Why Burlington Stores Shares Dropped

Why Burlington Stores Shares Dropped

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.

What: Shares of Burlington Stores ended down 8% after falling as much as 23% during the trading session after reporting earnings today.

So what: The off-price retailer posted a loss of $0.05, in line with estimates, while revenue grew 10% to $1.06 billion. Comparable sales in the quarter improved 3.9% in what was the company's first report as a publicly traded company. The market seemed to be disappointed by same-store sales, projected to be just 2%-3% in the fourth quarter. CEO Tom Kingsbury said the company was "focused on executing growth drivers, expanding retail store base, and enhancing our operating margins in the future."

Now what: Today's pullback seems to come largely from shares having risen 30% since its IPO despite posting a loss for the quarter, and an underwhelming holiday comp outlook. With a P/E of 44 and only modest growth prospects, Burlington may have further to fall.

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