Shares of Burlington Stores (NYSE: BURL) soared today after the off-price retailer delivered a better-than-expected result in its first-quarter earnings report, beating estimates on the top and bottom lines.
As a result, the stock finished the session up 17.6%.
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Burlington impresses the market
The off-price retailer reported revenue growth of 11% to $2.36 billion, which edged out the analyst estimate of $2.34 billion, and comparable-store sales were up 2% from the year-ago quarter.
What was more impressive were the company's gains further down the income statement as gross margin improved 120 basis points with the help of lower markdowns, and adjusted operating margin improved 170 basis points to 5.7%.
On the bottom line, adjusted earnings per share (EPS) jumped 68% to $1.42, benefiting in part from the shift in the timing of expenses, which beat estimates of $1.04.
Burlington is taking advantage of the Bed Bath & Beyond bankruptcy, acquiring the retailer's leases to fuel its expansion as demand for off-price retail remains strong.
CEO Michael O'Sullivan said momentum improved as the quarter went on, with 4% comparable sales growth in both March and April, though he did see "uncertainty in the external environment," as the company maintained its comparable-store sales guidance of 0% to 2%.
Can Burlington keep growing?
Looking ahead to the rest of the year, Burlington lowered its sales guidance growth from 9% to 11% to 8%-10%, but it raised its adjusted earnings EPS guidance to $7.35-$7.75 from an earlier range of $7 to $7.60. The company also expects to open approximately 100 new stores, showing it still has a long runway for growth.
While the stock isn't cheap, Burlington has a long track record of growth and execution, and the increase in profit guidance bodes well for another guidance hike later in the year.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
