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Burlington Stores Adopts Initiatives to Fend Off Competition


The U.S. economy is on a bumpy ride right now as investors are apprehensive about a trade war with China and rate hikes by the Fed. In such a scenario, investors can play safe with Burlington Stores, Inc. BURL, which flaunts a long-term earnings growth rate of 18.7%.

The stock has gained 8.1%, outperforming its industry’s 1.7% over the past month. The stock gained primarily from strategic initiatives, including store expansion and efforts to keep pace with the evolving retail environment among others.

Notably, this Zacks Rank #2 (Buy) company has made multiple changes to its business model to adapt to the ongoing transformation in the sector and counter intense competition. The company, which started operating as a coat-focused off-price retailer, is now focusing on “open to buy” off-price model. Over the years, it has increased vendor counts, made technological advancements, adopted a better marketing approach and focused on localized assortments.

Apart from these, Burlington Stores has also been focusing on store expansion to boost the top line. The company’s store count has increased from 13 in 1980 to 629 stores in fiscal 2017. Furthermore, the company plans to open 35 to 40 net new stores in fiscal 2018. It also believes that there is scope to raise the store count to 1,000.

Solid FY18 View Boosts Estimates

Banking on such moves, the company provided a strong guidance for fiscal 2018, which is boosting investors’ confidence.

For fiscal 2018, management expects total sales growth of 9-10%, excluding the 53rd week. Comps growth is anticipated in the 2-3% range compared with the prior year’s 3.4%. The company envisions fiscal 2018 adjusted earnings per share in the range of $5.73-$5.83 compared with $4.14 (excludes the impact of 53rd week) last fiscal.

Markedly, the solid guidance has turned analysts constructive on the stock, as evident from the positive estimate revisions over the past 60 days. To note, seven estimates went up compared to one estimate moving down. This has taken the Zacks Consensus Estimate for fiscal 2018 to $5.76, reflecting an increase of 8.7%.

Looking for More? Check These 3 Retail Stocks

Nordstrom, Inc. JWN carries a Zacks Rank #2. Ithas a long-term earnings growth rate of 6%.

Macy's, Inc. M has a long-term earnings growth rate of 8.5% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kohl's Corporation KSS has a long-term earnings growth rate of 6.7% and carries a Zacks Rank #1.

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