Diamonds and Dogs

8/29/19

Burlington Stores (BURL) ready for winter. The coat/jacket retailer is up 17% to a new high following strong earnings. Earnings easily beat expectations as sales rose 10.1% to $1.66 billon. The company also raised full year comps. Management said they were very pleased with our second quarter results, driven by our 3.8% comparable store sales increase and 10.5% overall sales growth, which resulted in a 19% increase in Adjusted EPS, well ahead of our guidance." CEO Tom Kingsbury went on to say, "based on our disciplined inventory management, our comparable store inventory decreased 7%, putting us in a very good position to take advantage of the abundant values available in the marketplace."

Ollie's Bargain Outlet (OLLI) heading to the bargain bin. The discount retailer is down 27% to a yearly low following earnings. Ollie's missed second quarter estimates by nearly every metric and further lowered guidance for the full year. Chief Executive Mark Butler noted that Ollie's opened twice as many stores in the quarter as it had the quarter before, including taking over 13 former Toys R Us locations. "The exceptional strength, rapid pace of openings and larger footprint of these new stores impacted comparable store sales through increased cannibalization and supply chain pressures that reduced comparable store inventory levels." He went on to say, "Comparable store sales were also affected by headwinds from store classes with exceptionally strong first-year sales now normalizing as they entered the comparable store base." In other words, not a great quarter.