What Happened?
Shares of off-price retail company Burlington Stores (NYSE:BURL) jumped 6.4% in the morning session after the company reported second-quarter earnings that significantly beat analyst expectations and raised its full-year financial outlook.
The company posted adjusted earnings of $1.72 per share, easily surpassing the consensus estimate of $1.29. Revenue also came in strong at $2.71 billion, a 9.7% year-over-year increase that topped forecasts of $2.64 billion. This top-line growth was supported by a solid 5% increase in comparable store sales, matching the growth rate from the same period last year. Encouraged by the strong performance, Burlington raised its full-year adjusted EPS guidance to a midpoint of $9.39. The positive results were driven by the strong sales beat and improved profitability, as the company demonstrated operating leverage with its expenses.
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What Is The Market Telling Us
Burlington’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago when the stock dropped 3.2% on the news that a hotter-than-expected wholesale inflation report fueled concerns about slowing consumer spending. The market was rattled by a Labor Department report showing the Producer Price Index (PPI), a measure of wholesale inflation, jumped 0.9% in July, significantly exceeding economists' expectations of a 0.2% rise. This was the largest monthly increase since March 2022, reigniting worries that businesses will be forced to pass higher costs on to consumers, who are already showing signs of price sensitivity. This inflation data has fanned concerns that U.S. tariffs on imported goods could start to translate into higher prices for shoppers. The inflation report landed amid growing evidence of consumer caution, with recent reports highlighting that shoppers are cutting back on non-essential spending, seeking out sales, and trading down to cheaper brands.
Burlington is up 5% since the beginning of the year, and at $300.12 per share, has set a new 52-week high. Investors who bought $1,000 worth of Burlington’s shares 5 years ago would now be looking at an investment worth $1,482.
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