Burlington Stores, Inc.

This is our first report on Burlington Stores, Inc., one of the major off-price retailer chains in the U.S. The company delivered a strong quarter, with sizable, consecutive improvement in its sales trends. Comparable store sales increased by 6% and the the result was an all-around beat. The company increased its values for new receipts in the fourth quarter and actively exploited markdowns to encourage speedier terms on existing inventory. Burlington also observed a boost in traffic. The management interprets this increase in traffic as a sign that the macro headwinds may be beginning to weaken. In particular, the substantial surge from late 2021 into early 2022 is starting to fade away, despite inflation still being high. The overall performance of their new stores, especially the new store format, continues to be good. The management intends to open 90 to 100 gross new stores in 2023 which should result in 70 to 80 new stores after relocations and closures. We initiate coverage on the stock of Burlington Stores with a ‘Hold’ rating.