Burlington Stores: A Potential for Margin Expansion Burlington Stores: A Potential for Margin Expansion

By: Alex Freidmen

Piper Sandler analyst Edward Yruma upgraded Burlington Stores, Inc BURL to Overweight from Neutral, raising the price target to $240 from $155.

Yruma expressed increasing confidence in the 300+ basis points (bps) margin expansion opportunity and anticipated continued market share gains.

According to the analyst, the conservative approach of department stores in the first half of 2024 ensures a conducive environment for off-price retailers, such as Burlington Stores, to further gain market share.

Yruma emphasized that Burlington Stores presents an improved in-store shopping experience and offers compelling value propositions, positioning the company to continue capturing market share.

The analyst believes that the company’s five-year guidance of 3-4% comparable growth is attainable in a stable consumer environment.

Burlington Stores underwent significant operational and cultural changes during 2022/2023.

Yruma wrote that the heavy lifting internally is largely complete and that Burlington Stores can refocus on accelerating long-term growth.

Noting that a targeted 300 bps improvement in earnings before interest and taxes (EBIT) margin looks achievable, the analyst stressed that this would merely return Burlington Stores to margin levels seen in 2018/2019.

The analyst projected revenue of $9.571 billion for fiscal year 2023, with an expectation of $10.431 billion for fiscal year 2024.

Price Action: Burlington Stores shares were trading higher by 1.58% at $196.42 at the time of the last check on Wednesday.

Photo via Wikimedia Commons

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