Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
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What: Shares of apparel retailer Burlington Stores fell on Tuesday after the company fell short of analyst estimates for revenue when it reported first-quarter earnings. After being down nearly 12% soon after the market opened on Tuesday, the stock had partially recovered by 2 p.m., down about 9% at that time.
So what: Burlington reported revenue of $1.18 billion for the quarter, up 4.9% year-over-year but about $40 million short of what analysts were expecting. Comparable-store sales rose by just 0.8%, with the rest of the company's revenue growth being driven by new stores.
Non-GAAP earnings were in line with analyst estimates, coming in at $0.41 per share, 64% higher than the first quarter of 2014. The company also announced that it would be paying all employees a minimum wage of at least $9 per hour starting July 5, with increased efficiencies expected to completely offset the additional labor expense.
Burlington expects sales to increase by 6%-7% in 2015, driven by comparable-store sales growth of 2%-3% and 25 new stores being opened. Non-GAAP EPS is expected to be between $2.15 and $2.25 for the full year.
Now what: Before the decline today, shares of Burlington had nearly doubled over the past year, so the harsh reaction to the company's earnings report may simply be a case of overheated expectations. The stock isn't cheap, trading at about 22 times the high end of the non-GAAP earnings guidance, so the company's slow comparable-store sales growth during the quarter may have unnerved investors.
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Overall, Burlington's quarter looked fine, and if the company hits its guidance for the full year, the decline in the stock price today will likely be just a bump in the road.
The article Why Shares of Burlington Stores Inc. Slumped Today originally appeared on Fool.com.
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