Burlington Stores' Growth Strategy and Ambitious Financial Targets
2025-01-24
Burlington Stores had its third quarter 2024 earnings call, where key executives Michael O'Sullivan, the Chief Executive Officer, and Kristin Wolfe, the EVP and Chief Financial Officer, shared insights. O'Sullivan discussed various topics, including the third quarter results, fourth quarter outlook, longer-term model with the new store program, and preliminary sales and earnings growth outlook for 2025.
During the third quarter of fiscal 2024, Burlington Stores saw a notable 11% increase in total sales, with comp store sales growing by 1%. The growth was primarily driven by the new store opening program. However, the company faced challenges with warmer temperatures impacting comp store sales growth, especially in cold weather categories. Despite this, effective inventory management was evident, with selling inventory on a comp basis down 2% compared to the previous year.
Looking forward, Burlington Stores is maintaining its guidance range of flat to 2% comp growth in the fourth quarter, citing the compressed holiday calendar as a factor. The company has set ambitious financial targets for 2028, aiming to achieve total sales of around $16 billion and operating income of $1.6 billion. In the current year, 147 new stores were opened, with projections to end 2024 with 101 net new stores, surpassing average sales volume expectations.
In terms of internal improvements, Burlington Stores anticipates high single-digit total sales growth, supported by 100 net new stores and flat to 2% comp sales growth. The third quarter performance highlighted growth in total sales, comp sales, and an 80 basis points margin improvement driven by higher gross margin and supply chain savings.
Looking ahead, Burlington Stores is prioritizing its long-term supply chain strategy by aiming to own new distribution centers to enhance flexibility and efficiency for their off-price model. Initiatives such as the Burlington 2.0 program are underway, focusing on new in-season trending processes and store-level sales algorithms to optimize sales and allocation strategies.
In conclusion, Burlington Stores continues to address challenges like weather impacts and external disruptions while leveraging its off-price model and strategic initiatives to boost sales and earnings growth. With a strong leadership team, a commitment to value offerings, and a focus on operational excellence, Burlington Stores is well-positioned for sustained success in the retail sector.