Burlington Stores, Inc. (NYSE:BURL) continued with upbeat performance in fiscal 2017 as it posted second-quarter fiscal 2017 results and also provided an encouraging outlook. This off-price retailer posted adjusted earnings of 72 cents a share that beat the Zacks Consensus Estimate of 50 cents and surged from 39 cents delivered in the year-ago period.
Higher sales, margin expansion and share repurchase activity drove the bottom line. Net sales of this Zacks Rank #2 (Buy) stock came in at $1,363.2 million, up 8.6% year over year. Other revenues increased 1.6% to $5.8 million. Total sales were up 8.6% to $1,369 million. The Zacks Consensus Estimate for the quarter was $1,352 million. Comparable store sales (comps) rose 3.5% during the quarter compared with 5.4% growth registered in the year-ago quarter. This was the 18th straight quarter of comps growth.
Gross margin increased 110 basis points to 40.7% mainly due to improved merchandise margin. Adjusted EBITDA soared 28.5% to $127.3 million, while EBITDA margin as a percentage of sales, expanded 140 basis points to 9.3% on account of higher gross margin. Adjusted operating income increased 40.1% to $84.5 million, while operating margin grew 140 basis points to 6.2%. Management now anticipates adjusted EBITDA margin expansion of 70-80 basis points in fiscal 2017.
During the trading session yesterday, shares of Burlington Stores jumped 1.4%. So far in the year, the stock has risen 1.6% comfortably outperforming the industry that declined 8.1%.
Burlington Stores now intends to focus more on categories such as home, beauty and ladies apparel. Further, the company plans to remodel 34 stores in fiscal 2017. During the quarter, the company opened four new stores, thereby taking the total count to 600. Management informed that new and non-comp outlets contributed $70 million to the second-quarter sales. The company plans to open 37 net new stores up from 30 net stores estimated earlier. The company believes that there is room to increase the store count to 1,000.
Other Financial Aspects
Burlington Stores ended the quarter with cash and cash equivalents of $32.6 million, long-term debt (excluding current maturities) of $1,276.4 million and shareholders’ deficit of $95.9 million. During the first half of the fiscal year, the company incurred capital expenditures net of landlord allowances of $98 million. For fiscal 2017, the company projects net capital expenditures of approximately $210-215 million.
During the quarter, the company bought back 1,226,450 shares worth $112 million. The company recently announced share buyback program of up to an additional $300 million expected to be concluded over the span of two years.
Burlington Stores, Inc. Price, Consensus and EPS Surprise
Burlington Stores, Inc. Price, Consensus and EPS Surprise | Burlington Stores, Inc. Quote
Encouraging View
Management now expects total sales to increase in the band of 8.4-8.9%, including 1.4% from the 53rd week during fiscal 2017. The company projects comps growth of 2-3% for the second half of the year, resulting in comps increase of 2-2.5% for the fiscal year. Burlington Stores forecasts total sales increase of 6.7-7.7% with comps growth of 2-3% during the third quarter.
The company now envisions fiscal 2017 adjusted earnings in the range of $4.11-$4.18 per share compared with $3.24 reported in the prior year. This includes an expected benefit of 4 cents a share on account of the 53rd week. For the third quarter, earnings are expected to come within the range of 58-61 cents a share compared with 51 cents reported in the prior-year period.
Earlier, the company had projected total sales to increase in the range of 7.3-8.1% with adjusted earnings between $3.86 and $3.96 per share.
Looking for More? Check These 3 Trending Retail Stocks
Investors interested in the retail space may consider some better-ranked stocks such asThe Children's Place, Inc. (NASDAQ:PLCE) flaunting a Zacks Rank #1 (Strong Buy), and Big Lots, Inc. (NYSE:BIG) and Ross Stores, Inc. (NASDAQ:ROST) both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Children's Place delivered an average positive earnings surprise of 16.3% in the trailing four quarters and has a long-term earnings growth rate of 9%.
Big Lots delivered an average positive earnings surprise of 83% in the trailing four quarters and has a long-term earnings growth rate of 13.5%.
Ross Stores delivered an average positive earnings surprise of 6.3% in the trailing four quarters and has a long-term earnings growth rate of 10.4%.
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Burlington Stores, Inc. (BURL): Free Stock Analysis Report
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