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Here's Why Burlington Stores (BURL) Marches Ahead Its Industry

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Burlington Stores, Inc. (BURL - Free Report) has exhibited a decent run on the bourses in the past three months, owing to its operational initiatives, and continuous focus on marketing, merchandising and store prototypes.

The company maintains a strong competitive advantage through its effective off-price retail model, innovative merchandising and streamlined supply-chain processes, proving its resilience in challenging market conditions. Burlington Stores, one of the recognized retailers in the branded apparel space, has shown a consistent ability to adapt to uncertainties, stay ahead of consumer trends, and drive revenue growth and margin expansion.

BURL's 2.0 initiative is a response to evolving industry dynamics, centering on marketing, merchandising and innovative store designs. This strategy aims to maximize customer value by efficiently managing liquidity, engaging in strategic purchasing, maintaining lean inventory levels, and ensuring rapid turnover of stock.

This Zacks Rank #3 (Hold) stock has outpaced the Zacks Retail - Discount Stores. In the said period, shares of the company have gained 66.2% compared with the industry’s growth of 22.3%. The Zacks Consensus Estimate for fiscal 2023 sales and earnings per share (EPS) is pegged at $9.61 billion and $5.74, indicating year-over-year increases of 10.4% and 34.7%, respectively.


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Let’s Delving Deeper

A pivotal objective for Burlington Stores is to elevate its operating margin to 10% by fiscal 2028, anticipating improvements through increased sales, enhanced inventory management and targeted cost-reduction strategies, particularly within the supply chain.

The company aims for remarkable growth in operating income, reaching $1.6 billion over the next five years — a threefold increase from the projected operating income in fiscal 2023. This strategy underscores the optimization of operational efficiency and capitalizing on growth opportunities.

The company reported a significant 6% year-over-year rise in comparable store sales in the third quarter of fiscal 2023, attributing this success to a strong back-to-school season, a key period in retail. This achievement reflects the effectiveness of Burlington Stores' merchandising strategies and its adept adaptation to consumer needs, laying the groundwork for further strategic expansion.

Burlington Stores is also setting ambitious sales targets, aiming for $16 billion over the next five years, indicating a 60% total increase from its fiscal 2023 reported figure. This goal is rooted in expanding its customer reach and improving its product range. Supporting this objective is an aggressive plan to open 500 stores within five years. The focus will be on smaller, 25,000-square-foot locations in high-traffic strip malls and strategically repositioning or downsizing older, less productive stores.

The company anticipates an average annual comp sales growth in the mid-single digits over this period. Burlington Stores' commitment to an off-price business model and the expected positive impact of its new openings and relocation initiatives are key drivers of this projected growth.

To wrap up, Burlington Stores is strategically aligning itself for substantial growth and improved profitability. The company is poised to significantly enhance its operational efficiency and market footprint through effective supply-chain management, the focused implementation of its off-price retail model under the Burlington 2.0 initiative and a bold store expansion plan. This positions Burlington Stores for a notable increase in sales and operating margins in the forthcoming years.

3 Red-Hot Stocks to Consider

A few better-ranked stocks are Abercrombie & Fitch Co. (ANF - Free Report) , Target Corporation (TGT - Free Report) and The TJX Companies, Inc. (TJX - Free Report) .

Abercrombie operates as a specialty retailer of premium, high-quality casual apparel. It currently sports a Zacks Rank #1 (Strong Buy). The company recorded an EPS surprise of 60.5% in the last reported quarter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Abercrombie’s current fiscal-year sales suggests growth of 15.1% from the year-ago reported number. ANF has a trailing four-quarter earnings surprise of 713%, on average.

Target has evolved from being a pure brick-and-mortar retailer to an omni-channel entity. The company carries a Zacks Rank #2 (Buy) at present.

The Zacks Consensus Estimate for Target’s current fiscal-year earnings implies growth of 38.5% from the fiscal 2022 reported number. TGT has a trailing four-quarter average earnings surprise of 30.8%.

TJX Companies is a leading off-price retailer of apparel and home fashions in the United States and worldwide. It currently carries a Zacks Rank #2.

The Zacks Consensus Estimate for TJX Companies’ current fiscal-year earnings and sales indicates growth of 20.6% and 8%, respectively, from the fiscal 2023 reported figures. TJX has a trailing four-quarter average earnings surprise of 6.3%.

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