Burlington Stores Declines After it Misses Revenue Expectations, Lowers Guidance

© Reuters. Burlington Stores (BURL) Declines After it Misses Revenue Expectations, Lowers Guidance

By Sam Boughedda

Burlington Stores (NYSE:BURL) tumbled Thursday, currently down more than 10% after it reported earnings for its latest quarter, missing revenue expectations and lowering guidance.

While the retailer posted second-quarter earnings per share of $0.35, $0.12 better than the analyst estimate of $0.23, revenue for the quarter came in at $1.99 billion, missing the consensus estimate of $2.03 billion.

Total sales decreased 10%, while comparable store sales decreased 17% compared to the second quarter of fiscal 2021. The company put the comparable sales fall down to surging inflation and inventory headwinds.

"Our 17% comp sales decline for the quarter came in below our guidance of down 15% to down 13%. There were two major external factors that contributed to this weak trend – firstly, lower-to-moderate income shoppers continue to face tremendous economic pressure driven by the higher cost of living, and secondly, a massive overhang of inventory across the retail industry has driven a huge surge in promotional activity at other retailers," said Michael O'Sullivan, CEO of Burlington Stores.

The company believes economic pressure on lower-to-moderate income shoppers, and very high levels of promotional activity, will continue well into the second half of the year. As a result, it lowered its full-year sales and earnings outlook.

The company now sees third-quarter earnings per share between $0.36 and $0.66, versus the consensus of $1.39. Comparable store sales are expected to decrease 18% to 15%.

Furthermore, FY2022 earnings per share are seen between $3.70 and $4.30, versus the consensus of $5.70, while comparable store sales for the period are expected to decline in the range of down 15% to down 13%.

Following the report, a Wells Fargo analyst who has an Overweight rating and $200 price target on the stock said the company's "results were expected to be slightly weak, and they were."

"However, while we believe buy-side expectations were for a cut to the FY outlook, we think BURL's FY EPS plan was taken down well below buy-side expectations," explained the analyst. "In some good news, QTD trends have improved from July. While the cut is clearly prudent and makes sense to us, it does show a deeper hole for them to dig their way out of next year (and makes the bull's $8.00+ EPS 'hope' look less likely)."