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Burlington Stores, Inc. (BURL - Free Report) reported second-quarter fiscal 2023 results, where sales and earnings surpassed the Zacks Consensus Estimate. Both the top and bottom lines increased year over year.
Over the past three months, this Zacks Rank #3 (Hold) stock has lost 3.6% against the industry's growth of 6.3%.
Insight Into the Headlines
Burlington Stores delivered adjusted earnings of 60 cents per share, beating the Zacks Consensus Estimate of earnings of 43 cents. The bottom line surged 71.4% from 35 cents per share recorded in the year-ago fiscal period.
Total revenues of $2,174.8 million came above the consensus estimate of $2,172 million and increased 9.4% from the last fiscal year’s quarterly reported figure. The company’s comparable store sales jumped 4% from the year-ago period, faring better than our estimate of 3% growth.
Burlington Stores, Inc. Price, Consensus and EPS Surprise
The gross margin was 41.7% in the reported quarter, up 280 basis points (bps) from second-quarter fiscal 2022 actuals. The metric fared better than our estimate of 39.8%. Merchandise margin increased by 150 bps and freight expenses improved by 130 bps.
Adjusted selling, general and administrative (SG&A) expenses, as a rate of sales, was 27%, increasing 90 bps from the second-quarter fiscal 2022 actuals. Our estimate for adjusted SG&A expenses, as a rate of sales, was 26.5%. Product sourcing costs included in SG&A expenses came in at $183 million, up from $157 million recorded in the second quarter of fiscal 2022. Product sourcing costs represent the processing goods expenses via supply chain and buying costs.
Adjusted EBITDA increased by 27% from the second quarter of fiscal 2022 to $141 million. Adjusted EBIT was $68 million, up from $43 million in second-quarter fiscal 2022. Adjusted EBIT margin increased by 100 bps from the second quarter of fiscal 2022.
Other Financial Aspects
The company ended the reported quarter with cash and cash equivalents of $521 million, long-term debt of $1,347.7 million and stockholders’ equity of $825.9 million. BURL exited the fiscal second quarter with $1,340 million of liquidity, including $521 million of unrestricted cash and $819 million available under its ABL facility.
Burlington Stores ended the quarter with $1,362 million of outstanding total debt, comprising $942 million under its Term Loan Facility, $397 million of Convertible Notes and no borrowings under its ABL Facility.
Merchandise inventories were $1,161.5 million, down from $1,266.7 million reported in the second quarter of fiscal 2022. Comparable store inventories grew 1% from the level recorded in the same quarter of fiscal 2022. Reserve inventory accounted for 45% of the total inventory at the end of the reported quarter.
Burlington Stores bought back 154,358 shares for $26 million under its share repurchase plan in the fiscal second quarter. As of Jul 29, 2023, BURL had $270 million remaining under its current share repurchase authorization. It is worth noting that on Aug 15, 2023, Burlington Stores’ board of directors approved the repurchase of up to an additional $500 million of common stock, which can be executed through August 2025.
Outlook
For fiscal 2023, comparable sales are anticipated to increase in the range of 3-4% against the 13% decrease reported during fiscal 2022. Net sales are expected to grow 11-12%, including an approximately 2% rise from the extra 53rd week, against a 7% fall in fiscal 2022.
Adjusted EBIT margin (excluding the impact of expected incremental expenses of 21 million related to the recently acquired Bed Bath & Beyond leases) is now expected to increase by 80-100 bps for the fiscal year. Adjusted earnings per share (EPS) are envisioned in the bracket of $5.60-$5.90 compared with an adjusted EPS of $4.26 recorded in the last fiscal year. The expected adjusted EPS excludes the impact of expected incremental expenses of 23 cents per share related to the acquired Bed Bath & Beyond leases.
In fiscal 2023, management intends to open 70 to 80 net new stores and projects capital expenditures, net of landlord allowances, of $560 million. Net interest expense is expected to be about $60 million, while the effective tax rate is likely to be around 26%.
For the third quarter of fiscal 2023, total sales are projected to increase 13-15% and comps are expected to rise 5-7% from the year-ago period. Adjusted EBIT margin is likely to be up by 170-220 bps from the last fiscal year’s quarterly reading and adjusted EPS is forecast in the range of 97 cents to $1.12.
The forecasted adjusted EBIT margin and adjusted EPS figures exclude the impact of expected incremental expenses of about $10 million or 11 cents per share, associated with the acquired Bed Bath & Beyond lease. Burlington Stores’ adjusted earnings were 43 cents per share in the third quarter of fiscal 2022.
The effective tax rate is likely to be about 26% for the fiscal third quarter.
Stocks to Consider
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch (ANF - Free Report) , Boot Barn (BOOT - Free Report) and American Eagle Outfitters (AEO - Free Report) .
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and earnings per share (EPS) suggests growth of 2.9% and 736%, respectively, from the year-ago reported figures. ANF has delivered an earnings surprise of 724.8% in the last four quarters, on average.
Boot Barn, a fashion retailer of apparel and accessories, currently sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 13.5%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales suggests growth of 5.1% from the year-ago reported figure.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank #2 (Buy). AEO has delivered an average earnings surprise of 9.2% in the last four quarters.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year EPS suggests growth of 8.3% from the year-ago reported figure.
