Burlington Stores Q3 2024: Weathering the Storm

Burlington Stores Inc. (BURL) recently released its Q3 2024 earnings, providing insights into the company's performance and market trends. The results highlight the significance of effective inventory management and strategic planning in navigating challenging market conditions.

BURL reported total sales growth of 11% on top of last year's 12% growth, while comparable store sales growth came in at 1%, below last year's 6% growth. Net income was $91 million, and diluted EPS was $1.40. Excluding certain expenses associated with acquired Bed Bath & Beyond leases, adjusted EPS increased 41% to $1.55. The company raised its FY24 adjusted EPS guidance to $7.76-$7.96.



Michael O'Sullivan, CEO of BURL, stated that the company's comparable sales trend started strongly but slowed due to warmer temperatures from mid-September onwards. Cold weather categories, representing about 15% of sales, were particularly affected. Excluding these categories, comparable sales growth was 4%, consistent with the trend seen since March. Despite the slowdown, BURL remained optimistic about its prospects for the fourth quarter.

The company's agile response to the change in weather allowed it to control liquidity and receipts, especially of cold-weather merchandise. This proactive approach drove strong margin improvement and earnings growth, with an adjusted EBIT margin increase of 80 basis points and adjusted EPS growth of 41%. BURL's effective inventory and liquidity management helped maintain a strong inventory position heading into the holiday season.



BURL's gross margin rate as a percentage of net sales was 43.9%, up 70 basis points from the previous year. Merchandise margin expanded by 50 basis points, primarily driven by lower markdowns and higher markup. Freight expense improved by 20 basis points. Adjusted SG&A, as a percentage of net sales, decreased by 40 basis points to 26.9%.

The company's cautious yet optimistic outlook for Q4 reflects its ability to adapt to changing market conditions. BURL is well-positioned to capitalize on the holiday season, with a strong inventory position and a focus on strategic inventory management.

In conclusion, Burlington Stores' Q3 2024 earnings demonstrate the importance of effective inventory management and strategic planning in navigating challenging market conditions. The company's agile response to weather patterns and strong margin improvement position it well for the holiday season and beyond. Investors should remain focused on BURL's ability to adapt and capitalize on market trends as they evolve.