Burlington Stores stock down as Q4 comparable sales forecast falls short

Investing.com -- Burlington Stores (NYSE:BURL) saw its shares slide more than 6% in Tuesday’s premarket trading after the company’s fourth-quarter forecast for earnings and comparable sales growth missed expectations.

For the third quarter of fiscal 2024, the department store retailer posted earnings per share (EPS) of $1.55, just above analysts' expectations of $1.54.

Revenue for the period reached $2.53 billion, slightly below the consensus estimate of $2.55 billion.

Gross margin improved to 43.9%, compared to 43.2% in the prior year, and came in ahead of the estimated 43.8%.

“Our third quarter comp trend started out very strongly, but then warmer temperatures from mid-September onwards slowed our sales momentum,” Michael O’Sullivan, CEO of Burlinton Stores said in a statement.

“Excluding these categories, our comp growth in the third quarter was 4%, which is consistent with the trend that we have seen in our business since March. We are very encouraged by this underlying comp sales trend.”

For the fourth quarter of fiscal 2024, which concludes on February 1, 2025, Burlington expects adjusted EPS to range between $3.55 and $3.75, compared to the consensus projection of $3.78.

Total (EPA:TTEF) sales are projected to increase by 5% to 7%, with comparable store sales expected to grow between 0% and 2%, falling below the consensus forecast of 2.21%.

The company anticipates a decline in adjusted EBIT margin of 50 to 80 basis points year-over-year and an effective tax rate of approximately 26%.

For the full fiscal 2024, Burlington forecasts EPS between $7.76 and $7.96, aligning closely with the consensus estimate of $7.92.

Total sales are expected to grow by 9% to 10%, building on a 10% increase for the fiscal year ended January 27, 2024. This assumes a comparable store sales increase of approximately 2%, following a 4% growth in the prior year.

Moreover, the company projects adjusted EBIT margin to expand by 60 to 70 basis points.