Burlington Stores (BURL 160.01, +14.01, +9.6%) is up nearly 10.0% after reporting slightly better than expected results for the first quarter. Today's advance has lifted the stock back to its 50-day moving average (159.92).
The discount apparel retailer reported above-consensus Q1 earnings of $1.26 per share on a 7.2% yr/yr increase in revenue to $1.63 bln, which was also just ahead of market expectations. Comparable store sales ticked up 0.1% yr/yr.
Burlington Stores is among a handful of retailers that have seen their share prices climb amid Amazon's (AMZN 1823.43, +4.24, +0.2%) rise. The stock hit a record high in November, and it has traded in a sideways range below that high during the last few months. The stock's rally was supported by a stream of better than expected quarterly reports, but the company's Q4 report, which was released in early March, was underwhelming.
This time around, the company reported a slight beat while the top end of its EPS guidance range for FY20 was reduced due to expected costs associated with the company's management transition, which was announced in late April. The company now expects FY20 EPS between $6.93 and $7.01 after its previous outlook called for EPS between $6.93 and $7.06.
The company's outgoing CEO, Tom Kingsbury, acknowledged that Q1 sales were at the low end of expectations, but he noted that cost controls helped the company to exceed its EPS expectations.
Gross margin weakened by 20 basis points to 41.0%, as higher freight costs outweighed an increase in merchandise margins. Product sourcing costs increased slightly on a yr/yr basis.
Inventories grew 13.9% yr/yr to $896 mln, mostly due to the addition of 37 net new stores. Comparable store inventory was up 5% yr/yr.
Looking to Q2, the company expects sales growth between 8% and 9% from $1.50 bln reported one year ago while comparable store sales are expected to grow between 1% and 2%. Burlington expects to report EPS between $1.11 and $1.15 after reporting EPS of $1.15 one year ago.
Shares of Burlington leveled off when the company began curtailing expectations in early 2019, but today's report showed that comparable store sales growth is expected to resume in Q2 after showing essentially no growth in Q1, and this projected resumption is being viewed favorably by the market.