Burlington Stores (BURL), which made its IPO debut in October 2013, is trading 3% higher today after reporting strong Q4 (Jan) earnings this morning. In case you're not familiar with BURL, some background would help. It operates a national chain of off-price retail stores (592 current locations) offering women's, men's and children's apparel and accessories, home goods, baby products and coats, principally under the name Burlington Stores.
It was known for decades as Burlington Coat Factory. The company was taken private by Bain Capital in 2006. Once acquired, Bain began a restructuring program that streamlined operations, refocused their merchandise (de-emphasizing coats and becoming much more of a general off-price merchandise company), and returned the company to growth.
Its merchandise is deeply discounted, up to 60-70% off department store prices. The company's stores are very large -- two to three times larger than its competitors' stores -- which allows BURL to feature merchandise from over 3,500 vendors, although the focus is on nationally-recognized brands. The company's two main competitors are TJ Maxx (TJX) and Ross Stores (ROST). Big Lots (BIG) is probably in the mix as well.
Turning to the JanQ results, non-GAAP EPS rose 19% YoY to $1.78 from $1.49 in the prior year period. It was above market expectations and well above BURL's prior guidance of $1.63-1.67. Revenue rose 9.4% year/year to $1.69 bln, which was also better than expected.
Same store comps came in at +4.6%, which was above prior guidance of +2.5-3.5%. It was also up nicely from the +3.7% comp in OctQ, but still down a bit from +5.4% in JulQ. For Q1 (Apr), comps are expected in the +1-2% range, reflecting the impact of the significant delay in the processing of income tax refunds this year compared to last year.
In terms of other guidance for Q1 (Apr), BURL expects non-GAAP EPS of $0.67-0.70, which was actually a bit below market expectations. Revenue is expected to grow +5-6%. It may just be that management is being cautious for AprQ. The last three quarters BURL issued modest guidance then came through with a large beat.
In sum, this was a good quarter for BURL. It's clear that Burlington's strategy of repositioning itself (de-emphasizing coats and becoming much more of a general off-price merchandise company) is really paying some dividends. The stock has been impressive over the past year, it's up 70% since its May 2016 lows. BURL has now reported four large EPS beats in a row. It seems to be performing fairly well in a difficult retail environment where others are struggling.