• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Wall Street Sees Strength in Burlington's Succession Plan

There's apparently no key man risk at Burlington.
By KEVIN CURRAN Aug 29, 2019 | 10:33 AM EDT
Stocks quotes in this article: BURL, KSS, M, ROST, JPM

One of the underappreciated factors in Burlington's (BURL) blockbuster report on Thursday is its seamless succession of Tom Kingsbury, the man who led the retailer for more than a decade.

Shares of the New Jersey-based retailer rose over 16% shortly after the market open, bolstered by a big earnings beat and raised guidance that bookended Kingsbury's tenure as top man at the company on a high note. Under his leadership, as a public company, Burlington shares have soared nearly 600%.

Prior to that stellar run, the lauded CEO had a decorated career as an executive at Kohl's (KSS) , Macy's (M) merger forerunner May Department Stores, and Filene's.

Given that track record, there could be understandable concern on the transition to new CEO Michael O'Sullivan, a former partner at Bain Capital and Vice President at J.P. Morgan (JPM)  , who most recently served as COO of key Burlington competitor Ross Stores (ROST) .

However, management quickly moved to instill confidence in the new CEO and the path ahead.

"Based on the strength of our team and our incoming CEO, Michael O'Sullivan, the future for Burlington is very bright," Kingsbury told analysts on Thursday morning. "During the hiring process, Michael was much aligned with the views of our Board in terms of future direction of Burlington. We see Michael as helping us implement our current corporate strategies."

He added that the growth outlook remains encouraging as O'Sullivan steps in and advised analysts to "give him a chance" as he steps into the executive office in mid-September.

Judging from analyst research, the street is giving him much more than just a chance.

"We think O'Sullivan's appointment bolsters the bull case thesis for BURL to accelerate its margin expansion story," Credit Suisse analyst Michael Binetti said. "On top of improving SSS as BURL fixes its women's apparel assortment issues, which we expect to be in a better place by Fall, we see a path for accelerating EPS growth next year."

J.P. Morgan analyst Matthew Boss noted that this is O'Sullivan's modus operandi as he kept productivity highly elevated against Burlington in his time at Ross.

"Operating margin expansion remains the opportunity over time with slightly more than 50% of the split driven by SG&A leverage," he explained. "We see retail 101 blocking and tackling as the key area of focus rather than an overhaul of SG&A investments noting a material productivity potential unlock."

The already positive dynamics in inventory management are quite encouraging ahead of his start on September 16 in Boss' view.

Inventory aged 91 days and older, declined to record low levels in the quarter, with inventory overall declining 7% and providing flexibility as O'Sullivan steps in.

Overall, the productivity focus of O'Sullivan make him a key factor in the stock story amidst numerous supply chain and pricing pressures on the retail sector.

With these factors at play, the market is clearly ready to give O'Sullivan much more than just a chance and is instead pinning hopes for Burlington to be among retail's best under his stewardship.

(Burlington Stores, Kohl's and JP Morgan are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells BURL, KSS or JPM? Learn more now.)

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are restricted from trading individual securities.

TAGS: Corporate Governance | Earnings | Investing | Markets | Stocks | Apparel | Retail | E-Commerce | Analyst Actions | Stock of the Day

More from Stocks

Market Looks Good from Above, Poor From Below

James "Rev Shark" DePorre
Jun 29, 2022 4:21 PM EDT

The major indexes held up well, but underneath, it wasn't pretty.

This FAANG Stock's Technicals Are at a Summer Crossroads

Bob Lang
Jun 29, 2022 3:30 PM EDT

Summer is a time when this name usually gains momentum. Will it this time?

Kass: Untapped Homeowners Equity and Imbedded Gains Will Be a Ballast to Growth

Doug Kass
Jun 29, 2022 3:00 PM EDT

Homeowners equity has more than tripled in the last decade.

Good High Yield Stocks Don't Have to Be Pricey. We've Got 3 to Prove It

Bob Ciura
Jun 29, 2022 1:32 PM EDT

Here are three cheap dividend stocks that should pay off big.

Don't Expect Fed Relief Anytime Soon

Maleeha Bengali
Jun 29, 2022 12:38 PM EDT

Major selloffs in recent years were accompanied by Fed cuts and market bottoms, but this time is different.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 04:51 PM EDT PAUL PRICE

    We should be in for better starting soon.

    Window dressing tomorrow, the last day of ...
  • 11:56 AM EDT STEPHEN GUILFOYLE

    Stocks Under $10

    Check out what's going on in the Stocks Under $10 ...
  • 12:04 AM EDT PAUL PRICE

    Two Good Signs -- Especially for Small-Cap Investors

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login