BURL Gains From Robust Comparable Sales & Operational Efficiencies

Burlington Stores, Inc.'s BURL strong sales growth in the second quarter of 2024, driven by an aggressive store expansion strategy, robust comparable sales performance and operational efficiencies, positions the company for sustained success.

Enhanced inventory management and operational efficiencies have boosted profitability. The company's revised guidance for fiscal 2024 reflects confidence in its continued strong performance, with expectations for improved margins and earnings.

Investments in supply-chain upgrades and automation position Burlington for sustained long-term growth. The company remains well-positioned to provide continued value to both consumers and investors, solidifying its market presence and competitive advantage.

BURL Achieves Growth on Store Expansion & Improved Margins

Burlington achieved a remarkable 13% growth in total sales in the second quarter due to rapid store expansion. The company added 36 stores, raising its total store count to 1,057. This expansion is expected to continue, with plans to open 100 stores and relocate 30 by the end of 2024.

Sales at these new locations exceeded expectations, typically generating about $7 million in their first full year of operation. Burlington's continued focus on growing its store footprint underscores its ability to scale revenues and enhance its market presence across the United States.

Burlington's comparable store sales (comp sales) grew 5% year over year, surpassing its guidance of flat to 2%. A key driver of this success has been the company's emphasis on full-price selling, which rose 7%, enabling Burlington to reduce markdowns and increase margins. By reducing clearance sales and focusing on full-price goods, the company improved profitability and showcased its ability to deliver value to consumers.

BURL also made significant strides in improving its margins. The company's gross margin rose by 110 basis points, reaching 42.8% in the second quarter primarily due to faster inventory turnover and fewer markdowns. Operational efficiencies in distribution centers helped offset inflationary pressures, while supply-chain improvements contributed to a 160-basis-point expansion in the operating margin.

Burlington's Strong Outlook for FY24

BURL, which shares space with Skechers SKX, Steven Madden, Ltd. SHOO and Abercrombie ANF, updated its fiscal 2024 guidance, signaling a stronger outlook. Total sales are expected to rise 9-10%, up from the previously mentioned 8-10%. Comparable store sales are projected to grow 2-3%, an improvement from the earlier stated 0-2%.

The adjusted operating margin is forecast to increase 50-70 basis points, higher than the prior stated 40-60 basis points. Adjusted earnings per share are expected to be $7.66-$7.96, up from the previously stated $7.35-$7.75.

For the third quarter, Burlington anticipates a total sales increase of 10-12%, with comparable sales growth of 0-2% and an adjusted EBIT margin improvement of 60-80 basis points. In the fourth quarter, comparable sales are forecast to be flat or rise up to 2%, with total sales growth expected to be 5-7%.

Synopsis of SKX, SHOO & ANF

Skechers is focused on expanding its direct-to-consumer segment and growing international sales. The company plans to invest in store openings, enhance omnichannel capabilities and build a second distribution center in China. These initiatives align with its long-term strategy to improve operational efficiency and expand customer reach. For fiscal 2024, Skechers expects sales between $8.88 billion and $8.98 billion, suggesting an increase from the $8 billion reported in fiscal 2023. It anticipates earnings per share between $4.08 and $4.18, indicating a rise from the $3.49 recorded in fiscal 2023.

Steven Madden's recovery in the U.S. wholesale footwear business signals a positive shift toward normalized inventory levels and renewed growth with key retail partners. This recovery underscores the brand's strength in its primary market and highlights its ability to overcome past challenges. With this improvement, the company is well-positioned for sustainable growth in its core business. Steven Madden's solid business framework enables it to capitalize on market opportunities and enhance stakeholder value. For 2024, SHOO expects revenue growth of 11-13% from that reported in 2023, with adjusted earnings projected at $2.55-$2.65 per share, implying growth from the $2.30 recorded in 2023.

Abercrombie is on track to achieve its 2024 target of demonstrating sustainable, profitable growth. The company expects to continue benefiting from strength in its brands, driven by its focus on delivering high-quality, on-trend assortments for new and retained customers across regions and brands. It has also been focused on making strategic investments across stores, digital and technology, which are slated to aid the company in the long term. Backed by the strong first-half fiscal 2024 results, Abercrombie raised its sales and operating margin views for the fiscal 2024. It anticipates net sales for fiscal 2024 to increase 12-13% from the $4.3 billion reported in the prior year. It earlier expected net sales growth of 10% for the fiscal 2024.

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