Burlington Stores Inc

The Consumer Staples Select Sector SPDR Fund rose 2.6% in July, as gains in discount retailers offset declines in alcoholic beverage and tobacco stocks. Target and Dollar General each rose about 10%, while Coca-Cola gained 7%, Molson Coors added 6.7%, and Philip Morris advanced 5.7%. Constellation Brands fell 6.3% to become the sector's worst performer, followed by Altria down 5.6%, Keurig Dr Pepper down 4%, and Procter & Gamble and Walmart each down 2%. Analyst Justin Purohit said Target's rally was driven by company-specific execution, while Dollar General's strength reflected consumers trading down amid inflation pressures, and he flagged discount retailers including Dollar Tree, TJX Companies, Ross Stores, and Burlington Stores as best positioned if inflation remains sticky.

The eight general merchandise retail stocks tracked by this publication reported a very strong first quarter, with revenues beating analysts' consensus estimates by 2.5% and next quarter's revenue guidance coming in 2.2% above expectations. Kohl's reported revenues of $3.17 billion, down 2% year on year and in line with expectations, making it the slowest grower in the group, though its stock has risen 33.4% since the report. Five Below led the group with revenues of $1.29 billion, up 32.5% year on year and beating estimates by 5.7%, while also delivering the highest guidance raise among peers, yet its stock fell 9.1%. Ollie's Bargain Outlet posted revenues of $658.9 million, up 14.2% but missing estimates by 0.7%, and its stock dropped 16.4%. Burlington Stores reported revenues of $2.86 billion, up 14.1% and beating estimates by 2.7%, with its stock up 5.9%. Ross Stores achieved the biggest analyst estimate beat with revenues of $6.01 billion, up 20.6% and surpassing expectations by 6.6%, and its stock gained 7.6%.

BJ's Restaurants has returned 71.3% so far this year, significantly outperforming the Retail-Wholesale sector's average gain of about 1.5%. The stock holds a Zacks Rank of 2, or Buy, and its full-year earnings estimate has been revised 1.4% higher over the past 90 days. Within the sector, BJ's Restaurants belongs to the Retail - Restaurants industry, which has gained about 0.5% year-to-date. Another sector outperformer, Burlington Stores, is up 19.6% this year and carries a Zacks Rank of 2, with its consensus EPS estimate rising 3.9% over the past three months.

Burlington Stores has been upgraded to a Zacks Rank #2 (Buy), reflecting an upward trend in earnings estimates. The Zacks Consensus Estimate for the company has increased 3.9% over the past three months, with analysts steadily raising their projections. For the fiscal year ending January 2027, the discount retailer is expected to earn $11.71 per share, unchanged from the prior year. The upgrade places Burlington Stores in the top 20% of Zacks-covered stocks based on estimate revisions, suggesting potential near-term stock price appreciation.

Ross Stores posted the strongest first-quarter results among discount retailers, with revenue of $6.01 billion, up 20.6% year over year and beating analyst estimates by 6.6%. The company also exceeded expectations for next-quarter EPS guidance and EBITDA. Five Below reported revenue of $1.29 billion, up 32.5% year over year, surpassing estimates by 5.7% and raising its full-year guidance, though its stock fell 15.2%. Ollie's Bargain Outlet had the weakest performance, with revenue of $658.9 million missing estimates by 0.7% and the softest full-year guidance update. TJX posted revenue of $14.32 billion, up 9.2% year over year and beating estimates by 2.4%, while Burlington Stores reported revenue of $2.86 billion, up 14.1% year over year and exceeding estimates by 2.7%. Overall, the five discount retailers tracked beat consensus revenue estimates by 3.3% and provided next-quarter revenue guidance 2.2% above expectations, though their average share price has declined 4.5% since reporting.

Burlington Stores raised its full-year fiscal 2026 adjusted earnings per share guidance to a range of $11.45 to $11.80 following first-quarter results that saw total sales rise 14% to $2.85 billion and comparable store sales increase 6%. Net income reached $115 million, with diluted earnings per share of $1.79 and adjusted earnings per share of $2.01, up 26% and well above the company's own previous guidance of $1.60 to $1.75. Gross margin expanded to 44.1% from 43.8% a year earlier, and adjusted EBITDA rose more than 16% to $284 million. The stock has surged nearly 50% over the past year, trading around $340 with a price-to-earnings ratio above 34, leaving limited upside according to a consensus analyst price target of $353.56. Burlington operates more than 1,200 off-price stores and competes with larger rivals TJX Companies and Ross Stores, while facing macroeconomic risks that could pressure consumer spending.