Who is left? Which retailer hasn't moved that might turn out to be a home run now that so many others have rounded the base paths?
I think it's Burlington Stores (BURL) , the off-price clothing retail chain still thought of by many -- incorrectly I might add -- as Burlington Coat Factory.
The company, by its own admittance, had a not-so-hot last quarter, something that is highly unusual for a business that has an outstanding record of 24 consecutive quarters of rising same-store sales growth. The 675-store chain was up against some unusually tough comparisons. Still, listen to what they said on their quarterly conference call: "We are nevertheless disappointed that our comparable-store sales results were below guidance."
How many execs would ever hammer that point home?
To me, the mea culpa was overdone. I think that excluding some iterations of women's apparel and some cold weather inventory issues, Burlington's stock would barely be down instead of plummeting from $167 to $139 in the wake of the rare miss. In fact, the rest of the company's items were way above plan, which is meaningful given that this is not a women's coats company anymore. It carries accessories, footwear, menswear, baby and home merchandise, too.
But Burlington and its self-effacing CEO, Tom Kingsbury, was so intent on being transparent that the call came off as a gang that couldn't shoot straight, instead of the unrepentant Masters of the Universe tone that you would have expected given their long-term record of success.
Now we are at an unusual moment in retail, because of what was obviously a weather pattern that most merchants, like those at Burlington, didn't anticipate and weren't ready for.
Consider that when Home Depot (HD) reported, it was the first company that cited bizarre weather for a reason that it didn't do as well as expected. The stock was crushed for its honesty, as doubts couldn't be quelled that, somehow, Home Depot was caught up in a downdraft of higher mortgage rates and slower home sales, one that would bedevil the chain for ages.
Subsequently, you heard all of the other companies in retail grouse about the weather, too.
Now Home Depot's stock, after initially plummeting because of that weak weather/mortgage rate thesis, is now well above where it was when it reported the alleged weak quarter.
I think we are now in a similar situation with Burlington. Once we get into the spring, portfolio managers will forget what ailed the company and, instead, like they did with Home Depot, give the company the benefit of recognition that the winter truly was an oddity, and outlier, that played havoc with some of the best merchants, merchants like Burlington.
At the same time, I don't think Kingsbury is going to get whatever they had wrong in fashion a second time. They are too good for that to happen.
Now why is all of this so important? Because Burlington speaks next week at JP Morgan's annual retail conference -- and I expect that they will use the forum to talk about how the spring weather has led to a turn in fortunes for the chain.
The stock would be a coiled spring from these levels if that happens.
That's why I think you have to buy this stock ahead of when everyone hears that the issues have been cleared up that, for the first time, caused the company to go off course.
I can't say this one will go all the way back above where the stock was before the quarter -- as Home Depot has. The Wednesday presentation is by the investor relations officer, not Kingsbury. Still, I like the risk-reward for the stock of this great company, after a brief stumble where the benefit of the doubt should have been given, but, mistakenly, wasn't.