Wells Fargo’s Best Growth Stocks: 28 Stocks With The Highest Consensus EPS Growth Estimates

9. Burlington Stores, Inc. (NYSE:BURL)

Consensus Long-Term EPS Growth Estimate: 23%

Number of Hedge Fund Holders: 42

Burlington Stores, Inc. (NYSE:BURL) is an American off-price retailer whose shares are up 39% year-to-date. As is the case with any retailer, the firm depends on its ability to ship high volumes to maintain robust margins. Margins have been key to Burlington Stores, Inc. (NYSE:BURL)’s stock performance in 2024. A tight economy based on lower consumer spending has helped the firm with its shares jumping by 21% in May after the firm’s first-quarter earnings. These saw Burlington Stores, Inc. (NYSE:BURL) grow its gross and Merchandise margins by 1.2 percentage points and 90 basis points, respectively. The margin improvement came on the back of the firm growing its revenue by 11% to $2.36 billion. Burlington Stores, Inc. (NYSE:BURL) is currently undertaking a strategy to optimize its supply chain, and the results from this strategy will also improve its margins. Consequently, cost control will drive the hypothesis moving forward.

Burlington Stores, Inc. (NYSE:BURL)’s management commented on its important supply chain improvement strategies during the Q2 2024 earnings call. Here is what they said:

“We continue to be pleased by the faster-than-expected progress we’re making in driving productivity gains and cost savings in supply chain. As we shared in the prepared remarks, supply chain leveraged 60 basis points in Q2. And this was despite the start-up of a new distribution center in the second quarter and the receipt shift that we talked about from Q1 into Q2, we referenced this on last quarter’s call. We do have a number of productivity initiatives. These are more within the four wall process improvements that streamline our DC operations, reduce touches, reduce steps, reduce time to process and ultimately save labor dollars in the DC, and we’re harvesting these savings a little bit faster than we’d originally planned.

On previous calls, we had described supply chain productivity improvement as driving potentially 100 basis points of the 400 basis points of margin improvement we laid out last year in our long-range model. And we’ll see how the rest of this year plays out, but expect supply chain to continue to drive leverage in the back half. And in getting to the second part of your question, longer term, probably beyond the long-range model we’ve laid out, we do have an opportunity to drive incremental leverage as we modernize our supply chain with new larger, much more automated DCs that we expect to open. As I mentioned, we recently opened a new DC this year and we have another much larger DC under construction, which we expect to open in 2026. And with these new DCs, we have an opportunity to design DCs for off-price and with much, much more automation.”