Burlington Beats Earnings Estimates But CEO Warns of ‘Uncertain and Unpredictable’ Times Ahead
Burlington Stores Inc. logged better-than-expected earnings and sales, but it sounded caution on the next quarter as rising COVID-19 cases across the country pose a threat to its business.
For the period ended Oct. 31, the off-price chain recorded profits of $20 million, or earnings of 29 cents per share, versus the prior year’s profits of $103 million, or earnings of $1.53 per share. The decline was attributed to the drop in sales, which decreased 6% to $1.67 billion, as well as higher product sourcing costs driven by pandemic-related disruptions. Still, the figures crushed analysts’ forecasts for earnings of 16 cents per share and revenues of $1.53 billion.
Comps at Burlington fell 11%. According to the company, sales trends were “challenging” in August due to a lack in inventory and delayed back-to-school purchases. However, they improved “significantly” in the combined months of September and October as inventory recovered and demand picked up for BTS products.
“We were pleased with the progress we made in the third quarter,” CEO Michael O’Sullivan said in a statement. “There were early signs of progress with our Burlington 2.0 Off-Price Full Potential Strategy as we chased the sales trends, took advantage of great opportunistic buys and turned our inventories rapidly. We were able to drive sales and also achieve a very healthy gross margin.”
However, the chief executive warned that the spike in new coronavirus infections could further impact the company’s overall performance as a number of state and local governments are mulling lockdowns that could shutter nonessential retail once again. In late August, when Dick’s reported Q2 results, O’Sullivan foresaw “a lot of risk” in Q3. (Its guidance for the full year remains suspended.)
“Unfortunately, the outlook remains uncertain and unpredictable — in fact, the situation across the country with COVID-19 appears to be deteriorating,” he said. “The fourth quarter has gotten off to a weak start with November month-to-date comparable store sales running down in the low double digits. In this uncertain environment, we will continue to plan and manage our business conservatively.”
At the end of the third quarter, Burlington had $1.64 billion in liquidity, including $1.35 billion in unrestricted cash and $292 million in availability through its asset-based lending facility.
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