Burlington Stores (BURL) has delivered same-store sales growth for 22 consecutive quarters. That reflects the strength of its off-price business model, even during challenging retail market conditions. Its same-store sales grew 3.8% and net sales rose 11.3% in the first six months of fiscal 2018.
Recent quarterly performance
In its second quarter of fiscal 2018,[1. Fiscal Q2 2018 ended on August 4, 2018.] Burlington Stores’ sales grew 9.9% to $1.5 billion, which was almost in line with analysts’ expectations. However, its same-store sales of 2.9% lagged analysts’ expectation of 3%.
Merchandise categories that delivered strong performances in the quarter were home, beauty, missy, better and active sportswear, men’s sportswear, athletic shoes, baby apparel, and Baby Depot. Larger rivals TJX Companies (TJX) and Ross Stores (ROST) generated sales growth of 11.6% and 8.9%, respectively, in the fiscal second quarter.
Burlington Stores’ adjusted EPS of $1.15 in its fiscal second quarter was significantly ahead of analysts’ consensus estimate of $0.96.
Burlington Stores continues to expand its network with new stores. That’s boosting its top-line growth. In the first six months of fiscal 2018, it opened 22 net new stores compared to eight stores in the first half of fiscal 2017. In the first six months of fiscal 2018, new and non-comparable stores contributed net sales of $176 million.
In its fiscal second-quarter conference call, Burlington Stores disclosed its updated expansion plan to open 43 net new stores in fiscal 2018 compared to the previous guidance of 35–40. The expansion plan includes the opening of 67 new stores and 24 store relocations and closures. It has also been optimizing its store fleet by focusing on smaller store sizes.
Another key growth strategy involves improving its presence in underpenetrated categories such as home, beauty, and women’s apparel. The company is adding more national brands and categories in the home division to aim for a higher penetration level of 20% compared to 14% in fiscal 2017.
Burlington Stores expects same-store sales growth of 2.9%–3.4% in fiscal 2018. Next, let’s look at its margins.