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Burlington Stores (BURL) Banks on Strategies: Apt to Hold

Burlington Stores, Inc. BURL stock seems well-poised for growth, thanks to the successful execution of its Burlington 2.0 strategy and its Full Potential plan. The main objective of the 2.0 initiative is to significantly improve the execution of the off-price model and offer great value to the consumers. The company has also been progressing well in its store-expansion efforts for a while now.

Benefiting from such tailwinds, shares of this Zacks Rank #3 (Hold) company have surged 54.3%, outperforming the industry’s 0.2% growth over the past six months.

Moving forward, the consensus mark for BURL’s fiscal 2023 earnings per share of $6.11 suggests year-over-year growth of 43.4%. The consensus estimate for the next fiscal year’s sales of $9.87 billion mirrors a 13.4% rise from the last fiscal year.

Zacks Investment Research
Zacks Investment Research


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Detailing Growth Efforts

Via the 2.0 initiative, Burlington Stores focuses on offering great customer value by effectively managing liquidity, chasing sales, buying opportunistically and more operational flexibility. Under the operational aspect, it wants to achieve more flexibility via faster and more responsive supply chain and by more flexible store staffing model. This initiative is expected to drive the company’s top-line and operating margin growth.

Additionally, Burlington Stores has made multiple changes to its business model to adapt to the ongoing changes in the industry. The company’s off-price model is helping customers to get nationally branded, fashionable, high-quality as well as right-priced products.

To drive top-line growth, Burlington Stores is focused on store expansion. The company’s store-related efforts including smaller store prototypes have been on track. Management had earlier stated that it has potential to expand the store base to 2,000 stores. During the fiscal fourth quarter, BURL inaugurated 34 net stores, taking the total store base to 927. This comprised 39 store openings, five relocations and no closings. For fiscal 2023, management expects to open 70 to 80 net new stores. Management believes that it can grow its new store program and help them open 500 to 600 net new stores in the following five years.

Management believes that it still has significant opportunity to drive growth, improve profitability and achieve its off-price Full Potential plan. Management remains optimistic about the outlook for fiscal 2023 and expects both the top line and bottom line to grow year over year.

Although the company has been facing higher supply chain expenses and competitive pressures, the upsides mentioned above will likely help Burlington to battle such hurdles.

3 Key Picks

Some top-ranked stocks are Inter Parfums IPAR, The Kroger Co. KR and Deckers Outdoor Corporation DECK.

IPAR has an expected long-term earnings growth rate of 15% and a trailing four-quarter earnings surprise of 36.2%, on average. Inter Parfums currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Inter Parfums’ current financial year sales suggests growth of 10.8% from the year-ago reported numbers.

The Kroger Co. operates in the thin-margin grocery industry. It currently flaunts a Zacks Rank of 2. KR has a trailing four-quarter earnings surprise of 9.8%, on average.

The Zacks Consensus Estimate for Kroger’s current financial year sales and earnings suggests growth of 2.5% and 6.2%, respectively, from the prior-year reported numbers.

Deckers Outdoor, a leading designer, producer and brand manager of innovative, niche footwear, currently carries a Zacks Rank of 2 (Buy). DECK has a trailing four-quarter earnings surprise of 31%, on average.

The Zacks Consensus Estimate for Deckers’ current financial year sales and earnings suggests growth of 12.2% and 13.6%, respectively, from the corresponding year-ago reported figures.

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