Burlington Stores, Inc. BURL has demonstrated strong upward momentum, trading above its 50 and 200-day simple moving averages (SMAs). SMA is a key indicator of price stability and long-term bullish trends.

The company ended Friday’s trading session at $291.90, above its 50 and 200-day SMAs of $284.56 and $249.36, respectively, highlighting a continued uptrend. This technical strength, combined with consistent momentum, indicates positive market sentiment and investor confidence in Burlington’s financial stability and growth potential.

BURL Trades Above 50 & 200-Day Moving Averages

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Shares of this leading retailer of branded apparel products are currently trading 2.3% below its 52-week high of $298.89 reached on Nov. 25, 2024, making investors contemplate their next moves. In the past year, the BURL stock has gained 47.1%, outperforming the Zacks Retail-Discount Stores industry’s 20.2% growth.

The company’s strategic initiatives, including enhancing merchandising capabilities and optimizing store operations, have helped it outperform the broader Retail-Wholesale sector and the S&P 500 index’s respective growth of 31.8% and 24.8% in the past year.

BURL Stock Past-Year Performance

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Burlington 2.0 Strategy Enhances Operational Performance

Burlington's 2.0 transformation is driving improvements in operational performance and customer value through the integration of cutting-edge technologies, such as upgraded merchant tools and machine-learning algorithms. These advancements optimize inventory management, reduce markdowns, and align with the company's commitment to offering value to price-conscious consumers.

This technological leap underlines BURL's focus on serving lower-income shoppers, whose discretionary spending is recovering, and higher-income consumers seeking cost-effective alternatives. By enhancing customer satisfaction, these innovations reinforce Burlington’s leadership position in the off-price retail sector, positioning the company for sustained growth.

BURL’s Store Expansion

Burlington continues its impressive growth trajectory, reporting a 10.5% year over year increase in total sales for the third quarter of fiscal 2024. A central element of this growth is the company’s targeted store expansion strategy, aiming for 101 store openings by the end of fiscal 2024. These new locations, with 25,000-square-foot prototypes, are strategically placed in high-traffic areas to optimize customer engagement and operational efficiency.

The relocation of stores has contributed to a 10% year-over-year sales increase, highlighting Burlington’s ability to enhance its physical footprint. With plans to open 500 stores by 2028, the company is on track to solidify its position as a leader in the retail sector.

The upcoming 2-million-square-foot distribution center in Savannah, GA, scheduled to open in fiscal 2026, will further enhance the company’s operational efficiency and scalability. By owning its distribution centers, BURL gains the flexibility to support its expansive store growth, ensuring long-term cost savings and margin improvements.

Burlington Responds to Rising Costs & Challenges

BURL has faced rising expenses, with adjusted selling, general, and administrative (SG&A) costs climbing 9.2% year over year to $680 million in the fiscal third quarter. The increase is largely due to higher investments in store payroll to boost in-store service levels and maintain competitive wages amid a tight labor market. Additionally, product sourcing costs rose from $200 million to $210 million, reflecting higher supply-chain costs despite improvements in distribution center productivity.

We anticipate adjusted SG&A costs to rise 11.8% year over year in fiscal 2024. As a percentage of net sales, this metric is expected to increase 40 basis points year over year in fiscal 2024.

In the fiscal third quarter, unusually warm temperatures led to a 300-basis-point decline in comparable store sales (comps), illustrating the risks associated with unpredictable weather patterns.

Final Words on BURL

Burlington's strong momentum, marked by its position above key moving averages, reflects positive market sentiment and investor confidence. The company's continued growth, driven by strategic expansion and technological innovations, positions it well for sustained success.

While rising costs and external challenges persist, Burlington's focus on efficiency and customer value ensures its competitive edge. With these factors in play, the company’s stock remains a promising contender in the retail sector, making it an attractive option for investors seeking long-term potential. You should consider holding on to this Zacks Rank #3 (Hold) stock for now.

Stocks to Consider

We have highlighted three better-ranked stocks, namely Abercrombie & Fitch Co. ANF, Deckers Outdoor Corporation DECK and The Gap, Inc. GAP.

Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 69.4% and 15.1%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 14.8%.

Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It carries a Zacks Rank of 2 at present.

The Zacks Consensus Estimate for DECK’s fiscal 2024 earnings and sales suggests growth of 15.2% and 14.1%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 41.1%.

Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It presently has a Zacks Rank #2.

The Zacks Consensus Estimate for Gap’s fiscal 2025 earnings and sales indicates growth of 41.3% and 0.8%, respectively, from the fiscal 2024 reported figures. GAP has a trailing four-quarter average earnings surprise of 101.2%.

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

Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report

The Gap, Inc. (GAP) : Free Stock Analysis Report

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

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