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Category: Burlington Stores and Stock Market
Last updated: 10 June 2020 Stock price: $212.63 On this page we will look to provide more details, often not covered by mainstream financial websites of Burlington Stores, a retailer in the United States with 727 stores with net sales topping $7.3 billion in their 2019 fiscal year.
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About Burlington Stores
We are a nationally recognized retailer of high-quality, branded merchandise at everyday low prices. We opened our first store in Burlington, New Jersey in 1972, selling primarily coats and outerwear. Since then, we have expanded our store base to 727 stores as of February 1, 2020, inclusive of an internet store, in 45 states and Puerto Rico. We have diversified our product categories by offering an extensive selection of in-season, fashionfocused merchandise at up to 60% off other retailers’ prices, including: women’s ready-to-wear apparel, menswear, youth apparel, baby, beauty, footwear, accessories, home, toys, gifts and coats. We sell a broad selection of merchandise acquired directly from nationally recognized manufacturers and other suppliers.
Quick facts about Burlington Stores
- Burlington Stores is listed on the New York Stock Exchange under share code ticker: BURL
- Burlington Stores market capital: $14.23 billion (as at 10 June 2020)
- Number of employees of Burlington Stores: 47 000
- Number of stores: 727
- Gross square footage (in thousands) 47,449
- Selling square footage (in thousands) 31,997
- Net sales in fiscal 2019: $7.27 billion
- Earnings per share in fiscal 2019: $6.21
- Shares in issue; 67.3 million
- Stockholders equity in Burlington Stores: $528.149 million
- Stockholders equity per share: $7.84
Burlington Stores
Over 99% of our net sales are derived from stores we operate as Burlington Stores. We believe that our customers are attracted to our stores principally by the availability of a large assortment of first-quality, current, brand-name merchandise at everyday low prices. Burlington Stores offer customers a complete line of merchandise, including: women’s ready-to-wear apparel, accessories, footwear, menswear, youth apparel, baby, home, coats, beauty, toys and gifts. Our broad selection provides a wide range of apparel, accessories and furnishings for all ages.
We purchase both pre-season and in-season merchandise, allowing us to respond timely to changing market conditions and consumer fashion preferences. Furthermore, we believe Burlington Stores’ substantial selection of staple, destination products attracts customers from beyond our local trade areas. We believe these products drive incremental store traffic and differentiate us from our competitors. We believe the breadth of our selection and our ability to successfully operate in stores of varying square footage represents a competitive advantage. We believe that, as we continue to reduce our comparable store inventory, we will be able to reduce the square footage of our stores while continuing to maintain our broad assortment. As a result, we believe major landlords seek us as a tenant because the appeal of our merchandise profile attracts a desired customer base.
We purchase both pre-season and in-season merchandise, allowing us to respond timely to changing market conditions and consumer fashion preferences. Furthermore, we believe Burlington Stores’ substantial selection of staple, destination products attracts customers from beyond our local trade areas. We believe these products drive incremental store traffic and differentiate us from our competitors. We believe the breadth of our selection and our ability to successfully operate in stores of varying square footage represents a competitive advantage. We believe that, as we continue to reduce our comparable store inventory, we will be able to reduce the square footage of our stores while continuing to maintain our broad assortment. As a result, we believe major landlords seek us as a tenant because the appeal of our merchandise profile attracts a desired customer base.
Distribution and Warehousing of Burlington Stores
We have four distribution centers that shipped approximately 98% of merchandise units to our stores in Fiscal 2019. The remaining 2% of merchandise units are drop shipped by our vendors directly to our stores. Our two east coast distribution centers are located in Edgewater Park, New Jersey and Burlington, New Jersey. Our two west coast distribution centers are located in San Bernardino, California and Redlands, California. These four distribution centers occupy an aggregate of 2,884,000 square feet, and each includes processing, shipping and storage capabilities. In addition, we entered into a lease for an additional distribution center in Riverside, California occupying approximately 900,000 square feet, which is expected to become operational during Fiscal 2020.
In addition to the distribution centers that we operate, we have arrangements with third parties for the use of pool point facilities, which we believe streamline and optimize our distribution network We also operate three warehousing facilities to support our distribution centers. The east coast has two supporting warehouses in Burlington, New Jersey. The west coast has one supporting warehouse in Redlands, California. These three warehousing facilities occupy an aggregate of 1,456,000 square feet and primarily serve as storage facilities. In addition, as of February 1, 2020, we occupied approximately 180,000 square feet of space at a third-party logistics center in Plainfield, Indiana to support our e-commerce business.
In addition to the distribution centers that we operate, we have arrangements with third parties for the use of pool point facilities, which we believe streamline and optimize our distribution network We also operate three warehousing facilities to support our distribution centers. The east coast has two supporting warehouses in Burlington, New Jersey. The west coast has one supporting warehouse in Redlands, California. These three warehousing facilities occupy an aggregate of 1,456,000 square feet and primarily serve as storage facilities. In addition, as of February 1, 2020, we occupied approximately 180,000 square feet of space at a third-party logistics center in Plainfield, Indiana to support our e-commerce business.
