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Analyzing Ross Stores and Burlington Stores’ Sales Growth

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Growth in fiscal 2018

Burlington Stores (BURL) has outperformed Ross Stores (ROST) regarding the sales growth in the first nine months of fiscal 2018, which ended on November 3. Burlington Stores’ sales grew 12.1% to $4.7 billion in the first nine months of fiscal 2018. The company had same-store sales growth of 4.0%. New and non-comparable stores contributed $303.6 million to Burlington Stores’ top line. Ross Stores’ sales grew 8.0% to $10.9 billion in the first nine months of fiscal 2018. Ross Stores’ sales growth was driven by same-store sales growth of 3.0% and a contribution from new stores.

Burlington Stores’ sales grew 10% in the third quarter of fiscal 2018. During the same period, Ross Stores’ sales grew 6.6%. Both of the retailers reported their third-quarter results in November.

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Continued efforts to improve sales

Off-price retailers have been successfully attracting customers due to deep discounts. Off-price retailers sell merchandise at deep discounts compared to similar merchandise sold by department stores and other retailers.

Ross Stores expects to boost its sales by diversifying its merchandise offerings. The company plans to consider local and regional tastes for merchandise and expand its store network. Ross Stores plans to end fiscal 2018 with 1,712 stores—a net increase of 95 stores in the current fiscal year.

Burlington Stores is improving its sales in underpenetrated categories like home and beauty. The company is also modernizing and remodeling its store network. Burlington Stores plans to end fiscal 2018 with 675 stores—a net increase of 46 stores.

Sales growth expectations

Analysts expect Ross Stores’ sales to rise 5.6% to $14.9 billion in fiscal 2018, which ends on February 2. Ross Stores issued its fourth-quarter sales guidance in November. The company expects same-store sales growth of 1%–2%.

Analysts expect Burlington Stores’ sales to grow 10% to $6.7 billion in fiscal 2018. Based on the guidance issued in November, Burlington Stores expects its fiscal 2018 sales to increase 10.9%–11.2% (excluding the impact of the additional 53rd week in fiscal 2017). The company expects its fiscal 2018 same-store sales growth to be 3.4%–3.7%. For the fourth quarter, Burlington Stores expects its same-store sales growth to be 2%–3%.

Next, we’ll discuss Ross Stores and Burlington Stores’ margins.

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