US based off-price retailer Burlington Stores Inc has announced a shakeup of its management division, which includes the departure of its CEO Thomas Kingsbury.
Kingsbury who has been CEO, president and chairman for more than ten years, will be replaced by Michael O’Sullivan – formerly president and COO of Ross Stores – in September. O’Sullivan said under his leadership he continued to see additional potential for comparable store sales growth, expansion of the store fleet, and improvement in operating margins.
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Jennifer Vecchio, chief merchandising officer, principal, has been appointed to the newly created role of president, chief merchandising officer and will continue to be responsible for merchandising and planning as well as overseeing marketing and strategy.
Burlington also lowered its first-quarter earnings outlook from US$1.21-1.31 to $1.21-1.25. It said comparable store sales are expected to increase in the range of 0% to 0.5%, within the previous guidance of 0% to 2%.
Cowen’s analyst John Kernan congratulated Kingsbury on a “job well done” and said its contacts in the industry “speak highly of” O’Sullivan. On the updated outlook, Cowen maintained its “outperform” status as it believes Burlington’s long term share gain story stands.
“Burlington can increase its store base from 675 to 1,000 over time. Store growth combined with low-single-digit same store sales creates a sustainable high-single-digit top-line trajectory for the foreseeable future. Expansion of Burlington’s vendor base and investments in merchandising and planning and allocation lead to higher traffic, improved inventory flow and markdown rates and a consistent improvement in EBIT margin from 8.5% to ~10%. Gradual improvements in productivity closer to off-price leaders TJ Maxx and Ross Stores and debt paydown could generate double-digit CAGR in earnings per share through 2022.”
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