Burlington Stores Faces Warm-Weather Setback, Q3 Revenue Miss Raises Stakes For Holiday Season

Burlington Stores BURL shares are trading lower after the company reported mixed third-quarter financial results.

Quarterly revenue grew 11% year-over-year to $2.53 billion, missing the consensus of $2.55 billion. Comparable store sales increased by 1%. Adjusted EPS rose 41% YoY to $1.55, beating the consensus of $1.54.

CEO Michael O’Sullivan commented, “Our third quarter comp trend started out very strongly, but then warmer temperatures from mid-September onwards slowed our sales momentum. Cold Weather categories represent about 15% of sales in the third quarter. Excluding these categories, our comp growth in the third quarter was 4%, which is consistent with the trend that we have seen in our business since March. We are very encouraged by this underlying comp sales trend.”

Gross margin was 43.9% vs. 43.2% for the quarter, an increase of 70 basis points. At the end of the quarter, merchandise inventories were $1.441 billion vs. $1.329 billion last year.

Adjusted EBITDA stood at $228.79 million, up 30.3% YoY, with the margin expanding 137 bps to 9%.

The company ended the quarter with $1.705 billion in liquidity, comprised of $858 million in unrestricted cash and $847 million in availability on its ABL facility. The company held $1.714 billion in outstanding total debt.

During the quarter, Burlington repurchased 213,372 shares of its common stock for $56 million under its share repurchase program. Burlington had $325 million remaining on its current share repurchase program.

“November is off to a good start, and we are optimistic about our prospects for the fourth quarter. But with the key selling weeks still ahead of us, we are planning our business cautiously and maintaining our comparable store sales guidance of 0% to 2% for the quarter. We are ready to chase if the trend is stronger,” stated Mr. O’Sullivan.

Q4 Outlook: Burlington expects YoY sales growth of 5% – 7% and assumes comparable store sales to increase between 0% and 2%. The company sees adjusted EPS of $3.55 – $3.75 versus the consensus of $3.77.

2024 Outlook, updated: Burlington continues to expect 9% – 10% sales growth and assumes comparable store sales will increase by 2% (prior view 2% to 3%).

The company raised its adjusted EPS guidance to $7.76 – $7.96 from $7.66 – $7.96, compared to the $7.92 consensus.

Price Action: BURL shares traded lower by 1.16% at $288.28 at the last check Tuesday.

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