Customer demographics of Burlington Stores
Our core customer is the 25-49 year old woman, with an average annual household income of $25,000-$100,000. The core customer is educated, resides in mid- to large-sized metropolitan areas and is a brand conscious fashion enthusiast. This customer shops for herself, her family, and her home. We appeal to value seeking and fashion conscious customers who are price-driven but enjoy the style and fit of high-quality, branded merchandise.
Competition of Burlington Stores
The U.S. retail apparel and home furnishings markets are highly fragmented and competitive. We compete on the basis of a combination of factors, including, among others, price, breadth, quality and style of merchandise offered, in-store experience, level of customer service, ability to identify and respond to new and emerging fashion trends, brand image and scalability. We compete for business with department stores, off-price retailers, specialty stores, online retailers, discount stores, wholesale clubs, and outlet stores, as well as with certain traditional, full-price retail chains that have developed off-price concepts. At various times throughout the year, traditional full-price department store chains and specialty shops offer brand-name merchandise at substantial markdowns, which can result in prices approximating those offered by us at our stores
Trademarks of Burlington Stores
We are the owner of certain registered and common law trademarks, service marks and tradenames (collectively referred to as the Marks) that we use in connection with our business. Our Marks include, but are not limited to, “Burlington Stores,” “BCF,” “Burlington,” “Burlington Coat Factory,” “Cohoes,” “Luxury Linens,” “MJM Designer Shoes,” “B” and “Baby Depot.” We consider these Marks and the accompanying name recognition to be valuable to our business. We believe that our rights to these properties are adequately protected. Our rights in these trademarks endure for as long as they are used.
Employees of Burlington Stores
As of February 1, 2020, we employed approximately 47,000 people, including part-time and seasonal employees. Our staffing requirements fluctuate during the year as a result of the seasonality of our business. We hire additional employees and increase the hours of part-time employees during seasonal peak selling periods. As of February 1, 2020, employees at one of our stores were subject to a collective bargaining agreement.
Seasonality of Burlington Stores
Our business, like that of most retailers, is subject to seasonal influences. In the second half of the year, which includes the back-to-school and holiday seasons, we generally realize a higher level of sales and net income. Weather is also a contributing factor to the sale of our clothing. Generally, our sales are higher if the weather is cold during the Fall and warm during the early Spring. Sales of cold weather clothing are increased by early cold weather during the Fall, while sales of warm weather clothing are improved by early warm weather conditions in the Spring. Although we have diversified our product offerings, we believe traffic to our stores is still driven, in part, by weather patterns.
Burlington Stores (NYSE: BURL) stock performance
The performance graph below and related information shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.
The following graph compares the cumulative total stockholder return on our common stock from the closing prices as of the end of each fiscal year from January 31, 2015 through February 1, 2020, with the return on the Standard & Poor’s (S&P) 500 Index and the S&P Retailing Index over the same period. This graph assumes an initial investment of $100 and assumes the reinvestment of dividends, if any. Such returns are based on historical results and are not intended to suggest future performance
The following graph compares the cumulative total stockholder return on our common stock from the closing prices as of the end of each fiscal year from January 31, 2015 through February 1, 2020, with the return on the Standard & Poor’s (S&P) 500 Index and the S&P Retailing Index over the same period. This graph assumes an initial investment of $100 and assumes the reinvestment of dividends, if any. Such returns are based on historical results and are not intended to suggest future performance
The graphic above shows that Burlington Stores easily outperformed the S&P 500 and the S&P 500 retailing index over the last 5 years. The average annual return provided by Burlington Stores was 34.2% while the S&P provided an annual average growth of 10.1% per annum. Burlington Stores increased by 3.4 times that of the S&P 500 over the last 5 years.
Our latest Burlington Stores stock valuation (6 March 2020)
So what are Burlington Stores Inc. stock worth based on their latest earnings report and the fiscal guidance provided for their 2020 fiscal year? Our valuation models gives a target price (full value price) of $161.10 per Burlington Stores Inc. stock (up slightly from our 3rd quarter 2019 earnings review valuation for Burlington Stores). We therefore feel the stock of Burlington Stores is overvalued
We usually recommend that long term fundamental or value investors to enter a stock at least 10% below our target price (full value price) which in this case is $161.10 So a good entry point would be around $145 or below. We expect to see the stock of Burlington Stores to pull back from current levels to closer to our target price in coming weeks and months.
Since the stock of Burlington Stores is trading at well above our suggested entry point we rate the stock as a sell
We usually recommend that long term fundamental or value investors to enter a stock at least 10% below our target price (full value price) which in this case is $161.10 So a good entry point would be around $145 or below. We expect to see the stock of Burlington Stores to pull back from current levels to closer to our target price in coming weeks and months.
Since the stock of Burlington Stores is trading at well above our suggested entry point we rate the stock as a sell