Results
BURLINGTON STORES REPORTS STRONG SECOND QUARTER SALES AND EARNINGS GROWTH.
15TH CONSECUTIVE QUARTER OF DOUBLE DIGIT EPS GROWTH.
Total sales increased 11%, on top of 10% last year
Comparable store sales increased 2%, on top of 5% last year
Net income was $184 million, and diluted EPS was $2.88
6Adjusted EPS increased 38% to $2.37, on top of a 39% increase last year
Adjusted EBIT margin increased 100 basis points versus last year
Outlook
1Increasing full year Adjusted EPS guidance to $11.77 to $11.97Guidance raised
Management commentary
Michael O’Sullivan, CEO, stated, “We are pleased with our strong financial performance in the second quarter, Total sales grew 11% on top of a strong 10% increase last year.
Comp store sales increased 2% on top of 5% last year, for a solid 7% two-year stack.
8Excluding the impact of tariff refunds, Adjusted EPS grew 38% versus the second quarter of last year, on top of a 39% increase in the prior year.
7This was driven by a 100 basis point increase in our operating margin.
This represented our 15th consecutive quarter of double digit EPS growth, reflecting our ability to consistently convert sales growth into margin expansion and exceptional earnings growth.”
Mr. O’Sullivan continued, “During the second quarter, we received $55 million in tariff refunds.
Rather than taking a one-time boost to earnings, we intend to fully invest these refunds back into the business in the back-half of the year, to deliver even sharper values to our shoppers.
Over the last few years, the rising cost of living has made life difficult for many customers.
At Burlington, we already offer great deals.
We plan to use the refunds to make these deals even better.”
Outlook
Mr. O’Sullivan continued, “Given our intent to invest the refunds in sharper values, we expect the direct impact of tariff refunds to be neutral to full year earnings.
2That said, we are raising guidance for the full year, passing through our underlying performance beat from Q2.Guidance raised
4Our updated Fiscal 2026 guidance is for comp growth of 3% to 4% and EPS growth of 16% to 18%.”
Results
Fiscal 2026 Second Quarter Operating Results
Total sales increased 11% compared to the second quarter of Fiscal 2025 to $2,998 million, while comparable store sales increased 2% compared to the second quarter of Fiscal 2025.
Gross margin rate as a percentage of net sales was 46.2% vs. 43.7% for the second quarter of Fiscal 2025, an increase of 250 basis points.
Excluding the benefit of $55 million in tariff refunds, merchandise margin expanded 70 basis points, while freight expense increased 10 basis points as a percentage of net sales.
Product sourcing costs, which are included in selling, general and administrative expenses (SG&A), were $226 million vs. $209 million in the second quarter of Fiscal 2025.
Product sourcing costs include the costs of processing goods through our supply chain and buying costs.
SG&A was 34.0% as a percentage of net sales vs 35.2% in the second quarter of Fiscal 2025.
Adjusted SG&A , excluding $4 million and $11 million of expenses, respectively, associated with bankruptcy acquired leases, was 26.2% as a percentage of net sales vs. 26.7% in the second quarter of Fiscal 2025.
The effective tax rate was 23.9% vs. 26.0% in the second quarter of Fiscal 2025.
The Adjusted Effective Tax Rate was 23.6% vs. 26.0% in the second quarter of Fiscal 2025.
Net income was $184 million, or $2.88 per share vs. $94 million, or $1.47 per share for the second quarter of Fiscal 2025.
Adjusted Net Income, excluding the $41 million after tax benefit of tariff refunds, was $151 million, or $2.37 per share, vs. $110 million, or $1.72 per share for the second quarter of Fiscal 2025; this also excluded $3 million and $8 million, respectively, of expenses in each period, net of tax, associated with bankruptcy acquired leases.
Diluted weighted average shares outstanding amounted to 63.9 million during the quarter compared with 63.9 million during the second quarter of Fiscal 2025.
Adjusted EBITDA was $324 million vs. $257 million in the second quarter of Fiscal 2025, which excludes the $55 million benefit of tariff refunds, as well as $4 million and $11 million, respectively, of expenses associated with bankruptcy acquired leases, an increase of 130 basis points as a percentage of sales.
Adjusted EBIT was $210 million vs. $162 million in the second quarter of Fiscal 2025, excluding the same amounts, an increase of 100 basis points as a percentage of sales.
First Six Months of Fiscal 2026 Results
Total sales increased 12% compared to the first six months of Fiscal 2025.
3Net income increased 53% compared to the same period in Fiscal 2025 to $299 million, or $4.67 per share vs. $3.05 per share in the prior period.
