Source: Company reports/Fung Global Retail & Technology

1Q17 Results

Burlington Stores reported 1Q17 adjusted EPS of $0.79, up 38.6% from the year-ago quarter and above the $0.70 consensus estimate. Helping the company’s bottom line was a 10-basis-point improvement in its product sourcing costs as a percentage of sales. Revenues were $1.35 billion, up 4.9% year over year and in line with company guidance, but slightly below the $1.36 billion consensus estimate. Total comps for the quarter rose by 0.5%, on top of a 4.3% increase in the year-ago quarter. February comps declined by a high-single-digit percentage, driven by the later timing of tax refunds this year; the decline was partially offset by a 4.5% increase in comp sales for March and April combined. Comps were driven by an increase in units per transaction that was partially offset by slight declines in traffic, conversion and average unit retail. The top-performing businesses were home, duty, business sportswear, men’s shoes, athletic shoes, beauty and handbags. By region, the West, Southeast and Northeast were the best performers, while the Southwest and Midwest underperformed the company average.

FY17 Outlook

The company raised its FY17 adjusted EPS guidance to $3.86–$3.96 from $3.77–$3.87; consensus calls for full-year EPS of $3.89. Burlington Stores reaffirmed its FY17 comp guidance of 2%–3% growth versus the 3% consensus estimate. The company slightly lowered its revenue guidance from 7.5%–8.5% to 7.3%–8.1%, inclusive of a 1.4% effect related to the 53rd week. The company expects 2Q17 adjusted EPS of $0.46–$0.50, compared with the $0.50 consensus estimate, and it expects comp sales to increase by 2%–3%. The company expects revenue to increase by 6.7%–7.7% versus the 7.2% consensus estimate. Management noted that it sees significant opportunities to increase penetration across several categories, including home, beauty, duty and women’s apparel. The company also plans to rebuild assortments in social dresses and suits, and to make investments in the plus-size category. Burlington Stores plans to open 30 net new stores in FY17.