Burlington Stores Battles Demand Shift, Inventory Challenges, Inflation

Scott Peters
27 May, 2022
New York City

Burlington Stores Inc earnings plunged after rising product and freight costs added to inventory woes as demand patterns shifted in the quarter. 

The retailer said total sales in the quarter ending on April 30 declined 12% to $1.9 billion on a comparable store sales fall of 18%. 

Net income in the quarter was $16 million or $0.24 per share compared to $171 million or $2.51 per share a year ago. 

Gross margin in the quarter declined to 41% from 43.3% a year ago after freight costs rose 150 basis points and merchandise margin decreased 80 basis points. 

Product sourcing costs which include the cost of processing goods through supply chain and buying costs increased to $157 million from $141 million a year ago. 

Net income in the quarter plunged to $16 million, or $0.24 per share from $171 million or $2.51 per share a year ago. 

Comparable quarter sales patterns changed as more people returned to work and demanded different goods than were available at stores. 

The demand shift was evident in the monthly sales trend. Comparable sales on a 3-year basis declined 6% in February, fell 2% in March and increased 5% in April when computed on a geometric basis. 

However, the consumer demand is still weak for the company's merchandise as discount shoppers struggle with higher fuel costs and tight budgets. 

Guidance and Outlook 

The retailer guided second quarter comparable store sales to decline between 13% and 15% and for the full-year fall between 6% and 9%. 

The retailer is still planning to open new 120 stores and relocate or close 30 stores and add net 90 new stores in fiscal 2022.  

Company and Stock 

Burlington Stores Inc fell 0.7% to $168.55 after the retailer reported quarterly results. 

Burlington Stores in the year-so-far has declined 42.1%.