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What Analysts Expect from Burlington Stores’ Earnings

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Updated

Updated guidance for the first quarter

After the markets closed on April 23, Burlington Stores (BURL) announced its updated guidance for the first quarter of fiscal 2019, which ends on May 4. The off-price retailer now expects first-quarter EPS to be in the range of $1.21–$1.25 compared to its previous outlook range of $1.21–$1.31.

Analysts now expect Burlington Stores’ adjusted EPS to remain flat at $1.26 in the first quarter.

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Recent results

Burlington Stores announced its results for the fourth quarter of fiscal 2018 in March. The company’s fiscal 2018 fourth-quarter adjusted EPS rose to $2.83 from $2.21 in the fourth quarter of fiscal 2017. Its adjusted EPS for the fourth quarter of fiscal 2017 excluded the impact of an additional week in the period and the impact of a deferred tax revaluation.

The company’s adjusted EPS rose to $6.44 in fiscal 2018 compared to $4.41 in fiscal 2017. The company’s EPS growth was driven by higher sales, a lower adjusted effective tax rate, and the impact of share repurchases, which resulted in a lower average share count.

Burlington Stores’ gross margin expanded ~30 basis points to 41.8% in fiscal 2018 driven by strong merchandise margins and partially offset by a 20-basis-point rise in freight costs.

The company’s operating margin expanded 50 basis points on a reported basis to 8.5% in fiscal 2018. On an adjusted basis, Burlington’s operating margin increased 50 basis points to 9.0% in fiscal 2018. The company’s operating margin was driven by improvement in the selling, general and administrative expense rate as a percentage of sales due to strong sales growth and expense-management efforts.

Profitability expectations

Burlington Stores is focused on enhancing its operating margin. The company’s operating margin has expanded 420 basis points on an adjusted basis over the last six years. Burlington Stores aims to enhance its margins by optimizing markdowns and improving the efficiency of its corporate and store operations.

Based on the guidance it issued in March, Burlington Stores expects zero to ten basis points of improvement in its adjusted operating margin. Burlington Stores expects its fiscal 2019 adjusted EPS to be in the range of $6.93–$7.06. On April 23, the company updated its first-quarter guidance but didn’t provide any updates for its full-year outlook.

Analysts expect Burlington Stores’ adjusted EPS to rise 8.2% to $6.97 in fiscal 2019.

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