Burlington Stores(US:BURL)2024-11-26 21:39Financial Data and Key Metrics Changes - Total sales increased by 11% in Q3 2024, following a 12% growth in Q3 2023 [7][19] - Comparable store sales (comp sales) grew by 1%, compared to a 6% increase in the same period last year [8][19] - Adjusted EBIT margin expanded by 80 basis points, reaching 5.6% [21] - Adjusted earnings per share (EPS) for Q3 was $1.55, a 41% increase year-over-year [22] Business Line Data and Key Metrics Changes - Comp store sales for cold weather categories were down in the negative teens, while non-cold weather categories saw a 4% increase [10] - The mix of cold weather merchandise represented about 15% of sales in Q3, increasing to nearly 25% by October [10] Market Data and Key Metrics Changes - The company noted that warmer temperatures significantly impacted Q3 comp sales, estimated to be a 300 basis point effect [10][31] - Major hurricanes in Q3 also negatively affected comp sales by approximately 100 basis points [31] Company Strategy and Development Direction - The company aims to grow total sales to approximately $16 billion and operating income to $1.6 billion by 2028 [13] - A new store opening program is a key driver, with 147 new stores opened in 2024, projecting 101 net new stores by year-end [14][16] - The company is focusing on acquiring existing leases from retailers in bankruptcy to enhance its store pipeline [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for Q4, with November sales running ahead of plan despite a compressed holiday calendar [12] - The company plans conservatively for 2025, anticipating total sales growth in the high single digits and comp sales growth of flat to 2% [17] Other Important Information - The gross margin rate for Q3 was 43.9%, an increase of 70 basis points year-over-year [20] - The company repurchased $56 million in common stock during the quarter, with $325 million remaining on its share repurchase authorization [23] Q&A Session Summary Question: Impact of weather on Q3 comp sales - Management clarified that the 300 basis point impact from warmer temperatures does not include hurricane effects, which added another point to the comp sales decline [31] Question: Inventory levels and markdown risk - Management indicated that inventory levels were well managed, with comp store inventories down 2% and no major markdown liabilities heading into Q4 [32] Question: Health of low-income consumers - Management noted that stores in lower-income areas are outperforming the chain, indicating a potential trend of increased spending among this demographic [39] Question: Drivers of margin expansion in Q3 - Management detailed that margin expansion was driven by lower markdowns, faster inventory turns, and improved supply chain efficiencies [40] Question: Outlook for 2025 - Management provided a preliminary outlook for 2025, expecting modest margin expansion and high single-digit revenue growth driven by new store openings [46]