Apparel Retailer Burlington Stores Warns Weakness In Core Consumer Base, Stock Falls

Burlington Stores Inc BURL reported Q2 FY23 sales growth of 9% Y/Y to $2.175 billion, almost in line with the consensus of $2.17 billion, with the management guidance of sales growth of 8%-10%. 

Comparable store sales increased by 4%, which was at the high end of the company's guidance range.

Adjusted EPS of $0.60 surpassed the consensus of $0.43 and the management guidance of $0.35 - $0.45.

Gross margin expanded by 280 basis points Y/Y to 41.7%. Adjusted EBIT reached $68 million versus $43 million a year ago, while the Adjusted EBITDA rose to $141 million, up from $111 million a year ago.

At the end of Q2, merchandising inventories were $1.16 billion vs. $1.267 billion last year.

Michael O'Sullivan, CEO, stated, "Looking at the spring season as a whole, it is clear that the lower-income shopper, our core customer, is still under significant economic pressure. Based on the underlying year-to-date comp trend, we are narrowing our full-year comparable store sales guidance to a range of 3% to 4% versus 2022. It is possible that the trend will strengthen in the back half of the year, and if it does, then we are confident that we can chase it."

Outlook: Burlington forecasts FY23 adjusted EPS of $5.60-$5.90, down from prior guidance of $5.50 - $6.00 versus the Street view of $5.88.

It expects lower sales in FY23 of 11%-12% compared to prior range of 12%-14%

Price Action: BURL shares are down 6.59% at $158.75 on the last check Thursday.

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