BURL Stock Falls 27% From 52-Week High: Time to Load Up or Stay Away?

Burlington Stores, Inc.’s BURL shares are currently trading 26.6% below its 52-week high of $298.89 reached on Nov. 25, 2024, making investors contemplate their next moves. Over the past year, BURL stock has gained 12.6%, outperforming the Zacks Retail-Discount Stores industry’s 7.7% growth. 

The company’s initiatives, including enhancing merchandising capabilities and optimizing store operations, have supported it to outperform the broader Retail-Wholesale sector’s growth of 3.3%.  The S&P 500 index declined 1.4% in the same period. 

BURL Stock Past-Year Performance

This nationally recognized off-price retailer is currently trading at a notable low price-to-sales (P/S) multiple, below the averages of the industry and the sector. With a forward 12-month P/S of 1.19, BURL is priced lower than the industry and the sector’s average of 1.68 and 1.36, respectively. This undervaluation highlights its potential for investors seeking attractive entry points. Furthermore, BURL's Value Score of B emphasizes its investment appeal.

BURL Looks Attractive From a Valuation Standpoint

Burlington 2.0 Strategy Enhances Market Responsiveness

The company’s shift to its Burlington 2.0 model has played a pivotal role in driving recent performance. By streamlining BURL’s merchandise to feature a mix of top-tier national labels alongside elevated private brands, the retailer has sharpened its value offering. This “eliminate to elevate” strategy has struck a chord with consumers, fueling growth in comparable sales during the fiscal fourth quarter. A curated assortment spanning diverse price tiers has deepened customer engagement and bolstered brand perception.

The company's nimble approach to merchandising has also enabled it to pivot quickly in response to evolving market conditions. From seizing opportunities around strong back-to-school traffic to adapting inventory in light of unseasonably warm autumn weather, Burlington has shown impressive responsiveness. This operational agility provides a competitive advantage and reaffirms its position as a key player in the off-price retail space.

Accelerated Store Growth Supports BURL’s Prospects

Burlington’s expansion strategy remains firmly on track, reinforcing its vision for sustained long-term growth. In fiscal 2024, the retailer added 101 net stores, exceeding its annual goal through 147 gross openings, 31 relocations and 15 closures of underperforming sites. The company is well-positioned to repeat this success in fiscal 2025 and 2026, with a solid pipeline supporting at least 100 net new stores each year.

New and relocated locations have shown strong performance, marked by high sales and improved store productivity. Burlington has also capitalized on favorable real estate trends, securing prime locations vacated by other retailers such as Bed Bath & Beyond. This calculated expansion bolsters its national footprint and positions the brand to capture increased share in the expanding off-price retail market.

BURL’s Positive FY25 Outlook Reflects Confidence

Burlington is entering fiscal 2025 with an optimistic outlook, buoyed by favorable retail conditions. The company projects total sales to rise 6-8%, driven by new store rollouts and a forecasted 0-2% increase in comparable sales. Our estimate puts comp sales growth around 1.8% year over year.

Adjusted EBIT margin is expected to improve in the range of 0-30 basis points compared with the previous year, with our projection landing on the high end at a 30-basis-point increase. Adjusted earnings per share are expected to reach between $8.70 and $9.30, up from $8.35 in fiscal 2024.

Capital expenditures, net of landlord contributions, are projected to hit $950 million. For the first quarter of fiscal 2025, the company anticipates sales growth of 5-7% year over year.

Rising Costs Pose a Challenge for Burlington

Despite its positive outlook, Burlington is contending with rising costs. Adjusted selling, general and administrative expenses climbed 4% year over year in the fiscal fourth quarter, reaching $745.6 million. While the company benefited from sales leverage on corporate G&A costs, these gains were offset by increased incentive compensation and higher advertising spend timing.

Product sourcing expenses also rose to $217 million from $210 million in the year-ago quarter, impacted by elevated incentive pay and asset protection costs. As a share of sales, these pressures weighed on efficiency. For fiscal 2025, we anticipate a 7.6% year-over-year increase in adjusted SG&A expenses.

Burlington's fiscal first quarter guidance points to a tough start for 2025, with management projecting a 50-90 basis point decline in adjusted EBIT margin, a sharp drop from the 170-basis point gain a year earlier. Pressures include higher inventory costs, more promotions and fixed cost deleverage from soft sales. Adjusted EPS is forecasted between $1.30 and $1.45 in the fiscal first quarter compared with $1.42 reported in the previous-year period.

Final Thoughts on BURL

Burlington has demonstrated strong momentum through its refined merchandising strategy, enhanced store productivity and agile response to shifting market trends. The company’s shift to Burlington 2.0 model has deepened customer engagement and strengthened brand perception, while ongoing store expansion continues to broaden its footprint. Trading at a valuation below industry norms, the stock presents a potentially attractive entry point. For investors focused on value and growth, Burlington’s solid fundamentals and strategic direction may outweigh short-term market pressures. Investors should consider holding on to this Zacks Rank #3 (Hold) stock.

Stocks to Consider

Some better-ranked stocks in the retail space are The Gap, Inc. GAP, Stitch Fix SFIX and Deckers Outdoor Corporation DECK.

The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for The Gap’s fiscal 2025 earnings and revenues indicates growth of 7.7% and 1.6%, respectively, from fiscal 2024 reported levels. GAP delivered a trailing four-quarter average earnings surprise of 77.5%.

Stitch Fix delivers customized shipments of apparel, shoes and accessories for women, men and kids. It currently has a Zacks Rank of 2 (Buy).

The Zacks Consensus Estimate for Stitch Fix’s fiscal 2025 earnings implies growth of 64.7% from the year-ago actuals. SFIX delivered a trailing four-quarter average earnings surprise of 48.9%.

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

The Zacks Consensus Estimate for Deckers’ fiscal 2025 earnings and revenues implies growth of 21% and 15.6%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 36.8%.

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This article originally published on Zacks Investment Research (zacks.com).

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