Burlington Stores(BURL) - 2026 Q2 - Quarterly Results

Executive Summary & Business Highlights Burlington Stores delivered strong Q2 FY2025 results, driven by effective strategies, leading to increased sales, improved margins, and raised full-year earnings guidance CEO Commentary CEO Michael O'Sullivan expressed satisfaction with Q2 FY2025 performance, highlighting strong comparable store sales growth, margin expansion, and earnings beat, attributing success to "Burlington 2.0 strategies" and raising full-year earnings guidance while maintaining sales guidance for Q3/Q4 - Exceptional performance in the second quarter, with comparable store sales increasing 5% on top of 5% last year[3] - Adjusted EBIT Margin increased 120 basis points, while Adjusted EPS grew 39% versus the second quarter of last year[3] - Raising full year earnings guidance due to Q2 strength, while maintaining 0% to 2% comp growth guidance for Q3 and Q4[3] - Strong Q2 results linked to early stages of Burlington 2.0 strategies, expected to drive longer-term performance[3] Second Quarter Fiscal 2025 Highlights Burlington Stores reported robust Q2 FY2025 results, with total sales up 10% and comparable store sales up 5%, net income reaching $94 million, and Adjusted EPS increasing 39% to $1.72, leading to raised full-year Adjusted EPS guidance Q2 FY2025 Key Financial Highlights | Metric | Q2 FY2025 | Q2 FY2024 | Change (YoY) | | :----- | :-------- | :-------- | :----------- | | Total Sales | $2,701 million | $2,461 million | +10% | | Comparable Store Sales | +5% | +5% | Flat | | Net Income | $94 million | $74 million | +27% | | Diluted EPS | $1.47 | $1.15 | +27.8% | | Adjusted EBIT Margin | +120 bps | N/A | +120 bps | | Adjusted EPS | $1.72 | $1.24 | +38.7% | - Full year adjusted EPS guidance increased to $9.19 to $9.59[6] Financial Performance Analysis This section details Burlington Stores' robust Q2 and first six months of FY2025, showcasing significant growth in sales, profitability, and earnings per share Second Quarter Fiscal 2025 Operating Results Detailed Q2 FY2025 operating results show strong sales growth, improved gross margin driven by merchandise margin expansion and lower freight expense, and significant increases in adjusted profitability metrics Sales and Gross Margin Total sales increased 10% to $2,701 million, with comparable store sales up 5%, and gross margin rate improved by 90 basis points to 43.7%, primarily due to a 60 basis point expansion in merchandise margin and a 30 basis point improvement in freight expense Q2 FY2025 Sales and Gross Margin Performance | Metric | Q2 FY2025 | Q2 FY2024 | Change (YoY) | | :----- | :-------- | :-------- | :----------- | | Total Sales | $2,701 million | $2,461 million | +10% | | Comparable Store Sales | +5% | +5% | Flat | | Gross Margin Rate | 43.7% | 42.8% | +90 bps | | Merchandise Margin | N/A | N/A | +60 bps | | Freight Expense (as % of net sales) | N/A | N/A | -30 bps | Operating Expenses and Profitability SG&A as a percentage of net sales slightly increased by 10 basis points to 35.2%, but Adjusted SG&A improved by 30 basis points to 26.7%, while Adjusted EBIT and Adjusted EBITDA both saw significant increases, with Adjusted EBIT margin improving by 120 basis points Q2 FY2025 Operating Expenses and Profitability | Metric | Q2 FY2025 | Q2 FY2024 | Change (YoY) | | :----- | :-------- | :-------- | :----------- | | Product Sourcing Costs | $209 million | $191 million | +9.4% | | SG&A (% of net sales) | 35.2% | 35.1% | +10 bps | | Adjusted SG&A (% of net sales) | 26.7% | 27.0% | -30 bps | | Adjusted EBIT | $162 million | $118 million | +37.3% | | Adjusted EBIT (% of sales) | N/A | N/A | +120 bps | | Adjusted EBITDA | $257 million | $205 million | +25.4% | | Adjusted EBITDA (% of sales) | N/A | N/A | +120 bps | Net Income and Earnings Per Share Net income for Q2 FY2025 was $94 million, or $1.47 per diluted share, up from $74 million and $1.15 per share in the prior year, with Adjusted Net Income increasing to $110 million, or $1.72 per share, reflecting a 39% growth in Adjusted EPS Q2 FY2025 Net Income and EPS | Metric | Q2 FY2025 | Q2 FY2024 | Change (YoY) | | :----- | :-------- | :-------- | :----------- | | Net Income | $94 million | $74 million | +27.0% | | Diluted EPS | $1.47 | $1.15 | +27.8% | | Adjusted Net Income | $110 million | $80 million | +37.5% | | Adjusted EPS | $1.72 | $1.24 | +38.7% | | Diluted Weighted Average Shares Outstanding | 63.9 million | 64.3 million | -0.6% | | Effective Tax Rate | 26.0% | 26.0% | Flat | First Six Months Fiscal 2025 Results For the first six months of Fiscal 2025, total sales increased 8%, net income grew 28% to $195 million, or $3.05 per share, Adjusted EBIT increased by 80 basis points as a percentage of sales, and Adjusted Net Income rose to $217 million, or $3.39 per share First Six Months FY2025 Key Financials | Metric | 6 Months FY2025 | 6 Months FY2024 | Change (YoY) | | :----- | :-------------- | :-------------- | :----------- | | Total Sales | N/A | N/A | +8% | | Net Income | $195 million | $152 million | +28.3% | | Diluted EPS | $3.05 | $2.37 | +28.7% | | Adjusted EBIT | $314 million | $254 million | +23.6% | | Adjusted EBIT (% of sales) | N/A | N/A | +80 bps | | Adjusted Net Income | $217 million | $171 million | +27.0% | | Adjusted EPS | $3.39 | $2.66 | +27.4% | Financial Position and Capital Management Burlington Stores maintains a strong financial position with healthy liquidity, managed inventory levels, and active share repurchase programs Inventory Merchandise inventories increased 16% year-over-year to $1,415 million at the end of Q2 FY2025, though comparable store inventories decreased by 8%, with reserve inventory, largely opportunistic purchases, growing to 50% of total inventory from 41% last year Inventory Overview | Metric | End of Q2 FY2025 | End of Q2 FY2024 | Change (YoY) | | :----- | :--------------- | :--------------- | :----------- | | Merchandise Inventories | $1,415 million | $1,223 million | +16% | | Comparable Store Inventories | N/A | N/A | -8% | | Reserve Inventory (% of total) | 50% | 41% | +9 percentage points | Liquidity and Debt Burlington Stores maintained strong liquidity at the end of Q2 FY2025, with $1,694 million, comprising $748 million in cash and $946 million in ABL facility availability, while total outstanding debt was $2,039 million, including Term Loan and Convertible Notes, with no ABL borrowings Liquidity and Debt Position (End of Q2 FY2025) | Metric | End of Q2 FY2025 | | :----- | :---------------- | | Total Liquidity | $1,694 million | | Unrestricted Cash | $748 million | | ABL Facility Availability | $946 million | | Total Outstanding Debt | $2,039 million | | Term Loan Facility | $1,727 million | | Convertible Notes | $297 million | | ABL Facility Borrowings | $0 | Common Stock Repurchases During Q2 FY2025, the company repurchased 102,474 shares of common stock for $26 million, with $632 million remaining authorized under its share repurchase program as of the quarter-end Common Stock Repurchases (Q2 FY2025) | Metric | Q2 FY2025 | | :----- | :--------- | | Shares Repurchased | 102,474 | | Value of Repurchases | $26 million | | Remaining Authorization | $632 million | Outlook Burlington Stores provides its financial projections for Fiscal Year 2025 and the third quarter, anticipating continued sales growth and improved profitability Fiscal Year 2025 Guidance For FY2025, Burlington Stores projects total sales growth of 7% to 8%, with comparable store sales increasing 1% to 2%, plans to open approximately 100 net new stores, and expects Adjusted EPS in the range of $9.19 to $9.59, an increase from the prior year Fiscal Year 2025 Guidance | Metric | FY2025 Guidance | FY2024 Actual | | :----- | :-------------- | :------------ | | Total Sales Growth | 7% to 8% | +11% | | Comparable Store Sales Growth | 1% to 2% | +4% | | Capital Expenditures (net of landlord allowances) | ~$950 million | N/A | | Net New Stores | ~100 | N/A | | Depreciation and Amortization | ~$385 million | N/A | | Adjusted EBIT Margin Increase | 20 to 40 bps | N/A | | Net Interest Expense | ~$50 million | N/A | | Adjusted Effective Tax Rate | ~25% | N/A | | Adjusted EPS | $9.19 to $9.59 | $8.35 | | Fully Diluted Share Count | ~64 million | N/A | Third Quarter Fiscal 2025 Guidance For Q3 FY2025, the company anticipates total sales growth of 5% to 7%, with comparable store sales increasing 0% to 2%, Adjusted EBIT margin expected to range from down 20 basis points to flat, and Adjusted EPS projected between $1.50 and $1.60 Third Quarter Fiscal 2025 Guidance | Metric | Q3 FY2025 Guidance | Q3 FY2024 Actual | | :----- | :----------------- | :--------------- | | Total Sales Growth | 5% to 7% | N/A | | Comparable Store Sales Growth | 0% to 2% | N/A | | Adjusted EBIT Margin | Down 20 bps to Flat | N/A | | Effective Tax Rate | ~25% | N/A | | Adjusted EPS | $1.50 to $1.60 | $1.55 | Non-GAAP Financial Measures This section clarifies the use and provides detailed reconciliations of non-GAAP financial measures to GAAP equivalents for enhanced transparency and performance evaluation Note Regarding Non-GAAP Financial Measures Burlington Stores uses non-GAAP financial measures such as Adjusted SG&A, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Adjusted EBIT, and Adjusted Effective Tax Rate to provide greater transparency and assist investors and management in evaluating core operating performance by excluding items that vary substantially in frequency and magnitude - Non-GAAP measures are used to evaluate business performance and provide transparency by excluding items that vary substantially from core operating results[18][37] - These measures help compare core operating results between past and future periods and assess the ability to generate earnings and leverage sales[37] - Definitions for Adjusted Net Income, Adjusted EPS, Adjusted EBITDA, Adjusted EBIT, Adjusted EBIT Margin, Adjusted SG&A, and Adjusted Effective Tax Rate are provided[32][33][34][35][36] Reconciliation of Non-GAAP Financial Measures This section provides detailed reconciliations of GAAP financial measures to their non-GAAP counterparts, including Adjusted Net Income, Adjusted EPS, Adjusted EBIT, Adjusted EBITDA, Adjusted SG&A, and Adjusted Effective Tax Rate, for both the three and six months ended August 2, 2025, and August 3, 2024 Adjusted Net Income and Adjusted EPS Reconciliation Reconciliation shows adjustments for net favorable lease costs, costs related to debt amendments, impairment charges, and litigation matters, with their respective tax effects, to arrive at Adjusted Net Income and Adjusted EPS Adjusted Net Income and Adjusted EPS Reconciliation (in thousands, except per share data) | Metric | Q2 FY2025 | Q2 FY2024 | 6 Months FY2025 | 6 Months FY2024 | | :----- | :-------- | :-------- | :-------------- | :-------------- | | Net Income (GAAP) | $94,185 | $73,760 | $195,018 | $152,274 | | Adjustments (pre-tax) | | | | | | Net favorable lease costs | 1,932 | 3,138 | 4,070 | 6,108 | | Costs related to debt amendments | — | — | 112 | — | | Impairment charges | 1,580 | — | 2,095 | 8,210 | | Litigation matters | 6,750 | 1,925 | 6,334 | 1,925 | | Tax effect | (2,690) | (1,336) | (3,290) | (4,217) | | Adjusted Net Income | $101,757 | $77,487 | $204,339 | $164,300 | | Diluted WA Shares | 63,893 | 64,328 | 63,966 | 64,284 | | Adjusted EPS | $1.59 | $1.20 | $3.19 | $2.56 | Adjusted EBIT and Adjusted EBITDA Reconciliation Reconciliation details the adjustments from net income to Adjusted EBIT and Adjusted EBITDA, including interest