Burlington Stores(BURL) - 2026 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION This part presents the unaudited condensed consolidated financial statements and management's analysis of financial condition and operations Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements and notes, outlining financial performance, position, and cash flows Condensed Consolidated Statements of Income The unaudited Condensed Consolidated Statements of Income show a significant increase in net sales and net income for both the three and six months ended August 2, 2025, compared to the prior year Condensed Consolidated Statements of Income (in thousands of dollars) | REVENUES: | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | | :--- | :--- | :--- | | Net sales (in thousands of dollars) | $2,701,026 | $2,461,193 | | Other revenue (in thousands of dollars) | $4,045 | $4,324 | | Total revenue (in thousands of dollars) | $2,705,071 | $2,465,517 | | COSTS AND EXPENSES: | | | | Cost of sales (in thousands of dollars) | $1,519,629 | $1,408,120 | | Selling, general and administrative expenses (in thousands of dollars) | $949,931 | $863,981 | | Depreciation and amortization (in thousands of dollars) | $94,810 | $86,659 | | Impairment charges - long-lived assets (in thousands of dollars) | $1,580 | $— | | Interest expense (in thousands of dollars) | $17,427 | $16,582 | | Total costs and expenses (in thousands of dollars) | $2,577,747 | $2,365,850 | | Income before income tax expense (in thousands of dollars) | $127,324 | $99,667 | | Income tax expense (in thousands of dollars) | $33,139 | $25,907 | | Net income (in thousands of dollars) | $94,185 | $73,760 | | Net income per common share - diluted | $1.47 | $1.15 | Condensed Consolidated Statements of Income (in thousands of dollars) | REVENUES: | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | | Net sales (in thousands of dollars) | $5,201,101 | $4,818,510 | | Other revenue (in thousands of dollars) | $7,991 | $8,560 | | Total revenue (in thousands of dollars) | $5,209,092 | $4,827,070 | | COSTS AND EXPENSES: | | | | Cost of sales (in thousands of dollars) | $2,924,720 | $2,738,846 | | Selling, general and administrative expenses (in thousands of dollars) | $1,817,989 | $1,689,207 | | Costs related to debt amendments (in thousands of dollars) | $112 | $— | | Depreciation and amortization (in thousands of dollars) | $186,593 | $168,624 | | Impairment charges - long-lived assets (in thousands of dollars) | $2,095 | $8,210 | | Interest expense (in thousands of dollars) | $33,237 | $33,231 | | Total costs and expenses (in thousands of dollars) | $4,948,896 | $4,617,764 | | Income before income tax expense (in thousands of dollars) | $260,196 | $209,306 | | Income tax expense (in thousands of dollars) | $65,178 | $57,032 | | Net income (in thousands of dollars) | $195,018 | $152,274 | | Net income per common share - diluted | $3.05 | $2.37 | Condensed Consolidated Statements of Comprehensive Income The Condensed Consolidated Statements of Comprehensive Income show an increase in total comprehensive income for both the three and six months ended August 2, 2025, compared to the prior year, despite other comprehensive losses primarily from interest rate derivative contracts Condensed Consolidated Statements of Comprehensive Income (in thousands of dollars) | | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | | :--- | :--- | :--- | | Net income (in thousands of dollars) | $94,185 | $73,760 | | Other comprehensive loss, net of tax: | | | | Interest rate derivative contracts: | | | | Net unrealized loss arising during the period (in thousands of dollars) | $(7,055) | $(9,037) | | Net reclassification into earnings during the period (in thousands of dollars) | $(3,110) | $(3,347) | | Other comprehensive loss, net of tax (in thousands of dollars) | $(10,165) | $(12,384) | | Total comprehensive income (in thousands of dollars) | $84,020 | $61,376 | Condensed Consolidated Statements of Comprehensive Income (in thousands of