Latest news with #BurlingtonStoresInc
Globe and Mail
a day ago
- Business
- Globe and Mail
Can Burlington's Margin Strategy Withstand Tariff Pressures?
Burlington Stores, Inc. BURL delivered stronger-than-expected margin performance in the first quarter of 2025 despite flat comparable sales. The company reported an adjusted EBIT margin of 6.1%, up 30 basis points from last year and well above guidance of a decline of 50-90 basis points. This outperformance was driven by the favorable timing of merchandise receipts expected to reverse in the second quarter and aggressive expense savings initiatives implemented early to mitigate expected tariff-related pressures. The gross margin also improved by 30 basis points year over year to 43.8%. This was supported by a 20-basis-point increase in the merchandise margin and a 10-basis-point reduction in freight expenses. Modest initial markup pressure was more than offset by faster inventory turnover. Product sourcing costs rose 10 basis points as a percentage of sales to $197 million from $183 million, reflecting higher asset protection investments despite supply-chain productivity gains. Adjusted SG&A expenses declined by 30 basis points from last year due to the favorable timing of SOAR program expenses, which will shift into the second quarter, and company-wide cost-saving actions. Reserve inventory rose 31% in dollar terms to 48% of total inventory from 40% last year. This highly branded, tariff-free merchandise already in the United States is expected to support margins in the future quarters. For 2025, Burlington maintained its outlook, projecting 6-8% sales growth and an adjusted EBIT margin flat to up 30 basis points. The outlook assumes tariffs, inflation and freight costs remain stable. Management emphasized its ability to navigate uncertainty through flexibility, disciplined operations and its value-focused off-price model, supporting long-term growth despite external challenges. How BURL's Margin Strategy Compares With TGT, ROST & DLTR Target Corporation 's TGT first-quarter 2025 margin strategy increased the operating margin to 6.2% from 5.3%, or 3.7% excluding one-time gains. The gross margin at Target slipped to 28.2% from 28.8% due to higher markdowns and supply-chain costs. SG&A at Target improved 70 basis points to 19.3%, reflecting credit card interchange fee settlements and disciplined cost management. Ross Stores ROST maintained an operating margin of 12.2% in the first quarter of 2025, matching last year, despite flat comparable sales. Gross profit benefited from Ross Stores' disciplined inventory and cost control. SG&A at Ross Stores rose slightly to $797.1 million from $776.3 million, reflecting controlled spending as Ross Stores navigated tariff pressures and economic uncertainty. Dollar Tree 's DLTR gross margin rose 20 bps to 35.6% in first-quarter 2025 on lower freight and occupancy costs despite higher shrink and markdowns. SG&A at Dollar Tree climbed 100 basis points to 27.3% of sales, driven by higher wages and store investments. Dollar Tree's operating margin contracted to 8.3%, reflecting elevated costs despite strong sales leverage and improved gross profit. Burlington's Price Performance, Valuation & Estimates The BURL stock has gained 9% in the past three months compared with the industry 's 8.8% growth. Burlington's forward 12-month price-to-sales ratio of 1.31X indicates a lower valuation compared with the industry's average of 1.80X. BURL carries a Value Score of D. Image Source: Zacks Investment Research The Zacks Consensus Estimate for Burlington's current fiscal-year sales and earnings per share implies year-over-year growth of 7.5% and 11.8%, respectively. Image Source: Zacks Investment Research Burlington currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Target Corporation (TGT): Free Stock Analysis Report Dollar Tree, Inc. (DLTR): Free Stock Analysis Report Ross Stores, Inc. (ROST): Free Stock Analysis Report Burlington Stores, Inc. (BURL): Free Stock Analysis Report
Yahoo
07-03-2025
- Business
- Yahoo
Burlington Stores Inc (BURL) Q4 2024 Earnings Call Highlights: Surpassing Sales Expectations ...