expense/income, net favorable lease costs, debt amendment costs, impairment charges, litigation matters, and income tax expense Adjusted EBIT and Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 FY2025 | Q2 FY2024 | 6 Months FY2025 | 6 Months FY2024 | | :----- | :-------- | :-------- | :-------------- | :-------------- | | Net Income (GAAP) | $94,185 | $73,760 | $195,018 | $152,274 | | Interest expense | 17,427 | 16,582 | 33,237 | 33,231 | | Interest income | (4,124) | (6,128) | (8,835) | (14,200) | | Net favorable lease costs | 1,932 | 3,138 | 4,070 | 6,108 | | Costs related to debt amendments | — | — | 112 | — | | Impairment charges | 1,580 | — | 2,095 | 8,210 | | Litigation matters | 6,750 | 1,925 | 6,334 | 1,925 | | Income tax expense | 33,139 | 25,907 | 65,178 | 57,032 | | Adjusted EBIT | $150,889 | $115,184 | $297,209 | $244,580 | | Depreciation and amortization | 94,810 | 86,659 | 186,593 | 168,624 | | Adjusted EBITDA | $245,699 | $201,843 | $483,802 | $413,204 | Adjusted SG&A Reconciliation SG&A is reconciled to Adjusted SG&A by subtracting net favorable lease costs, product sourcing costs, and litigation matters Adjusted SG&A Reconciliation (in thousands) | Metric | Q2 FY2025 | Q2 FY2024 | 6 Months FY2025 | 6 Months FY2024 | | :----- | :-------- | :-------- | :-------------- | :-------------- | | SG&A (GAAP) | $949,931 | $863,981 | $1,817,989 | $1,689,207 | | Net favorable lease costs | (1,932) | (3,138) | (4,070) | (6,108) | | Product sourcing costs | (208,982) | (191,069) | (405,798) | (374,215) | | Litigation matters | (6,750) | (1,925) | (6,334) | (1,925) | | Adjusted SG&A | $732,267 | $667,849 | $1,401,787 | $1,306,959 | Adjusted Effective Tax Rate Reconciliation The GAAP effective tax rate is adjusted for items excluded from Adjusted Net Income to derive the Adjusted Effective Tax Rate Adjusted Effective Tax Rate Reconciliation | Metric | Q2 FY2025 | Q2 FY2024 | 6 Months FY2025 | 6 Months FY2024 | | :----- | :-------- | :-------- | :-------------- | :-------------- | | Effective tax rate (GAAP) | 26.0% | 26.0% | 25.0% | 27.2% | | Adjustments | — | — | 0.1% | — | | Adjusted Effective Tax Rate | 26.0% | 26.0% | 25.1% | 27.2% | Consolidated Financial Statements This section presents the company's unaudited condensed consolidated statements of income, balance sheets, and cash flows for the specified periods Condensed Consolidated Statements of Income The Condensed Consolidated Statements of Income provide a detailed breakdown of revenues, costs, and expenses, leading to net income for the three and six months ended August 2, 2025, and August 3, 2024 Condensed Consolidated Statements of Income (Unaudited, in thousands) | Metric (in thousands) | 3 Months Ended Aug 2, 2025 | 3 Months Ended Aug 3, 2024 | 6 Months Ended Aug 2, 2025 | 6 Months Ended Aug 3, 2024 | | :-------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Net sales | $2,701,026 | $2,461,193 | $5,201,101 | $4,818,510 | | Total revenue | $2,705,071 | $2,465,517 | $5,209,092 | $4,827,070 | | Cost of sales | $1,519,629 | $1,408,120 | $2,924,720 | $2,738,846 | | SG&A expenses | $949,931 | $863,981 | $1,817,989 | $1,689,207 | | Depreciation and amortization | $94,810 | $86,659 | $186,593 | $168,624 | | Interest expense | $17,427 | $16,582 | $33,237 | $33,231 | | Income before income tax expense | $127,324 | $99,667 | $260,196 | $209,306 | | Income tax expense | $33,139 | $25,907 | $65,178 | $57,032 | | Net income | $94,185 | $73,760 | $195,018 | $152,274 | | Diluted net income per common share | $1.47 | $1.15 | $3.05 | $2.37 | Condensed Consolidated Balance Sheets The Condensed Consolidated Balance Sheets present the company's financial position as of August 2, 2025, February 1, 2025, and August 3, 2024, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (Unaudited, in thousands) | Metric (in