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Solid Comps, Strategic Initiatives to Aid Burlington Stores

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Burlington Stores, Inc. (BURL - Free Report) has been riding on robust strategies, impressive comparable store-sales (comps) growth and a solid earnings surprise history. Moreover, the company has made multiple changes to its business model, to resonate well with the intensely competitive retail landscape.

The company started business as a coat-focused off-price retailer, and is now focusing on “open to buy” off-price model. In fact, the current model is aiding customers to get nationally branded, fashionable, high quality and fair priced products. Also, over the years, the company has increased vendor counts, made technological advancements, initiated better marketing approach and focused on localized assortments.

Additionally, the company’s focus on store expansion to drive top-line growth remains noteworthy. Management now intends to focus more on categories such as home, beauty and ladies apparel. It also believes that there is room to increase the store count to 1,000, over the long term.

These strategic endeavors are quite well reflected in the company’s performance. Impressively, it delivered 16th straight quarter of a positive earnings surprise, when the company reported third-quarter fiscal 2017 results. Moreover, the bottom line has shown constant improvement in the past several quarters. The company has been doing quite well on the revenue front as well. The company’s top line has outpaced the estimates in five out of the trailing seven quarters and also shown constant improvement over the past few quarters.

The company now envisions fiscal 2017 adjusted earnings in the range of $4.23-$4.27 per share compared with $3.24 reported in the prior year. For the fourth quarter, earnings are expected to come within the range of $2.02-$2.06 per share compared with $1.78 reported in the prior-year period. Burlington Stores forecasts total sales increase of 11-12%, including 5% from the 53rd week for the fourth quarter. Full-year sales are expected to increase in the band of 8.1-8.4%, including 1.4% from the 53rd week during fiscal 2017.

Driven by consistent changes in the business model, comps have witnessed constant growth in the last few years. Apparently, it increased 4.5%, 2.1%, 4.9%, 4.7% and 1.2% in fiscal 2016, 2015, 2014, 2013 and 2012, respectively. Impressively, the momentum has entered the current fiscal as well. The comps increased 0.5%, 3.5% and 3.1%, respectively, in the first, second and third quarters of fiscal 2017. Management now projects comps growth of 2-3% for the final quarter, resulting in comps increase of 2.3-2.6% for fiscal 2017.

Apart from Burlington Stores, retailers like Dollar Tree, Inc. (DLTR - Free Report) , Dollar General Corporation (DG - Free Report) and Big Lots, Inc. (BIG - Free Report) are also gaining amid a tough retail backdrop.

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