Burlington Pops 11% As 4Q Sales Outperform Estimates

Shares of Burlington Stores closed 11.2% higher on Thursday after the off-price retailer reported 4Q results (ending Jan. 30, 2021) that topped the Street’s estimates.

Burlington (BURL) reported 4Q revenues of $2.28 billion, which beat consensus estimates of $2.08 billion and grew 4% year-over-year. Comparable-store sales (comps) were flat but improved sequentially. Notably, comps declined 10% in November due to unfavorable weather. However, the trend improved significantly in December and January, as “weather normalized and federal stimulus payments were disbursed.”

Adjusted earnings declined about 24% to $2.44 in 4Q but surpassed analysts’ expectations of $2.12 per share. Gross and merchandise margins improved 40 and 110 basis points, respectively. However, adjusted SG&A (selling, general and administrative) expenses and product sourcing costs were higher due to increased store-related costs, higher wages, and COVID-19-related costs. (See Burlington stock analysis on TipRanks)

In addition, the company announced a new store target of 2,000 stores, higher than the previous goal of 1,000 stores.

Following the results, Guggenheim analyst Robert Drbul maintained a Hold rating on the stock citing its high valuation. Drbul added, “we continue to hold a favorable outlook for the off-price sector and appreciate the operational opportunity at the company under CEO Michael O’Sullivan.”

Overall, the Street has a bullish outlook on the stock, with a Strong Buy consensus rating based on 10 Buys and 2 Holds. The average analyst price target of $285.08 implies upside potential of about 1% to current levels. Shares have gained about 31% over the past year.

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