dollars) | | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | | Net income (in thousands of dollars) | $195,018 | $152,274 | | Other comprehensive loss, net of tax: | | | | Interest rate derivative contracts: | | | | Net unrealized loss arising during the period (in thousands of dollars) | $(19,588) | $(1,302) | | Net reclassification into earnings during the period (in thousands of dollars) | $(6,090) | $(6,690) | | Other comprehensive loss, net of tax (in thousands of dollars) | $(25,678) | $(7,992) | | Total comprehensive income (in thousands of dollars) | $169,340 | $144,282 | Condensed Consolidated Balance Sheets The unaudited Condensed Consolidated Balance Sheets show an increase in total assets and stockholders' equity as of August 2, 2025, compared to February 1, 2025, and August 3, 2024, driven by growth in property and equipment, operating lease assets, and accumulated earnings Condensed Consolidated Balance Sheets (in thousands of dollars) | ASSETS | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :--- | :--- | :--- | :--- | | Cash and cash equivalents (in thousands of dollars) | $747,619 | $994,698 | $659,910 | | Merchandise inventories (in thousands of dollars) | $1,414,814 | $1,250,775 | $1,222,714 | | Total current assets (in thousands of dollars) | $2,574,046 | $2,628,803 | $2,257,924 | | Property and equipment—net (in thousands of dollars) | $2,836,035 | $2,369,720 | $2,063,818 | | Operating lease assets (in thousands of dollars) | $3,542,956 | $3,386,852 | $3,144,169 | | Total assets (in thousands of dollars) | $9,309,263 | $8,770,413 | $7,821,436 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | Accounts payable (in thousands of dollars) | $1,024,320 | $1,038,148 | $1,017,449 | | Total current liabilities (in thousands of dollars) | $2,093,794 | $2,272,511 | $2,178,655 | | Long term debt (in thousands of dollars) | $2,019,409 | $1,539,918 | $1,234,521 | | Long term operating lease liabilities (in thousands of dollars) | $3,406,543 | $3,253,825 | $3,020,557 | | Total stockholders' equity (in thousands of dollars) | $1,446,817 | $1,370,496 | $1,070,337 | | Total liabilities and stockholders' equity (in thousands of dollars) | $9,309,263 | $8,770,413 | $7,821,436 | Condensed Consolidated Statements of Cash Flows The Condensed Consolidated Statements of Cash Flows indicate a decrease in cash and cash equivalents for the six months ended August 2, 2025, primarily due to increased cash used in investing activities, partially offset by cash provided by financing activities Condensed Consolidated Statements of Cash Flows (in thousands of dollars) | OPERATING ACTIVITIES | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | | Net income (in thousands of dollars) | $195,018 | $152,274 | | Depreciation and amortization (in thousands of dollars) | $186,593 | $168,624 | | Merchandise inventories (change) (in thousands of dollars) | $(164,039) | $(134,872) | | Net cash provided by operating activities (in thousands of dollars) | $150,532 | $209,806 | | INVESTING ACTIVITIES | | | | Cash paid for property and equipment (in thousands of dollars) | $(589,241) | $(360,438) | | Net cash used in investing activities (in thousands of dollars) | $(581,414) | $(362,272) | | FINANCING ACTIVITIES | | | | Proceeds from long term debt—Term Loan Facility (in thousands of dollars) | $495,000 | $— | | Principal payment on long term debt— 2025 Convertible Notes (in thousands of dollars) | $(156,158) | $— | | Purchase of treasury shares (in thousands of dollars) | $(154,883) | $(137,739) | | Net cash provided by (used in) financing activities (in thousands of dollars) | $183,803 | $(112,983) | | Decrease in cash and cash equivalents (in thousands of dollars) | $(247,079) | $(265,449) | | Cash and cash equivalents at end of period (in thousands of dollars) | $747,619 | $659,910 | Notes to Condensed Consolidated Financial Statements These notes provide essential details and context for the condensed consolidated financial statements, covering significant accounting policies, equity, debt, and other financial