Shares of Burlington Stores (BURL 0.78%), a discount retailer, fell dramatically in early trading on Thursday, dropping as much as 18%. By roughly 11:30 a.m. ET, they were still off by a significant (though perhaps less daunting) 10%. The big story was the company's fourth-quarter 2021 earnings update.
Fourth-quarter performance was a mixed picture. Sales were up 14.5% in the final period of 2021 compared to the same quarter of 2020. They were up 18% compared to 2019, with a comparable-store sales increase of 6% relative to the pre-pandemic period. All of that sounds pretty good.
But analysts had been expecting a higher sales figure. On the bottom line, Burlington earned $1.80 per share, down from $2.33 in the fourth quarter of 2020 (a year marred by the pandemic and not particularly comparable) and $3.08 in the final stanza of 2019. Analysts, meanwhile, had been expecting $3.22 per share, so it was a pretty big miss.
The bad news didn't stop there. The company stated that 2021 was a record year, but then went on to explain that, "Ordinarily we would be happy with 6% comp growth in Q4 but compared to the rest of 2021 this was a slowdown in our trend." Notably, customer traffic fell off, which could indicate that consumers aren't as enamored with the discount chain's wares as they were before.
Add in the inflationary environment, which is leading to rising freight costs and tightening margins, and it makes sense that investors are feeling less than sanguine about the future here.
Burlington Stores says it isn't providing guidance for 2022 because of the pandemic and the "uncertainty surrounding the pace of the recovery of consumer demand." That's a bit troubling when you consider that even management noted that the retailer's sales trends were weakening.
While the company lauded 2021 as a record year, investors should probably keep a close watch on this retailer over the next few quarters to make sure it hasn't hit an undesirable inflection point.