What to Watch When Burlington Stores Posts Third-Quarter Results

Burlington Stores (BURL) is expected to report higher third-quarter earnings and revenue than last year before Tuesday's opening bell.

Analysts surveyed by FactSet are looking for adjusted earnings of 33 cents per share on revenue of $1.32 billion. During the same quarter last year, the off-price retailer earned 25 cents per share on revenue of $1.23 billion.

Wall Street is forecasting that comparable-store sales will increase 3.3% in the most recent period, according to FactSet. Last year, comparable-store sales grew 2.8%.

BMO Capital Markets said Ross Stores' (ROST) better-than-expected results for the 2016 third quarter last week should provide a positive read-through for Burlington due to the momentum of the off-price channel and relatively favorable weather conditions.

"We note that both ROST and BURL utilize a similar pack-away model, which likely benefited from last year's inventory liquidations in the full-price channel, enabling cheaper buying opportunities," the firm wrote in a recent note.

Packaway inventory is purchased with the intent that it will be stored in a company's warehouses until a later date.

Additionally, the majority of Ross' store fleet is based in the Western and Southern U.S., which faced unfavorable weather during the period, whereas Burlington has a larger portion of stores concentrated in the Northeast and Mid-Atlantic, where there was more favorable weather, BMO noted.

MKM Partners said that off-price retailers have demonstrated continued strength and resilience in a tough retail environment.

"We believe TJX  (TJX) and ROST's 5% and 7% comp gains, respectively, driven primarily by traffic gains at TJX and in part by traffic at ROST, bode well for continued momentum into 4Q and strength at BURL," the firm wrote in a note today.

Shares of Burlington slumped 3.19% to $75.45 in late-afternoon trading on Monday. The stock has run up about 76% year-to-date.

As of July 30, Burlington operated 570 stores, including an online store, in 45 states and Puerto Rico.

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