Burlington Stores (BURL 145.66, -21.52, -12.87%) is trading sharply lower today despite the company having this morning reported strong, upside EPS
results for its Q4 (Jan) EPS. The company, which operates a national chain of
off-price retail stores focused on apparel, home goods, baby products, and
coats, reported non-GAAP EPS of $2.83, which exceeded prior guidance for
$2.71-2.75. Revenue rose 3.2% year/year to $2.00 bln vs prior guidance for
revenues in the range of $2.09-2.11 bln.
Same store comps are always a critical and closely-watched metric for retailers as this metric filters out the impact of adding new stores, making it a better indicator than total sales of the underlying health of a business.
Same store comps in JanQ came in at +1.3%, which was below prior guidance for comparable sales growth of +2-3%. It was also below the +4.4% comps achieved in OctQ and the +2.9% comps in JulQ. Looking ahead to Q1 (Apr), BURL expects comps of +0-2%, citing smaller tax refunds and a very late Easter this year.
On the call, BURL noted that for a number of years, it has been strategically planning down its cold weather category penetration as it strives to de-weather its business. While BURL planned for cold weather categories conservatively for JanQ, sales in these categories did fall short of expectations.
Also, BURL continues to face challenges in its ladies' apparel business. BURL experienced merchandise content issues in these areas and also found itself inadequately positioned in certain categories. Of note, BURL says that it experienced a drop-off in sales trend in January.
In sum, JanQ results were pretty disappointing. However, it's important to note that BURL was lapping a robust +5.9% comp in the prior year period. Last year's comp number was the highest of that year, so BURL knew that it would be difficult to post a strong positive result. The company’s better-than-expected EPS, achieved thanks to some tight expense management, is positive news for the stock today, but overall, investors were surprised at BURL's poor JanQ sales result and its tepid guidance for AprQ.
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