Today's surge in Burlington Stores' stock can be attributed to...
Today's surge in Burlington Stores' stock can be attributed to...
Burlington Stores' (BURL 0.09%) shares skyrocketed today after the budget retail chain surpassed expectations in its first-quarter financial report. The off-price retail giant's earnings report revealed stronger-than-anticipated results on both the income and expense sides.
Consequently, the stock concluded the trading day with a 17.6% increase.
Burlington outshines market expectations
The retail chain reported a 11% revenue surge to $2.36 billion, surpassing analyst projections of $2.34 billion, as well as a 2% year-over-year increase in comparable-store sales.
The company's earnings report showed further improvements in other areas, such as a 120-basis-point boost in gross margin due to less discounting and a 170-basis-point improvement in adjusted operating margin, reaching 5.7%.
This led to an impressive surge in adjusted earnings per share (EPS), rising 68% to $1.42, which significantly exceeded the estimated $1.04.
Taking advantage of the Bed Bath & Beyond's bankruptcy and acquisition of the retailer's leases, Burlington is expanding its market presence, continuing to capitalize on the strong demand for off-price retail.
CEO Michael O'Sullivan noted that momentum picked up as the quarter progressed, achieving 4% comparable sales growth in March and April, while acknowledging "questions in the external environment." Nevertheless, the company maintained its 0% to 2% comparable-store sales forecast for the remainder of the quarter.
Can Burlington continue its growth?
With the rest of the year in sight, Burlington revised its sales growth forecast downward from 9% to 11% to 8%-10%, yet it bumped up its adjusted EPS guidance to $7.35-$7.75 from a previous range of $7 to $7.60. Furthermore, the company expects to open approximately 100 new stores, indicating its continued room for growth.
Although the stock may not be considered inexpensive, Burlington's history of success and execution, coupled with the increasing profit guidance, hints at another potential profit guidance boost later in the year.
In light of Burlington's impressive financial performance, investors might consider investing further in the company's shares to capitalize on its projected growth. The retail giant's initiatives, such as expanding its market presence and opening new stores, are expected to drive its financial performance in the coming months.