commitments 1. Summary of Significant Accounting Policies This note outlines the basis of presentation for the unaudited condensed consolidated financial statements, defines the Company's fiscal year, and confirms its operation as a single reportable segment off-price retailer. It also mentions the evaluation of new accounting standards related to income tax disclosures and expense disaggregation - Burlington Stores, Inc. operated 1,138 retail stores as of August 2, 2025[18] - The Company operates as a single reportable segment, deriving all revenue in the United States as an off-price retailer[22][23] - The Company is evaluating the impact of ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation) on its future financial statement disclosures[27][29] 2. Stockholders' Equity This note details changes in stockholders' equity, covering net income, stock option exercises, share repurchases, and derivative-related gains or losses Stockholders' Equity Changes (in thousands of dollars) | | Balance at February 1, 2025 | Net income (in thousands of dollars) | Stock options exercised (in thousands of dollars) | Shares used for tax withholding (in thousands of dollars) | Shares issued as part of convertible debt settlement (in thousands of dollars) | Shares purchased as part of publicly announced program (in thousands of dollars) | Stock based compensation (in thousands of dollars) | Unrealized losses on interest rate derivative contracts, net (in thousands of dollars) | Amount reclassified from accumulated other comprehensive income into earnings, net (in thousands of dollars) | Balance at August 2, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Common Stock Shares | 82,805,353 | — | 52,026 | — | 57,149 | — | — | — | — | 83,205,672 | | Common Stock Amount (in thousands of dollars) | $8 | — | — | — | $1 | — | — | — | — | $9 | | Additional Paid-in Capital (in thousands of dollars) | $2,237,579 | — | $8,430 | — | $(5) | — | $54,265 | — | — | $2,300,269 | | Accumulated Earnings (in thousands of dollars) | $1,487,703 | $195,018 | — | — | — | — | — | — | — | $1,682,721 | | Accumulated Other Comprehensive Income (Loss) (in thousands of dollars) | $42,522 | — | — | — | — | — | — | $(19,588) | $(6,090) | $16,844 | | Treasury Stock Shares | (19,520,968) | — | — | (101,929) | — | (547,759) | — | — | — | (20,170,656) | | Treasury Stock Amount (in thousands of dollars) | $(2,397,316) | — | — | $(23,798) | — | $(131,912) | — | — | — | $(2,553,026) | | Total (in thousands of dollars) | $1,370,496 | $195,018 | $8,430 | $(23,798) | $(4) | $(131,912) | $54,265 | $(19,588) | $(6,090) | $1,446,817 | 3. Lease Commitments This note details the Company's lease commitments, providing a schedule of future minimum lease payments for operating and finance leases, along with weighted average discount rates and remaining lease terms. It also presents net lease costs and supplemental cash flow information related to lease liabilities Future Minimum Lease Payments (in thousands of dollars) | Fiscal Year | Operating Leases (in thousands of dollars) | Finance Leases (in thousands of dollars) | | :--- | :--- | :--- | | 2025 (remainder) | $268,304 | $1,781 | | 2026 | $694,516 | $3,640 | | 2027 | $671,457 | $3,640 | | 2028 | $630,456 | $3,447 | | 2029 | $563,471 | $2,104 | | Thereafter | $2,050,984 | $18,683 | | Total future minimum lease payments (in thousands of dollars) | $4,879,188 | $33,295 | | Amount representing interest (in thousands of dollars) | $(1,079,780) | $(9,395) | | Total lease liabilities (in thousands of dollars) | $3,799,408 | $23,900 | | Less: current portion of lease liabilities (in thousands of dollars) | $(392,865) | $(2,371) | | Total long term lease liabilities (in thousands of dollars) | $3,406,543 | $21,529 | | Weighted average discount rate | 6.2% | 5.5% | | Weighted average remaining lease term (years) | 7.9 | 11.9 | Net Lease Costs (in thousands of dollars) | | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | :--- | :--- | | Finance lease cost: | | | | | | Amortization of finance