Adjusted EBIT, excluding $12 million and $17 million, respectively, of expenses associated with bankruptcy acquired leases, as well as the $55 million benefit of tariff refunds, was $389 million vs. $314 million in the first six months of Fiscal 2025, an increase of 60 basis points as a percentage of sales.
Adjusted Net Income, excluding $9 million and $12 million, respectively, of after-tax expenses associated with bankruptcy acquired leases, as well as the $41 million after-tax benefit of tariff refunds, was $286 million, or $4.46 per share, vs. $217 million, or $3.39 per share for the first six months of Fiscal 2025.
Inventory
Merchandise inventories were $1,541 million vs. $1,415 million at the end of the second quarter of Fiscal 2025, a 9% increase, driven by our 149 net new stores and a comparable store inventory increase
of 11% compared to the second quarter of Fiscal 2025.
Reserve inventory was 43% of total inventory at the end of the second quarter of Fiscal 2026 compared to 50% at the end of the second quarter of Fiscal 2025.
Reserve inventory is largely composed of merchandise that is purchased opportunistically and will be sent to stores in future months or next season.
Corporate events
Liquidity and Debt
Results
The Company ended the second quarter of Fiscal 2026 with $1,646 million in liquidity, comprised of $704 million in unrestricted cash and $942 million in availability on its ABL facility.
The Company ended the second quarter with $1,914 million in outstanding total debt, including $1,712 million on its Term Loan facility, $186 million in Convertible Notes, and no borrowings on its ABL facility.
Capital return
Common Stock Repurchases
During the second quarter of Fiscal 2026, the Company repurchased 270,279 shares of its common stock under its share repurchase program for $87 million.
As of the end of the second quarter of Fiscal 2026, the Company had $218 million remaining on its current share repurchase program authorization.
Outlook
Outlook
Please note that guidance now includes the benefit of $55 million in tariff refunds, which were recognized in the second quarter of fiscal 2026.Guidance raised
In addition, guidance also includes the reinvestment of approximately 40% of such refunds in the third quarter and approximately 60% in the fourth quarter of fiscal 2026.
Tariff refunds therefore have a neutral impact on full fiscal year 2026 earnings guidance.Guidance reaffirmed
5Excluding the $55 million planned tariff refund reinvestment, our underlying Fall guidance assumptions for EBIT margin improvement and earnings growth are unchanged versus prior guidance, estimated EBIT margin improvement of 10 to 30 basis points and EPS growth of 7% to 10%.Guidance reaffirmed
As we noted earlier, we believe it is important to pass on those savings to our customers and drive even stronger value offerings.
For Fiscal Year 2026 (the 52-weeks ending January 30, 2027), the Company now expects:
Total sales to increase in the range of 10% to 11% on top of the 9% increase during Fiscal 2025; this assumes comparable store sales will increase in the range of 3% to 4%, on top of the 2% increase during Fiscal 2025;
Capital expenditures, net of landlord allowances, to be approximately $875 million.
This excludes any potential costs related to the relocation of our corporate headquarters, which is currently being evaluated.
The timing and amount of such relocation expenditures are still uncertain;
To open approximately 115 net new stores;
Depreciation and amortization to be approximately $460 million;
Adjusted EBIT margin to increase in the range of 20 to 40 basis points versus Fiscal 2025; excluding $16 million of anticipated expenses associated with bankruptcy acquired leases in Fiscal 2026 and $35 million in Fiscal 2025;
Net interest expense to be approximately $55 million;
An Adjusted Effective Tax Rate of approximately 25%; and
Adjusted EPS in the range of $11.77 to $11.97, as compared to $10.17 of Adjusted EPS last year; excluding $12 million, net of tax, of anticipated expenses associated with bankruptcy acquired leases in Fiscal 2026 and $26 million in Fiscal 2025.
This assumes a fully diluted share count of approximately 64 million shares.
For the third quarter of Fiscal 2026 (the 13-weeks ending October 31, 2026), the Company expects:
Total sales to increase in the range of 9% to 11%; this assumes comparable store sales will increase in the range of 1% to 3% versus the third quarter of Fiscal 2025;
Adjusted EBIT margin to decrease 80 to 60 basis points versus the third quarter of Fiscal 2025; excluding approximately $2 million of anticipated expenses associated with bankruptcy acquired leases in the third quarter of Fiscal 2026 and $11 million in the third quarter of Fiscal 2025;
An Adjusted Effective Tax Rate of approximately 26%; and
Adjusted EPS in the range of $1.60 to $1.70, as compared to $1.80 in Adjusted EPS last year; excluding $2 million, net of tax, of anticipated expenses associated with bankruptcy acquired leases in the third quarter of Fiscal 2026 and $8 million in the third quarter of Fiscal 2025.
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