Burlington Stores, Inc., a leading retailer, recently held its fiscal 2023 third quarter earnings conference call to discuss its operating results and provide insights into its long-term financial expectations. While the company slightly missed earnings expectations with reported EPS of $0.98 compared to the expected $0.99, executives expressed optimism about the future.
In terms of the third quarter results, Burlington Stores saw a 6% increase in comparable store sales, falling within the guidance range of 5% to 7%. The company experienced strong back-to-school trends but faced challenges due to unseasonably warm weather in October. Despite these obstacles, Burlington Stores remained pleased with its third quarter performance considering the overall softness in the discretionary retail sector.
Looking ahead to the fourth quarter, the company is maintaining its guidance for comparable store sales, expecting growth in the range of negative 2% to flat. With the toughest multiyear comparisons and an uncertain economic environment, Burlington Stores remains cautious but encouraged by a solid start to November. The highest volume weeks of the holiday season are still ahead, which could significantly impact fourth-quarter results.
The highlight of the conference call was Burlington Stores’ updated longer-range financial model. Over the next five years, the company plans to grow its total sales to approximately $16 billion, representing about 60% of aggregate growth compared to 2023. The average annual growth rate for total sales is projected to be in the low double digits. Burlington Stores expects its operating income to reach approximately $1.6 billion, nearly three times the forecasted 2023 operating income. By 2028, the company aims to achieve an operating margin of approximately 10% of sales.
The financial model is based on three key assumptions: new store sales, comparable store sales, and operating margin. Burlington Stores plans to open approximately 500 net new stores in the next five years, primarily focusing on its 25,000 square foot prototype located in busy strip malls. The company also intends to relocate or downsize older, less productive locations to improve efficiency. With a robust pipeline of new store openings and relocations, Burlington Stores expects this program to be a significant driver of its annual double-digit sales growth.
In terms of comparable store sales growth, Burlington Stores anticipates mid-single-digit growth on average over the next five years. This projection takes into account the interruption caused by the pandemic and the subsequent positive 15% comp growth followed by a negative 13% comp growth over the past three years.
Overall, Burlington Stores, Inc. remains optimistic about its long-term prospects and is committed to executing its growth strategy. While uncertainties exist, the company’s financial model and strategic initiatives demonstrate its confidence in achieving sustainable growth and profitability.
FAQ:
1. Did Burlington Stores meet its earnings expectations in the third quarter?
No, Burlington Stores, Inc. slightly missed its earnings expectations with reported EPS of $0.98 compared to the expected $0.99.
2. What was the company’s comparable store sales growth in the third quarter?
Burlington Stores saw a 6% increase in comparable store sales in the third quarter, falling within the company’s guidance range of 5% to 7%.
3. What is Burlington Stores’ long-term financial outlook?
Over the next five years, Burlington Stores aims to grow its total sales to approximately $16 billion, with an average annual growth rate in the low double digits. The company expects its operating income to reach approximately $1.6 billion, with an operating margin of around 10% by 2028.
4. What are the key drivers of Burlington Stores’ growth?
Burlington Stores plans to open approximately 500 net new stores in the next five years, primarily focusing on its 25,000 square foot prototype located in busy strip malls. The company also intends to relocate or downsize older, less productive locations. Additionally, comparable store sales growth is expected to contribute to overall growth in the mid-single digits on average over the next five years.
5. What challenges does Burlington Stores anticipate in the fourth quarter?
Burlington Stores expects challenges in the fourth quarter due to its toughest multiyear comparisons and an uncertain economic environment. However, the company remains optimistic and has maintained its guidance for comparable store sales growth and adjusted EPS.