Comparable Store Sales Growth (Q4 2024): Increased by 6%, exceeding guidance of 0% to 2%. Total Sales Growth (Q4 2024): Increased by 10%. Gross Margin (Q4 2024): 42.9%, an increase of 30 basis points from the previous year. Adjusted EBIT Margin (Q4 2024): Expanded by 10 basis points to 11.1%. Adjusted Earnings Per Share (Q4 2024): $4.13, a 12% increase from the prior year. Total Sales Growth (Full Year 2024): Increased by 11%. Operating Margin Expansion (Full Year 2024): Expanded by 100 basis points. New Store Openings (2024): 147 new stores opened, 101 net new stores added. Cash and Liquidity (End of Q4 2024): $995 million in cash, $1.8 billion in total liquidity. Share Repurchases (Q4 2024): $61 million repurchased, $263 million remaining on authorization. 2025 Guidance - Total Sales Growth: Expected to be 6% to 8%. 2025 Guidance - Comp Store Sales Growth: Expected to be 0% to 2%. 2025 Guidance - Adjusted Earnings Per Share: Expected to be $8.70 to $9.30. Capital Expenditures (2025): Expected to be approximately $950 million. Warning! GuruFocus has detected 3 Warning Sign with BURL. Release Date: March 06, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Burlington Stores Inc (NYSE:BURL) reported a strong 6% increase in comparable store sales for the fourth quarter, surpassing their guidance of 0% to 2%. The company achieved an 11% total sales growth for the full year 2024, indicating robust performance. Burlington Stores Inc (NYSE:BURL) expanded its operating margin by 100 basis points in 2024, exceeding initial expectations. The company successfully opened 101 net new stores in 2024, aligning with its long-term growth strategy. Burlington Stores Inc (NYSE:BURL) demonstrated effective inventory management, with comparable store inventories down 3% year-over-year, contributing to faster inventory turns. The first quarter of 2025 started weaker than expected, with sales trends impacted by unfavorable weather and delayed tax refunds. Burlington Stores Inc (NYSE:BURL) provided a conservative guidance for 2025, with expected comp store sales growth of only 0% to 2%. The company anticipates a challenging margin comparison in the first quarter of 2025, with potential EBIT margin contraction. Higher capital expenditures are expected in 2025 due to the purchase of distribution centers, which may impact debt levels and stock buybacks. The uncertain economic and geopolitical environment poses risks to consumer spending and could affect Burlington Stores Inc (NYSE:BURL)'s performance. Q: Could you elaborate on sales trends seen so far in the first quarter, particularly given the conservative comp guidance? A: Michael O'Sullivan, CEO, explained that the first-quarter trend started weaker than expected, consistent with other retailers. The volatility is attributed to weather and the timing of tax refunds, particularly in the Midwest and Northeast. As weather normalized and tax refunds caught up, sales trends improved. The cautious Q1 guidance reflects this initial weakness. Q: Can you explain the drivers of margin contraction in the first quarter and the expected margin expansion throughout the year? A: Kristin Wolfe, CFO, noted that Q1 faces challenging margin comparisons due to modest merchandise margin pressure and fixed cost deleverage in supply chain. However, margin expansion is expected to improve as the year progresses, with the most significant improvement anticipated in Q4. Q: How did trade-down shoppers versus existing customers contribute to the comp trend in 2024, especially in Q4? A: Michael O'Sullivan highlighted that both need-a-deal and want-a-deal customers contributed to growth. Stores in lower-income areas performed strongly, indicating success with need-a-deal shoppers. Additionally, moderate- and higher-income areas saw healthy growth, driven by trade-down customers. Q: What are the implications of higher CapEx for debt levels and stock buybacks? A: David Glick, Investor Relations, explained that while CapEx increased due to DC purchases, the impact on leverage ratios is expected to be modest. The company plans to continue share repurchases at levels similar to previous years. Q: Could you update us on off-price merchandise availability and potential impacts of tariffs? A: Michael O'Sullivan stated that off-price merchandise availability is strong, and potential tariff disruptions could create buying opportunities. The company maintains strong vendor partnerships, which have been beneficial for growth. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
