Burlington Stores (BURL) Seems a Lucrative Pick: Here's Why

Burlington Stores, Inc. BURL stock is placed well for growth, thanks to the successful execution of its Burlington 2.0 strategy and strong fundamentals. The main objective of the 2.0 initiative is to significantly improve the execution of the off-price model. The company has also been progressing well in its store-expansion efforts.

These catalysts have aided this apparel retailer’s shares to appreciate 45.3% in the past three months, surpassing the industry’s 1.9% dip. A Momentum Score of B for this presently Zacks Rank #2 (Buy) stock further speaks volumes.

Moving forward, analysts seem optimistic about the stock. The Zacks Consensus Estimate for sales is $9.57 billion and $6.44 for fiscal 2023 and $6.36 for fiscal 2023 shows an increase of 11.9% and 60.7%, respectively, year over year.

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s Delve Deep

Detailing the 2.0 initiative further, this strategy is focused on three aspects such as marketing, merchandising and store prototype. Under the marketing aspect, Burlington Stores looks to communicate a stronger and more direct off-price value message and deliver the communication in a more cost-effective manner. This marketing program is expected to leverage the company’s wide reach.  With respect to merchandising, management expects investing in merchandising capabilities to better execute the off-price model and boost overall growth.

Markedly, the Burlington 2.0 initiative is focused on offering great customer value by effectively managing liquidity, chasing sales, buying opportunistically, obtaining lean inventories, getting fast fresh receipts to the sales floor and making the store model flexible.

Burlington Stores’ off-price model is helping customers to get nationally branded, fashionable, high quality as well as rightly-priced products. Management has increased vendor counts, made technological advancements, initiated better marketing approaches and focused on localized assortments. Management has made multiple changes to its business model to adapt to the ongoing changes in the industry.

To drive top-line growth, Burlington Stores is focused on store expansion. The company’s store-related efforts including smaller store prototypes have been on track. Management had earlier raised the long-term store target to 2,000 stores from 1,000, by virtue of the smaller store format enabled by the Burlington 2.0 strategy.

Over time, this smaller prototype is likely to represent the majority of the company’s new store openings. With this smaller prototype, the company aims to operate with leaner in-store inventory levels.

Management remains optimistic about the outlook for 2023 on five factors. These factors are a greater consumer focus on value, lower levels of promotional activity with a recovering sales trend, strong availability of great off-price merchandise, taking the right actions and a better expense environment in 2023, particularly for the contracted transportation rates. It expects the availability of great in-season merchandise to be pretty strong in the year.

 All in all, BURL stock appears a safe investment bet for 2023 given the aforementioned factors.

Three Top-Ranked Stocks

Here we have highlighted three top-ranked stocks, namely Abercrombie & Fitch ANF, American Eagle Outfitters AEO and Boot Barn BOOT.

Abercrombie & Fitch, a leading casual apparel retailer currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and EPS suggests growth of 0.5% and 526.3%, respectively, from the year-ago reported figures. ANF delivered an earnings surprise of 107.7% in the last reported quarter.

American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently sports a Zacks Rank of 1. AEO has delivered an earnings surprise of 82.6% in the last reported quarter.

The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year sales and EPS suggests growth of 3.3% and 24.2%, respectively, from the year-ago reported figures.

Boot Barn, a fashion retailer of apparel and accessories, currently carries a Zacks Rank of 2. The company has a trailing four-quarter earnings surprise of 8.7%, on average.

The Zacks Consensus Estimate for Boot Barn’s current financial-year sales and EPS suggests growth of 8.2% and 9.1%, respectively, from the year-ago reported figures.

Is THIS the Ultimate New Clean Energy Source? (4 Ways to Profit)

The world is increasingly focused on eliminating fossil fuels and ramping up use of renewable, clean energy sources. Hydrogen fuel cells, powered by the most abundant substance in the universe, could provide an unlimited amount of ultra-clean energy for multiple industries. 

Our urgent special report reveals 4 hydrogen stocks primed for big gains - plus our other top clean energy stocks.  

See Stocks Now

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report

Boot Barn Holdings, Inc. (BOOT) : Free Stock Analysis Report

Burlington Stores, Inc. (BURL) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.