4.30 and adjusted earnings per share of $8.41 recorded in the last fiscal year.
For the fiscal fourth quarter, comps are expected to decrease 6-9%, indicating a three-year geometric comps stack of down 1-4%. Adjusted EBIT margin is likely to be flat to up 70 bps from the last fiscal year’s quarterly reading, while adjusted earnings per share are forecast in the range of $2.45-$2.75. Burlington Stores’ adjusted earnings were $2.53 per share in the fourth-quarter fiscal 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 5.15% due to these changes.
VGM Scores
At this time, Burlington Stores has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. 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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Why Is Burlington Stores (BURL) Down 1.5% Since Last Earnings Report?
A month has gone by since the last earnings report for Burlington Stores (BURL - Free Report) . Shares have lost about 1.5% in that time frame, outperforming 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 Miss Mark, Sales Fall Y/Y
Burlington Stores reported dismal results for third-quarter fiscal 2022, wherein sales and earnings missed the Zacks Consensus Estimate, and compared unfavorably with the respective prior-fiscal year’s quarterly tallies. Margins were also soft in the reported fiscal quarter.
Insight Into the Headlines
Burlington Stores delivered adjusted earnings of 43 cents per share, lagging the Zacks Consensus Estimate of 52 cents. Also, the bottom line fell sharply from $1.36 a share recorded in the year-ago fiscal period.
Total revenues of $2,040.7 million tumbled 11.4% from the last fiscal year’s quarterly reported figure. Net sales decreased 11.5% from the third-quarter fiscal 2021 number to $2,035.9 million, while Other revenues increased 9.1% to $4.8 million. The Zacks Consensus Estimate stood at $2,052 million for the reported quarter.
Comps dropped 17% from the year-ago fiscal quarter’s reading against a rise of 16% seen in the third quarter of fiscal 2021. BURL’s three-year geometric comp stack came in at a negative 3%.
Margins
Gross margin was 41.2% in the reported quarter, down 20 bps from the third-quarter fiscal 2021 actuals. Merchandise margins declined 90 bps, partly offsetting a 70-bps improvement in freight expenses. The decline in the merchandise margin was induced by aggressive markdowns.
Adjusted SG&A as a rate of sales was 26.7%, increasing 140 bps from the third-quarter fiscal 2021 actuals. Product sourcing costs included in SG&A came in at $178 million, up from $173 million recorded in the third quarter of fiscal 2021. Product sourcing costs represent the processing goods expenses via supply-chain and buying costs.
Adjusted EBITDA decreased 40% from the third-quarter fiscal 2021 tally to $123 million. As a rate of sales, the metric decreased 290 bps. Adjusted EBIT was $55 million, down from $140.3 million in third-quarter fiscal 2021. Adjusted EBIT margin fell 340 bps from the third-quarter fiscal 2021 finals.
Other Financial Aspects
Burlington Stores ended the reported quarter with cash and cash equivalents of $428.6 million, long-term debt of $1,464.6 million and a stockholders’ equity of $638.7 million. BURL exited the fiscal third quarter with $1,279 million of liquidity, including $429 million of unrestricted cash and $850 million available under its ABL facility.
Burlington Stores ended the quarter with $1,487 million of outstanding total debt comprising $949 million under its Term Loan Facility, $508 million of Convertible Notes and no borrowings under its ABL Facility.
Merchandise inventories were $1,445.1 million, up 41.5% from the third-quarter fiscal 2021 tally. Comparable store inventories grew 8% from the level recorded in the same quarter of fiscal 2021. Reserve inventory accounted for 31% of the total inventory at the end of the reported quarter.
Burlington Stores bought back 370,599 shares for $51 million under its share repurchase plan in the fiscal third quarter. As of Oct 29, 2022, BURL had $399 million remaining under the share repurchase authorization.
For fiscal 2022, management projects capital expenditures, net of landlord allowances, of $510 million.
Outlook
For fiscal 2022, comps are likely to fall 14-15% compared with a decline of 13-15% predicted earlier and a 15% rise in fiscal 2021. This implies a three-year geometric comps stack of down 1-2% from the fiscal 2019 level.
Adjusted EBIT margin is now expected to decrease 370-400 bps for the full fiscal compared with a decline of 360-410 bps projected previously. Adjusted earnings per share are envisioned in the bracket of $3.77-$4.07 compared with the earlier view of $3.70-$4.30 and adjusted earnings per share of $8.41 recorded in the last fiscal year.
For the fiscal fourth quarter, comps are expected to decrease 6-9%, indicating a three-year geometric comps stack of down 1-4%. Adjusted EBIT margin is likely to be flat to up 70 bps from the last fiscal year’s quarterly reading, while adjusted earnings per share are forecast in the range of $2.45-$2.75. Burlington Stores’ adjusted earnings were $2.53 per share in the fourth-quarter fiscal 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 5.15% due to these changes.
VGM Scores
At this time, Burlington Stores has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Burlington Stores has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.