lease asset (in thousands of dollars) | $566 | $643 | $1,132 | $1,442 | | Interest on lease liabilities (in thousands of dollars) | $330 | $362 | $666 | $745 | | Operating lease cost (in thousands of dollars) | $168,666 | $156,848 | $333,471 | $308,028 | | Variable lease cost (in thousands of dollars) | $68,705 | $61,596 | $136,365 | $122,552 | | Total lease cost (in thousands of dollars) | $238,267 | $219,449 | $471,634 | $432,767 | | (Gain) impairment on sale and leaseback transaction (in thousands of dollars) | $— | $— | $(1,039) | $8,210 | | Less all rental income (in thousands of dollars) | $(1,097) | $(1,334) | $(2,402) | $(2,713) | | Total net rent expense (in thousands of dollars) | $237,170 | $218,115 | $468,193 | $438,264 | Supplemental Lease Cash Flow Information (in thousands of dollars) | Supplemental cash flow information: | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | | Cash payments arising from operating lease liabilities (in thousands of dollars) | $336,005 | $311,147 | | Cash payments for the principal portion of finance lease liabilities (in thousands of dollars) | $1,080 | $1,523 | | Cash payments for the interest portion of finance lease liabilities (in thousands of dollars) | $666 | $745 | | Operating lease liabilities arising from obtaining right-of-use assets (in thousands of dollars) | $389,743 | $263,941 | 4. Long Term Debt This note details the Company's long-term debt, including the Term Loan Facility, 2025 and 2027 Convertible Notes, and ABL Line of Credit. It highlights recent amendments to the Term Loan Facility, the maturity and settlement of the 2025 Convertible Notes, and the terms of the 2027 Convertible Notes and ABL Line of Credit Long Term Debt Composition (in thousands of dollars) | Long term debt consists of: | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :--- | :--- | :--- | :--- | | Senior secured term loan facility (in thousands of dollars) | $1,727,148 | $1,238,921 | $929,014 | | Convertible senior notes, 2.25%, matured on April 15, 2025 (in thousands of dollars) | $— | $156,155 | $156,155 | | Convertible senior notes, 1.25%, matures on December 15, 2027 (in thousands of dollars) | $297,069 | $297,069 | $297,069 | | ABL senior secured revolving facility (in thousands of dollars) | $— | $— | $— | | Finance lease obligations (in thousands of dollars) | $23,900 | $24,980 | $26,023 | | Unamortized deferred financing costs (in thousands of dollars) | $(8,812) | $(6,316) | $(5,848) | | Total debt (in thousands of dollars) | $2,039,305 | $1,710,809 | $1,402,413 | | Less: current maturities (in thousands of dollars) | $(19,896) | $(170,891) | $(167,892) | | Long term debt, net of current maturities (in thousands of dollars) | $2,019,409 | $1,539,918 | $1,234,521 | - The Term Loan Facility had an aggregate principal amount of $1.74 billion as of August 2, 2025, maturing on September 24, 2031[39] - On June 11, 2025, the Company incurred $500 million of incremental term loans under the Term Loan Facility as additional Term B-7 Loans[41] - The 2025 Convertible Notes matured on April 15, 2025, with approximately $155.5 million aggregate principal amount converted, resulting in the issuance of 57,149 shares of common stock[44][45] - The ABL Line of Credit provides for $1 billion of revolving commitments, maturing on July 25, 2030, with $945.7 million available as of August 2, 2025[52][53][54] 5. Derivative Instruments and Hedging Activities This note describes the Company's use of interest rate swap agreements as cash flow hedges to manage interest rate risk, detailing new agreements entered in September 2024 and June 2025, their notional amounts, fixed interest rates, and fair values. It also presents unrealized gains and losses deferred to accumulated other comprehensive income - On September 27, 2024, the Company entered into new interest rate swaps totaling $800 million notional amount with blended interest rates of 2.83% and 3.37%[56] - On June 12, 2025, the Company entered into additional interest rate swap agreements totaling $300 