Burlington Stores Q1 earnings blow past Street; cites supply chain problems

Burlington Stores Inc. reported strong sales earnings for its first quarter, helped by stimulus checks, the vaccination rollout and pent-up consumer demand.

Burlington’s net income totaled $171 million, or $2.51 a share, in the quarter ended May 1, compared to a loss of $333.7 million, or $5.09 a share, in the year-ago period and to $78 million, or $1.15 per share, in the first quarter of 2019. 

Adjusted per-share earnings came to $2.59, soaring past analysts’ estimates of $0.83.
 
Total sales increased 35% to $2.193 billion versus the first quarter of fiscal 2019, beating estimates of $1.776 billion. Same-store sales rose 20% compared to the 2019 period.

"There were numerous factors that contributed to improved traffic and consumer spending in the quarter - including the latest stimulus checks, the pace of the vaccine roll-out, and pent-up consumer demand," stated CEO Michael O'Sullivan.  

Burlington Stores operated 784 stores at the end of the quarter. It expects to open 100 new stores, while relocating or closing 25 locations, for a total of 75 net new stores this year.

O’Sullivan said the second quarter is "off to a good start. But go-forward sales trend remains very difficult to predict. 

“Meanwhile, expense headwinds in supply chain and freight have continued to deteriorate, and these are likely to weigh on our operating margin throughout the balance of the year," he said. 

On the company’s earnings call, CFO John Crimmins said that earlier this year Burlington thought — or hoped —   that some of the industry-wide supply chain issues would have started to settle down by now, something that “clearly hasn’t happened.”

“In fact, the whole global supply chain situation seems to have gotten maybe even a little bit worse,” he added.

Crimmins said there are significant capacity issues and delays with imports, especially shipments in through the West Coast ports. 

“The demand for ocean freight is far exceeding the supply right now and it’s significantly driven up ocean freight rates,” he explained. “There continues to be significant congestion in domestic freight networks, in all modes of transportation.”

Given the uncertainty surrounding the pace of the recovery of consumer demand and the ongoing COVID-19 pandemic, Burlington is not providing sales or earnings guidance for its current fiscal year.