Burlington Stores, a well-known off-price retailer, released its financial results for the second quarter ending on 29 July 2023.

The US-based apparel and home product retailer reported a 4% increase in comparable store sales for the second quarter, which exceeded their expectations.

CEO Michael O’Sullivan expressed satisfaction with the company's performance, highlighting robust margin and earnings figures. The retailer attributed its success to strategies aimed at offering customers great value and a favourable supply of off-price merchandise.

Narrowing full-year guidance

The retailer acknowledged that lower-income shoppers, their core customer base, continue to face economic challenges. As a result, they adjusted their full-year comparable store sales guidance to a range of 3% to 4% compared to 2022.

However, they remain optimistic that this trend could improve in the latter half of the year.

Mr O’Sullivan emphasised the potential for expanding Burlington Stores' store count. The company has acquired leases for 62 former Bed Bath & Beyond locations, capitalising on recent opportunities created by retail bankruptcies.

This strategic move, along with a broader real estate market shift, positions them well for future growth in 2024 and beyond.

Financial highlights for Q2 2023

In the second quarter of fiscal year 2023, Burlington Stores reported the following key financial figures:

• Total sales increased by 9% to $2,170m compared to the same period in 2022.
• Comparable store sales grew by 4% year-over-year.
• Gross margin rate increased to 41.7% from 38.9%, driven by improved merchandise margins and reduced freight expenses.
• Selling, general and administrative expenses (SG&A) as a percentage of net sales increased to 35.7% from 34.6%.
• Net income for the quarter was $31m, or $0.47 per share, compared to $12 million, or $0.18 per share, in Q2 2022.
• Adjusted EBITDA increased to $141m from $111m in the second quarter of fiscal year 2022.

Positive six-month results

For the first six months of fiscal year 2023, Burlington Stores reported a 10% increase in total sales, with net income rising significantly by 126% compared to the same period in 2022.

Merchandise inventories decreased by 8% compared to the second quarter of fiscal year 2022. Meanwhile, reserve inventory, composed of future merchandise, accounted for 45% of total inventory.

The company ended the second quarter of fiscal 2023 with $1,340m in liquidity and $1,362m in outstanding total debt.

Stock repurchases and future plans

During the second quarter of fiscal year 2023, Burlington Stores repurchased 154,358 shares of its common stock. As of the end of the quarter, the company had $270m remaining on its current share repurchase programme authorisation.

The company's Board of Directors authorised the repurchase of up to an additional $500m of common stock through August 2025.

Looking ahead

For the full fiscal year 2023, Burlington Stores anticipates strong growth, expecting total sales to increase by approximately 11% to 12%.

They also plan to open 70-80 new stores and focus on improving margins. In the third quarter of fiscal year 2023, the company expects total sales to increase by 13% to 15% with an improved EBIT margin, despite some expected expenses related to recently acquired Bed Bath & Beyond leases.

Burlington Stores continues to navigate market dynamics and economic conditions while focusing on its commitment to delivering value to its customers.