Burlington Stores, Inc. (BURL - Free Report) has made several changes to its business model to adapt to the ongoing transformation in the sector. The company has increased vendor counts, made technological advancements and initiated better marketing approach.
These apart, its strategic initiatives including store expansion have helped the company to continue registering top- and bottom-line growth. As a result, the stock has surged and outpaced the industry in a year’s time. Shares of this Zacks Rank #2 (Buy) stock have rallied approximately 66%, outperforming the industry’s and S&P 500 index’s growth of around 39% and 14%, respectively.
Moreover, impressive estimate revisions for the current and next fiscal seem to boost investors’ confidence. Over the past 60 days, the Zacks Consensus Estimate for fiscal 2018 and 2019 moved north 23 cents and 20 cents to $6.22 and $7.15, respectively.
We have highlighted three reasons behind the company’s impressive share price performance.
Comparable Sales Growth: A Key Catalyst
On the revenue front, Burlington Stores has been doing quite well. It has not only outpaced the estimates in eight out of the 10 trailing quarters but has also shown constant improvement over the past few quarters. In the second quarter of fiscal 2018, the top line improved 9.9%. Meanwhile, comparable store sales have increased 3.4%, 4.5%, 2.1% and 4.9% in fiscal 2017, 2016, 2015, 2014, respectively. Management projects comps growth in the range of 2.9-3.4% for fiscal 2018 and total sales to increase in the band of 10.1-10.6%. Further, sales are expected to increase in the 11-12% range, with comps growth of 2-3% in the third quarter.
Store Expansion Strategy on Track
Burlington Stores has been on track with its store expansion strategy. The company’s store count has increased from 13 in 1980 to 629 stores in fiscal 2017. Burlington Stores now intends to focus more on categories such as home, beauty and ladies apparel. Further, it remodeled 34 stores in fiscal 2017. The company plans to open 43 net new stores in the current year. Also, management stated that the company acquired three Toys R Us locations during the quarter under review and is also evaluating other sites.
Favorable Business Model
Burlington Stores, which started business as a coat-focused off-price retailer, is now focusing on “open to buy” off-price model. Currently, this model is helping customers to get nationally branded, fashionable, high quality as well as right priced products. This apart, the company’s long-term strategies include enhancement of assortments with primary focus on underpenetrated categories, particularly home and beauty. Burlington Stores is benefiting from its multichannel engagement strategy as well.
3 More Stocks You Can Vouch Upon
Boot Barn Holdings (BOOT - Free Report) pulled off an average positive earnings surprise of 31.8% in the trailing four quarters. It has a long-term earnings growth rate of 23% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The TJX Companies, Inc. (TJX - Free Report) delivered an average positive earnings surprise of 7.3% in the trailing four quarters. The company has a long-term earnings growth rate of 10.9% and a Zacks Rank #2.
Ross Stores, Inc. (ROST - Free Report) came up with an average positive earnings surprise of 5.1% in the trailing four quarters. It has a long-term earnings growth rate of 10% and a Zacks Rank of 2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>