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Burlington Stores posts a Q3 miss but shares soar 15% on positive commentary

Stock Markets Nov 22, 2022 10:10
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By Senad Karaahmetovic

Burlington Stores (NYSE:BURL) stock is up 15% higher today after the retailer said business trends have improved recently.

The positive commentary more than offset weaker-than-expected Q3 results. BURL posted a Q3 EPS of $0.43 on revenue of $2.04 billion to miss the average analyst estimate of $0.52 on sales of $2.06 billion.

"In Q3 we took significant steps to improve the value and mix of our assortment. These actions have driven an improvement in our trend from mid-October through November. We are encouraged by this but given the external risks we are maintaining our guidance for Q4," CEO Michael O'Sullivan said, sending BURL shares higher in pre-market Tuesday.

For this quarter, Burlington sees Q4 EPS at $2.60 (up or down $0.15), somewhere in line with the consensus of $2.61. Comparable sales are expected to decrease from 9% to 6%.

On a full-year basis, the EPS is projected in the range of $3.77-4.07, missing the consensus of $4.00. Comparable store sales are expected to decrease in the range of down 15% to down 14% for Fiscal 2022.

"While we acknowledge that there are risks and uncertainties, we think the outlook for 2023 is very positive. We anticipate that the economic and competitive environment could set up very well for off-price. We also recognize that we will be lapping our own execution mistakes and under-performance from 2022. Based on these factors we believe that we can start to drive significant sales, margin, and earnings recovery next year," O'Sullivan added.

Goldman Sachs analysts took note of "weaker" Q3 results.

"We see today's result as mixed but slightly positive. We acknowledge that BURL's comp trend and earnings result in the quarter was weaker than peers in the off-price space. However, we do see some signs of improvement," the analysts said in a note.

BMO analysts added:

"Through our conversations, we believe BURL has a heavily debated company as of late and this report may well bolster both sides. BURL is clearly underperforming TJX/ROST and the company is acknowledging it, while suggesting their confidence on their ability for improvement."

Burlington Stores posts a Q3 miss but shares soar 15% on positive commentary
 

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