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Burlington Stores Stock Climbs on Third-Quarter Earnings Beat

Burlington shares climb as the discount department store chain beats Wall Street's third-quarter expectations.

Burlington Stores  (BURL) - Get Burlington Stores, Inc. Report shares climbed on Tuesday after the discount department store chain posted better-than-expected fiscal-third-quarter earnings.

Shares of the Burlington, N.J., company at last check were up 8.1% to $284..

Burlington said it made its earnings comparisons to the third quarter of 2019 due to the volatility in its 2020 results caused by the Covid-19 pandemic.

The company posted net income of $93 million, or $1.36 a share, compared with $103 million, or $1.53 a share, for the third quarter of 2019. 

Analysts surveyed by FactSet were expecting Burlington to report earnings of $1.25 a share for the latest period.

Sales totaled $2.231 billion, up 30% from 2019, and ahead of the FactSet consensus for $2.23 billion. 

Comparable-store sales increased 16% from fiscal 2019. That was short of the FactSet consensus of a rise of 19.4%.

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The gross margin rate narrowed to 41.4% from 42.4% for the third quarter of 2019.

“As predicted, freight and supply chain headwinds pressured margins in Q3," Chief Executive Michael O'Sullivan said in a statement. 

"We fully expect these headwinds to moderate over time and, as they do, this should generate very attractive off-price buying opportunities as well as significantly lower expenses.”

O'Sullivan added that as the economy moves into a more inflationary environment, "shoppers will be even more attracted" to Burlington's offerings.

The company declined to provide sales or earnings guidance due to uncertainty caused by the pandemic.

MKM Partners analyst Roxanne Meyer in a note to investors that Burlington's earnings results were meaningfully ahead of Wall Street's consensus, according to the Fly.

She said comp growth was achieved even as checks pointed to select product voids, Growth was fueled by Burlington's execution and anticipation of demand heading into back-to-school, the analyst wrote.

Meyer, who has a buy rating and a $360 price target, recommended buying shares on any weakness.