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Burlington Stores (BURL +12%) gets coated with buy orders today as investors cheer the off-price apparel retailer's superb comparable store sales growth in Q4 (Jan), registering a +6% pop, crushing its +0-2% forecast. With shares tumbling by around 17% on the year as of yesterday's close, plenty of doom and gloom was priced into the stock. However, a positive response despite soft Q4 (Jan) numbers from peer Ross Stores (ROST) yesterday foreshadowed what is unfolding today, as market participants hang their hat on the silver linings from the quarter, brushing aside downbeat Q1 (Apr) and FY26 guidance.

• BURL attributed two underlying factors to its robust comp growth in Q4. Throughout the past year, BURL has been elevating its assortment across certain categories and price points to retain the higher-income shoppers who have flocked to its stores in light of cumulative inflation. This strategy involved bringing in a higher mix of well-known national brands, better quality and rate of fabric, and more up-to-date fashion. At the same time, BURL eliminated items that were no longer up to par. The benefits of these actions were most apparent in Q4.
• The second influential factor was that BURL stayed nimble during the quarter, ensuring its flexibility to act decisively to whatever trends presented themselves. Because of its overexposure to weather events, given its heavy tilt toward coats and jackets, BURL has a better case than some of its peers when it attributes unfavorable weather to poor sales. BURL exited Q3 (Oct) dealing with unseasonably warm weather, which clipped its previous quarter's results. However, its flexibility allowed it to pull back on cold weather apparel during Q4 quickly, better matching end demand.
• BURL is still not out of the woods. The company projected weak earnings, sales, and comp figures for Q1 and FY26. For the first quarter, BURL expects adjusted EPS of $1.30-1.45, well below consensus, revenue growth of +5-7%, and comps to come in somewhat flattish. For the year, BURL estimates adjusted EPS of $8.70-9.30, up nicely from $8.35 in FY25 but still markedly below consensus, revenue growth of +6-8%, which is on top of an +11% jump in FY25, and comps of +0-2%, building on a +4% increase in FY25.
• Nevertheless, there are reasons for a more sunny disposition. BURL plans to open 100 new stores this year, hoping to do an additional 100 in 2026. Meanwhile, management noted that its long-range model projects that through 2028, it should be able to hit mid-single-digit comp growth. Furthermore, BURL reiterated its goal to expand operating margins by around 400 bps between 2023 and 2028, driven by robust top-line growth and better control of inventory.

There were certainly areas of concern from BURL's Q4 report, namely, that its guidance signaled moderate turbulence ahead. However, such an impressive comp beat showcases management's ability to roll with the punches, adapting to a fluid economic backdrop that unpredictable and unfavorable weather patterns can exacerbate. This encouraging attribute can benefit BURL during a volatile period.