million notional amount with fixed interest rates of 3.76% and 3.73%[57] Interest Rate Derivative Contracts | Interest Rate Derivative | Number of Instruments | Notional Aggregate Principal Amount | Interest Swap Rate | Maturity Date | | :--- | :--- | :--- | :--- | :--- | | Interest rate swap contract | Four | $1,100.0 million | 2.83% - 3.76% | September 24, 2031 | Fair Values of Derivative Instruments (in thousands of dollars) | Fair Values of Derivative Instruments | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :--- | :--- | :--- | :--- | | Interest rate swap contracts (Other assets) (in thousands of dollars) | $18,508 | $45,699 | $20,090 | | Interest rate swap contracts (Other liabilities) (in thousands of dollars) | $4,803 | $— | $— | Interest Rate Derivatives Impact (in thousands of dollars) | Interest Rate Derivatives: | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | :--- | :--- | | Unrealized losses, net of taxes (in thousands of dollars) | $(7,055) | $(9,037) | $(19,588) | $(1,302) | 6. Fair Value Measurements This note explains the Company's fair value measurement methodology, classifying inputs into a three-level hierarchy. It provides fair values for financial assets, such as cash equivalents, and financial liabilities, including the Term Loan Facility and Convertible Notes. The note also details impairment charges on long-lived assets, which are measured at fair value on a non-recurring basis - Fair value measurements are classified into Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[64][67] Financial Assets Fair Value (Level 1) (in thousands of dollars) | Financial Assets (Level 1) | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :--- | :--- | :--- | :--- | | Cash equivalents (in thousands of dollars) | $322,233 | $728,443 | $276,780 | - Impairment charges on long-lived assets were $1.6 million for the second quarter of Fiscal 2025 and $2.1 million for the six-month period ended August 2, 2025, related to unrecoverable store assets[69][70] Financial Liabilities Fair Value (in thousands of dollars) | Financial Liabilities (Fair Value) | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :--- | :--- | :--- | :--- | | Term Loan Facility (in thousands of dollars) | $1,730,454 | $1,250,965 | $934,904 | | 2025 Convertible Notes (in thousands of dollars) | $— | $202,852 | $187,870 | | 2027 Convertible Notes (in thousands of dollars) | $433,049 | $444,674 | $402,196 | | Total debt (in thousands of dollars) | $2,163,503 | $1,898,491 | $1,524,970 | 7. Income Taxes This note provides details on income tax expense and effective tax rates for the three and six months ended August 2, 2025, and August 3, 2024. It highlights the impact of higher pre-tax income and the tax benefit from stock-based compensation on the effective tax rate. The note also discusses the 'One Big Beautiful Bill Act' and the Company's net deferred tax liabilities, assets, and carry-forwards - Income tax expense for Q2 FY25 was $33.1 million (26.0% effective rate), up from $25.9 million (26.0%) in Q2 FY24, driven by higher pre-tax income[72] - Income tax expense for H1 FY25 was $65.2 million (25.0% effective rate), up from $57.0 million (27.2%) in H1 FY24. The lower effective tax rate in H1 FY25 was mainly due to the tax benefit from stock-based compensation[73] - The 'One Big Beautiful Bill Act' (OBBBA) had no material impact on the income statements but resulted in a reclassification of certain tax liabilities from current to deferred[74] Net Deferred Taxes (in thousands of dollars) | Net deferred taxes: | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :--- | :--- | :--- | :--- | | Deferred tax asset (in thousands of dollars) | $2,248 | $2,248 | $2,190 | | Deferred tax liability (in thousands of dollars) | $265,603 | $259,261 | $243,274 | | Net deferred tax liability (in thousands of dollars) | $263,355 | $257,013 | $241,084 | 8. Capital Stock This note details the Company's capital stock activities, specifically focusing on treasury stock. It reports shares acquired from employees