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Burlington Stores (BURL) Q2 Earnings Beat, Sales Rise Y/Y
Burlington Stores, Inc. (BURL - Free Report) reported second-quarter fiscal 2023 results, where sales and earnings surpassed the Zacks Consensus Estimate. Both the top and bottom lines increased year over year.
Over the past three months, this Zacks Rank #3 (Hold) stock has lost 3.6% against the industry's growth of 6.3%.
Insight Into the Headlines
Burlington Stores delivered adjusted earnings of 60 cents per share, beating the Zacks Consensus Estimate of earnings of 43 cents. The bottom line surged 71.4% from 35 cents per share recorded in the year-ago fiscal period.
Total revenues of $2,174.8 million came above the consensus estimate of $2,172 million and increased 9.4% from the last fiscal year’s quarterly reported figure. The company’s comparable store sales jumped 4% from the year-ago period, faring better than our estimate of 3% growth.
Burlington Stores, Inc. Price, Consensus and EPS Surprise
Burlington Stores, Inc. price-consensus-eps-surprise-chart | Burlington Stores, Inc. Quote
Margins
The gross margin was 41.7% in the reported quarter, up 280 basis points (bps) from second-quarter fiscal 2022 actuals. The metric fared better than our estimate of 39.8%. Merchandise margin increased by 150 bps and freight expenses improved by 130 bps.
Adjusted selling, general and administrative (SG&A) expenses, as a rate of sales, was 27%, increasing 90 bps from the second-quarter fiscal 2022 actuals. Our estimate for adjusted SG&A expenses, as a rate of sales, was 26.5%. Product sourcing costs included in SG&A expenses came in at $183 million, up from $157 million recorded in the second quarter of fiscal 2022. Product sourcing costs represent the processing goods expenses via supply chain and buying costs.
Adjusted EBITDA increased by 27% from the second quarter of fiscal 2022 to $141 million. Adjusted EBIT was $68 million, up from $43 million in second-quarter fiscal 2022. Adjusted EBIT margin increased by 100 bps from the second quarter of fiscal 2022.
Other Financial Aspects
The company ended the reported quarter with cash and cash equivalents of $521 million, long-term debt of $1,347.7 million and stockholders’ equity of $825.9 million. BURL exited the fiscal second quarter with $1,340 million of liquidity, including $521 million of unrestricted cash and $819 million available under its ABL facility.
Burlington Stores ended the quarter with $1,362 million of outstanding total debt, comprising $942 million under its Term Loan Facility, $397 million of Convertible Notes and no borrowings under its ABL Facility.
Merchandise inventories were $1,161.5 million, down from $1,266.7 million reported in the second quarter of fiscal 2022. Comparable store inventories grew 1% from the level recorded in the same quarter of fiscal 2022. Reserve inventory accounted for 45% of the total inventory at the end of the reported quarter.
Burlington Stores bought back 154,358 shares for $26 million under its share repurchase plan in the fiscal second quarter. As of Jul 29, 2023, BURL had $270 million remaining under its current share repurchase authorization. It is worth noting that on Aug 15, 2023, Burlington Stores’ board of directors approved the repurchase of up to an additional $500 million of common stock, which can be executed through August 2025.
Outlook
For fiscal 2023, comparable sales are anticipated to increase in the range of 3-4% against the 13% decrease reported during fiscal 2022. Net sales are expected to grow 11-12%, including an approximately 2% rise from the extra 53rd week, against a 7% fall in fiscal 2022.
Adjusted EBIT margin (excluding the impact of expected incremental expenses of 21 million related to the recently acquired Bed Bath & Beyond leases) is now expected to increase by 80-100 bps for the fiscal year. Adjusted earnings per share (EPS) are envisioned in the bracket of $5.60-$5.90 compared with an adjusted EPS of $4.26 recorded in the last fiscal year. The expected adjusted EPS excludes the impact of expected incremental expenses of 23 cents per share related to the acquired Bed Bath & Beyond leases.
In fiscal 2023, management intends to open 70 to 80 net new stores and projects capital expenditures, net of landlord allowances, of $560 million. Net interest expense is expected to be about $60 million, while the effective tax rate is likely to be around 26%.
For the third quarter of fiscal 2023, total sales are projected to increase 13-15% and comps are expected to rise 5-7% from the year-ago period. Adjusted EBIT margin is likely to be up by 170-220 bps from the last fiscal year’s quarterly reading and adjusted EPS is forecast in the range of 97 cents to $1.12.
The forecasted adjusted EBIT margin and adjusted EPS figures exclude the impact of expected incremental expenses of about $10 million or 11 cents per share, associated with the acquired Bed Bath & Beyond lease. Burlington Stores’ adjusted earnings were 43 cents per share in the third quarter of fiscal 2022.
The effective tax rate is likely to be about 26% for the fiscal third quarter.
Stocks to Consider
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch (ANF - Free Report) , Boot Barn (BOOT - Free Report) and American Eagle Outfitters (AEO - Free Report) .
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 earnings per share (EPS) suggests growth of 2.9% and 736%, respectively, from the year-ago reported figures. ANF has delivered an earnings surprise of 724.8% in the last four quarters, on average.
Boot Barn, a fashion retailer of apparel and accessories, currently sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 13.5%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales suggests growth of 5.1% from the year-ago reported figure.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank #2 (Buy). AEO has delivered an average earnings surprise of 9.2% in the last four quarters.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year EPS suggests growth of 8.3% from the year-ago reported figure.