Burlington Stores reported its Q1 earnings for fiscal year 2023, with sales and earnings quoted less than the anticipated Zacks Consensus Estimate. Nevertheless, the top and bottom lines surged with growth year over year.
The stock’s value has fallen by 26% over the past three months, as opposed to the retail industry’s 3.5% decline.
Details on the Headlines
While Burlington Stores’ adjusted earnings increased by 55.6% from the same period last year, it fell short of expectations at 84 cents per share, compared to the Zacks Consensus Estimate of 93 cents per share.
Burlington Stores, Inc. Price, Consensus and EPS Surprise
Burlington Stores, Inc. price-consensus-eps-surprise-chart | Burlington Stores, Inc. Quote
Total revenue was $2.137 million, slightly below the estimated $2.187 million, despite growing by 10.7% in comparison to last year. Additionally, comparable store sales saw a year-over-year increase of 4%.
Margins
Burlington Stores’ gross margin was 42.3%, a 130 basis point increase from Q1 2022. While freight expenses improved by 150 basis points, a 20-basis point merchandise margin decline was driven by increased markdowns. Adjusted selling, general and administrative expenses, as a rate of sales, came at 26.5%, improving 20 basis points from last year’s Q1. The costs involved in product sourcing included in selling, general and administrative expenses increased from $157 million to $187 million YoY, representing goods expenses through supply chain and purchasing.
Meanwhile, adjusted EBITDA witnessed a 70 basis point increase from the previous quarter to reach $342 million. Adjusted EBIT was a total of $157 million, up from $125 million in Q1 2022. This resulted in an adjusted EBIT margin increasing by 80 basis points from the last quarter.
Other Financial Aspects
Burlington Stores ended the quarter with cash and cash equivalents of $532.4 million, long-term debt of $1,350.4 million and a stockholders’ equity of $801.5 million. The fiscal quarter ended with $1,372 million of liquidity, with $532 million of unrestricted cash and an $840 million ABL facility available.
Burlington Stores’ outstanding total debt at the end of the quarter was $1,364 million, including $945 million from its term loan facility and $397 million of convertible notes.
Inventory for merchandise leveled at $1,231 million, down from last year’s Q1 reported figure of $1,257 million, while comparable inventories increased by 10%. At the end of the quarter, reserve inventory accounted for 44% of total inventory. In Q1 fiscal 2023, the company bought back 245,414 shares for $51 million under the share repurchase plan.
Outlook
The company forecasts comparable sales to increase by 3-5% in fiscal 2023, compared to the 13% decrease in fiscal 2022. Net sales are expected to go up by 12-14% of which an additional 2% are predicted to rise due to the extra 53rd week, as opposed to the 7% decrease witnessed during fiscal 2022. Adjusted EBIT margin is expected to increase 80-120 basis points for the entire fiscal, and adjusted EPS is estimated to be $5.50-$6.00. These figures reflect adjusted EPS of $4.26 in the past fiscal year.
In fiscal 2023, the firm anticipates opening 70-80 new stores and calculating capital expenditures, net of allowances, amounting to $560 million.
For the second quarter of fiscal 2023, the company forecasts total sales to increase by 8-10%, with comps rising 2-4% YoY. Adjusted EBIT margin is predicted to rise by 10-50 basis points from the last fiscal year’s quarterly figures, and adjusted EPS is expected to be 35-40 cents. Burlington Stores recorded an adjusted EPS of 35 cents for Q2 fiscal 2022.
Strong Retail Options
The report mentions three premium-ranked stocks, Abercrombie & Fitch, Urban Outfitters, and Hibbett Sports.
Zacks Rank #1 labeled, Abercrombie & Fitch is one of the leading casual apparel retailers in the market. The Zacks Consensus Estimate suggests that sales and EPS for the current financial year should increase by 2.1% and 472%, respectively, from the numbers recorded in the year-ago period. ANF incurred a loss of 141.2% in its trailing four-quarter earnings.
Urban Outfitters, a retailer specializing in fashion apparel, accessories, and footwear, currently carries a Zacks Rank #2 label. URBN recorded break-even earnings for the last quarter reported. The Zacks Consensus Estimate suggests that the current financial year’s sales and EPS should grow by 4% and 40.6%, respectively, from the numbers recorded in the year-ago period.
Hibbett, a sporting goods retailer, is also ranked as Zacks Rank #2. On average, the company recorded a negative trailing four-quarter earnings surprise of 13.9%. The consensus forecast for Hibbett’s current financial-year sales suggests growth of 5.7% from the year-ago
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