Unseasonably warm weather this fall moderated Burlington Stores comp sales in its third quarter, although the company made progress year over year with a lift from store growth.
Net income was $90.6 million, or $1.40 per diluted share, versus $48.6 million, or 75 cents per diluted share, for the year-prior quarter, the company reported. Adjusted for one-time events, net income was $99.9 million, or $1.55 cents per diluted share, versus $63.8 million, or 98 cents per diluted share, in the year-earlier period.
A Yahoo Finance-published analyst consensus estimate was for adjusted diluted earnings per shares of $1.55 and revenues of $2.56 billion.
Comparable store sales advanced 1% in the quarter year over year. Net revenues were $2.53 billion versus $2.29 billion in the year-before period, the company stated.
In a conference call, Michael O’Sullivan, Burlington CEO, said comps were positive, but warm weather in the quarter put pressure on sales, as many customers remember the company by the name it used to go by, Burlington Coat Factory, and look at it as a destination for winter merchandise. As such, warm fall temperatures pressured cold weather gear sales and the traffic it pulls through other departments.
Store growth was the major driver of revenue gains. The company continues to add stores, focusing on its recently developed 25,000 square foot prototype. Burlington has opened 147 new stores year to date, including 31 relocations.
As the company released its financial results, O’Sullivan said, “Our third-quarter comp trend started out very strongly, but then warmer temperatures from mid-September onwards slowed our sales momentum. Cold Weather categories represent about 15% of sales in the third quarter. 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. I was very pleased with how well our teams reacted to the change in weather. We proactively controlled liquidity and receipts, especially of cold weather merchandise, and drove strong margin improvement and earnings growth in the third quarter, with an adjusted EBIT margin increase of 80 basis points, and adjusted EPS growth of 41%. These increases were driven by higher gross margin and leverage on supply chain expenses.”
As he looked into the fourth quarter and beyond, Sullivan said: “The agility with which we operated during the quarter has left us in a strong inventory position, which has us well poised for the holiday season. To this end, November is off to a good start, and we are optimistic about our prospects for the fourth quarter. But with the key selling weeks still ahead of us, we are planning our business cautiously and maintaining our comparable store sales guidance of 0% to 2% for the quarter. We are ready to chase if the trend is stronger.”
