Burlington Trends Will Improve Despite Soft Start To 2025, Analyst Remains Bullish

Telsey Advisory Group analyst Dana Telsey reiterated an Outperform rating on the shares of Burlington Stores Inc BURL with a price target of $340.00.

Burlington ended FY24 strong, surpassing expectations with solid sales and margin growth due to its value offering and quick response to market trends, said the analyst.

BURL is experiencing a slower start to first-quarter FY25 due to unseasonal weather and delayed tax refunds.

The company noted that this is typical for the first quarter, which is often unpredictable. Unseasonal weather in February and March, particularly in the Northeast and Midwest, impacted sales, though trends improved as the weather normalized.

Additionally, delayed tax refunds, especially for earned income and child tax credits, contributed to weaker early sales. Meanwhile, there is still potential for improvement as the quarter progresses, the analyst observed.

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Although BURL expects a slower start to the first quarter, management anticipates improvement in the second half of the year. The company plans to open 100 new stores, with most in the third quarter, boosting sales.

EBIT margins are expected to face pressure in the first quarter due to difficult comparisons and supply chain factors, but margins should improve as the year progresses.

Merchandise margins and supply chain savings will contribute to margin expansion, especially in fourth-quarter.

The company added 101 net new stores in FY24, aligning with its long-term goal of opening 100 stores annually.

BURL is continuing its supply chain strategy by purchasing its most productive distribution centers (DCs), giving the company more control over operations and protecting it from rising rent costs.

Despite issuing conservative guidance for the first quarter and FY25 due to a slow start and uncertain economic conditions, the company’s off-price model and store expansion position it well for future growth. The analyst lowered the FY25 EPS estimate to $9.15 from $9.45 previously.

Price Action: BURL shares traded lower by 8.53% at $235.68 at last check Friday.

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