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Why Burlington Stores Stock Soared Today

By Jeremy Bowman – Nov 28, 2018 at 7:42PM

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The off-price chain posted strong earnings, breezing past expectations.

What happened 

Shares of Burlington Stores (BURL 0.62%) were flying higher today after the popular off-price chain posted a strong third-quarter earnings report, beating estimates on the top and bottom lines and raising its full-year outlook. The stock finished the day up 12.8% on the news.

So what 

The apparel retailer said comparable sales increased 4.4%, driving revenue up 13.7% to $1.64 billion, which beat estimates of $1.61 billion. That revenue growth was helped by the addition of 48 new stores over the last year. 

The exterior of a Burlington store.

Image source: Burlington Stores.

Operating profitability improved, and gross margin expanded by 20 basis points, to 42.4%, with the help of better merchandise margins. Selling, general, and administrative costs fell 60 basis points, to 27.7% of revenue, as same-store sales growth helped leverage occupancy and marketing costs. 

On the bottom line, adjusted earnings per share jumped 73%, to $1.21, with the help of a lower tax rate from the new tax reform law, and topped expectations of $1.06. CEO Tom Kingsbury said the company was "very pleased" with the results.

Now what 

Burlington, known for its eponymous Coat Factories, also delighted investors by raising its full-year guidance. The company is now calling for comparable-sales growth of 3.4%-3.7%, up from previous guidance of 2.9%-3.4%, and sees adjusted earnings per share of $6.33-$6.37, up from a prior range of $6.13-$6.20. 

Off-price chains like Burlington, TJX Companies, and Ross Stores have been consistent winners in the e-commerce era as the model has been difficult to imitate online. After its latest report and with the consumer economy continuing to roar, Burlington looks like it should continue to outperform.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends The TJX Companies. The Motley Fool has a disclosure policy.

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