thousands) | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :-------------------- | :------------- | :--------------- | :------------- | | Cash and cash equivalents | $747,619 | $994,698 | $659,910 | | Merchandise inventories | $1,414,814 | $1,250,775 | $1,222,714 | | Total current assets | $2,574,046 | $2,628,803 | $2,257,924 | | Total assets | $9,309,263 | $8,770,413 | $7,821,436 | | Accounts payable | $1,024,320 | $1,038,148 | $1,017,449 | | Total current liabilities | $2,093,794 | $2,272,511 | $2,178,655 | | Long term debt | $2,019,409 | $1,539,918 | $1,234,521 | | Total liabilities and stockholders' equity | $9,309,263 | $8,770,413 | $7,821,436 | Condensed Consolidated Statements of Cash Flows The Condensed Consolidated Statements of Cash Flows illustrate the cash generated and used in operating, investing, and financing activities for the six months ended August 2, 2025, and August 3, 2024 Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) | Metric (in thousands) | 6 Months Ended Aug 2, 2025 | 6 Months Ended Aug 3, 2024 | | :-------------------- | :------------------------- | :------------------------- | | Net cash provided by operating activities | $150,532 | $209,806 | | Net cash used in investing activities | $(581,414) | $(362,272) | | Net cash provided by (used in) financing activities | $183,803 | $(112,983) | | Decrease in cash and cash equivalents | $(247,079) | $(265,449) | | Cash and cash equivalents at end of period | $747,619 | $659,910 | Company Information & Disclosures This section provides essential company background, details on the Q2 conference call, investor contacts, and important safe harbor statements regarding forward-looking information About Burlington Stores, Inc. Burlington Stores, Inc. is a nationally recognized off-price retailer headquartered in New Jersey, operating 1,138 stores across 46 states, Washington D.C., and Puerto Rico, offering high-quality branded merchandise at significant discounts, with Fiscal 2024 net sales of $10.6 billion - Nationally recognized off-price retailer of high-quality, branded merchandise at up to 60% off other retailers' prices[2][21] - Operated 1,138 stores as of end of Q2 FY2025 in 46 states, Washington D.C. and Puerto Rico[21] - Fiscal 2024 net sales of $10.6 billion; Fortune 500 company listed on NYSE (BURL)[21] Second Quarter 2025 Conference Call Burlington Stores held a conference call on August 28, 2025, to discuss its second-quarter results, with details for live participation and replay access provided - Conference call held on August 28, 2025, at 8:30 a.m. ET to discuss Q2 results[19] - Live webcast available on www.burlingtoninvestors.com; replay available until September 4, 2025[19][20] Investor Relations Contacts Contact information for investor relations inquiries is provided, including names, phone numbers, and email addresses - Investor Relations contacts: David J. Glick, Daniel Delrosario (855-973-8445, Info@BurlingtonInvestors.com) and Allison Malkin of ICR, Inc. (203-682-8225)[23] Safe Harbor for Forward-Looking and Cautionary Statements This section outlines the company's forward-looking statements, emphasizing that they are subject to risks and uncertainties that could cause actual results to differ materially, and states that the company does not undertake to publicly update these statements, except as required by law - Release contains forward-looking statements regarding financial condition, results, plans, and future performance[24] - Statements are subject to risks and uncertainties that may cause actual events or results to differ materially[24] - Company does not undertake to publicly update or revise forward-looking statements, except as required by law[24] - Factors causing differences include general economic conditions, competitive factors, seasonal fluctuations, supply chain disruptions, and regulatory changes[24]