Burlington Stores (BURL) announced its impressive third-quarter results, which have propelled the company's stock to new heights. The company reported adjusted earnings of 98 cents per share on $2.29 billion in revenue, surpassing last year's figures by more than 12%. Market analysts had predicted earnings per share of 97 cents on $2.29 billion in revenue. Burlington also experienced a significant 6% year-over-year increase in same-store sales.
Looking ahead to the fourth quarter, Burlington maintained its guidance for earnings between $3.04 and $3.19, with revenue expected to range from $2.88 billion to $2.93 billion. However, these forecasts fall slightly below consensus estimates of $3.21 per share and $3.03 billion in revenue, respectively. For the full year, the company expects earnings per share to be between $5.52 and $5.67, with the midpoint coming in slightly below analysts' expectations of $5.63.
Despite falling short of predictions for future earnings, Burlington's stock jumped more than 15% to $158 in early trading following the earnings report. This surge can be attributed to improvements in both gross margin and merchandise margin during the quarter. Management also noted a strong start to November, further boosting investor confidence.
Investors are likely relieved by this morning's rally, given Burlington's inconsistent performance in recent quarters. While the stock has lagged behind its competitors TJX and Ross Stores, experiencing a 33% decline since the beginning of 2023, the positive tone set by the company's robust results seems to have boosted shareholders' faith in Burlington's future prospects.
Off-Price Retailers Weather Retail Challenges
It has been a satisfactory reporting season for off-price retailers. Ross, in particular, experienced a surge after reporting strong earnings, surpassing its two-year high. Despite a cautious fourth-quarter outlook, the company continues to perform well. Another industry leader, TJX, also had a robust third quarter despite conservative guidance. Since it was recommended in the spring, TJX's stock has seen an increase of nearly 15%.
As the retail sector grapples with a return to pre-pandemic patterns, off-price retailers have managed to maintain their positive momentum. The end of stimulus checks and stay-at-home mandates has marked the decline of the curbside pickup and contactless shopping boom that defined the Covid years. Moreover, inflation has meant that retailers must now compete against experiences like dining out and travel for a smaller discretionary budget.
However, off-price retailers have managed to navigate these challenges due to their reputation for offering value. In addition, many brands are eager to collaborate with them in order to sell merchandise without having to advertise discounts online.
Given the current consumer pressures and the gradual return to normalcy, it is understandable that off-price retailers would approach the holiday quarter with caution. Nevertheless, they may still deliver some surprises in the coming months.
