Burlington Stores Inc (NYSE:BURL) stock rose 5.49% (As on November 26, 11:20:29 AM UTC-4, Source: Google Finance) after the company reported third-quarter revenue that fell short of analyst expectations, despite the company beating earnings estimates and raising its full-year profit outlook. Despite the revenue miss, Burlington’s adjusted EBIT margin increased 60 basis points compared to the previous year, and adjusted EPS grew 16%. Merchandise inventories were $1.66 billion at quarter-end, up 15% from the same period last year, while comparable store inventories decreased 2%. The company maintained a strong liquidity position with $1.53 billion available at quarter-end. The company is very pleased with the new store opening program and performance, the weather adjusted comp growth, and the rapid progress it is making in expanding the margin.
Moreover, gross margin rate as a percentage of net sales was 44.2% vs. 43.9% for the third quarter of Fiscal 2024, an increase of 30 basis points. Merchandise margin expanded by 10 basis points, while freight expense improved 20 basis points. Adjusted Net Income was $116 million vs. $100 million for the third quarter of Fiscal 2024
Product sourcing costs, which are included in selling, general and administrative expenses (SG&A), were $214 million vs. $209 million in the third quarter of Fiscal 2024, decreasing 40 basis points as a percentage of net sales. Product sourcing costs include the costs of processing goods through our supply chain and buying costs. The company ended the third quarter of Fiscal 2025 with $1,532 million in liquidity, comprised of $584 million in unrestricted cash and $948 million in availability on its ABL facility.
BURL in the third quarter of FY25 has reported the adjusted earnings per share of $1.80, beating the analysts’ estimates for the adjusted earnings per share of $1.64. The company had reported the adjusted revenue growth of 7 percent to $2.71 billion in the third quarter of FY25, slightly missing the analysts’ estimates for revenue of $2.72 billion. The comparable store sales rose 1%. The company attributed the revenue performance to significant traffic declines after the back-to-school period, citing “unseasonably warm temperatures in the major markets.” The comparable sales trends improved to mid-single-digits in mid-October once weather cooled, a trend that continued through the first three weeks of November.
The company raised its full-year adjusted EPS guidance to a range of $9.69 to $9.89, above the analyst consensus of $9.54. For the fourth quarter, Burlington expects comparable store sales to increase 0% to 2%. Looking forward, the company expects the operating income to grow to approximately $1.6B by 2028.