Burlington Stores, Inc. (BURL) Earnings & Analysis

Latest quarter

Burlington reported quarterly revenue of $3.0 billion, up 11.0% from $2.7 billion a year earlier. Revenue missed the consensus by −0.87%, although both the reported and estimated amounts rounded to $3.0 billion. Adjusted earnings per share as counted by the consensus were $2.96, above the $2.18 estimate.

The company’s filing attributed sales growth primarily to new and non-comparable stores, alongside higher comparable-store sales. CEO Michael O’Sullivan said comparable sales rose in the quarter even as new openings drew some business from nearby Burlington locations.

Burlington’s gross margin rose to 46.2% from 43.8%, while operating margin increased to 8.51% from 5.20%. The filing attributed the gross-margin increase primarily to tariff refunds and improved merchandise margin. Diluted earnings per share rose to $2.88 from $1.47.

Free cash flow increased to $29.3 million from $22.2 million a year earlier. The filing said inventory also rose, primarily because of higher comparable-store inventory and stock for new stores, partly offset by lower reserve inventory.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Michael O’Sullivan said Burlington would reinvest its tariff refunds in lower prices in the second half. He told analysts the decision reflected pressure on households from the cost of living, particularly for moderate- and lower-income families. He also said Burlington had shifted away from heavily tariff-exposed categories in the prior year, reducing its exposure to those costs.

Asked about the consumer, O’Sullivan said he was more cautious, citing persistently higher gas prices and pressure on household budgets. He said Burlington would manage its purchasing and inventory and be ready to pursue demand if sales trends improved. He also said other retailers’ price investments could mute the effect of Burlington’s own reductions. Stores in lower-income trade areas continued to record comparable-sales growth above the chain average, he said.

CFO Kristin Wolfe said merchandise margin benefited from better initial markups and less tariff pressure, as well as markdown timing and a lower shortage rate. She also pointed to supply-chain productivity and lower store-related costs, partly offset by freight and depreciation pressure. Her discussion of quarterly profitability excluded the benefit of the tariff refunds.

O’Sullivan said new stores contributed to sales growth but also diverted some sales from nearby locations. He said Burlington accounts for that effect when evaluating new sites and expects the elevated impact to continue through the rest of the year. Wolfe said Burlington expects 135 gross openings and about 115 net new stores in fiscal 2026.

Looking ahead, O’Sullivan said the company would pass the quarter’s earnings outperformance into its full-year outlook while maintaining its second-half sales guidance. Wolfe said the refund reinvestment was the reason for lower expected operating margins in the third and fourth quarters; excluding it, the company’s underlying fall margin assumptions were unchanged.

Guidance

Burlington raised its fiscal 2026 earnings outlook and now expects adjusted earnings per share of $11.77 to $11.97. Wolfe said the company passed the quarter’s underlying earnings outperformance through to the full-year forecast.

The company now expects full-year sales growth of 10.0% to 11.0%, compared with its prior forecast of 9.00% to 11.0%. It expects comparable-store sales growth of 3.00% to 4.00%, versus the previous 2.00% to 4.00%. Burlington also raised its forecast for adjusted EBIT margin expansion.