to satisfy tax withholdings and shares repurchased under publicly announced programs, along with the remaining authorization for repurchases - During the six months ended August 2, 2025, the Company acquired 101,929 shares of common stock for approximately $23.8 million to satisfy employee tax withholdings[82] - The Board of Directors authorized an additional $500 million for common stock repurchases through May 20, 2027[83] - The Company repurchased 547,759 shares of common stock for $131.1 million during the six months ended August 2, 2025, with $632.1 million remaining under authorization[84] 9. Net Income Per Share This note presents the computation of basic and diluted net income per share for the three and six months ended August 2, 2025, and August 3, 2024, detailing the weighted-average number of common shares and potentially dilutive securities Net Income Per Share Calculation (in thousands of dollars) | | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | :--- | :--- | | Basic net income per share: | | | | | | Net income (in thousands of dollars) | $94,185 | $73,760 | $195,018 | $152,274 | | Weighted average number of common shares – basic | 63,061 | 63,734 | 63,075 | 63,803 | | Net income per common share – basic | $1.49 | $1.16 | $3.09 | $2.39 | | Diluted net income per share: | | | | | | Net income (in thousands of dollars) | $94,185 | $73,760 | $195,018 | $152,274 | | Weighted average number of common shares – basic | 63,061 | 63,734 | 63,075 | 63,803 | | Assumed exercise of stock options and vesting of restricted stock | 579 | 431 | 621 | 421 | | Assumed conversion of convertible debt | 253 | 163 | 270 | 60 | | Weighted average number of common shares – diluted | 63,893 | 64,328 | 63,966 | 64,284 | | Net income per common share – diluted | $1.47 | $1.15 | $3.05 | $2.37 | 10. Stock Based Compensation This note details the Company's stock-based compensation, including the approval to increase shares under the 2022 Omnibus Incentive Plan. It provides non-cash compensation expense for restricted stock units, stock options, and performance stock units, along with summaries of transactions for each award type, including grants, exercises, vesting, and forfeitures - Stockholders approved an increase of 3,100,000 shares of common stock available for issuance under the 2022 Omnibus Incentive Plan[88] Non-Cash Stock Compensation Expense (in thousands of dollars) | Type of Non-Cash Stock Compensation | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | :--- | :--- | | Restricted stock unit grants (in thousands of dollars) | $14,137 | $10,823 | $25,108 | $20,771 | | Stock option grants (in thousands of dollars) | $4,122 | $5,042 | $9,023 | $9,608 | | Performance stock unit grants (in thousands of dollars) | $14,189 | $8,914 | $20,133 | $13,506 | | Total (in thousands of dollars) | $32,448 | $24,779 | $54,264 | $43,885 | Stock Option Activity | Stock Options | Number of Shares | Weighted Average Exercise Price Per Share | | :--- | :--- | :--- | | Options outstanding, February 1, 2025 | 1,456,342 | $196.77 | | Options granted | 589 | $273.66 | | Options exercised | (52,026) | $162.04 | | Options forfeited | (24,896) | $204.81 | | Options outstanding, August 2, 2025 | 1,380,009 | $197.97 | Restricted Stock Unit Activity | Restricted Stock Units | Number of Shares | Weighted Average Grant Date Fair Value Per Award | | :--- | :--- | :--- | | Non-vested awards outstanding, February 1, 2025 | 653,406 | $190.83 | | Awards granted | 325,427 | $229.41 | | Awards vested | (191,756) | $202.53 | | Awards forfeited | (22,823) | $197.39 | | Non-vested awards outstanding, August 2, 2025 | 764,254 | $204.12 | Performance Stock Unit Activity | Performance Stock Units | Number of Shares | Weighted Average Grant Date Fair Value Per Award | | :--- | :--- | :--- | | Non-vested awards outstanding, February 1, 2025 | 292,870 | $188.37 | | Awards granted | 173,183 | $225.17 | | Awards vested | (99,388) | $207.29 | | Awards forfeited | (3,776) | $196.30 | | Non-vested awards outstanding, August 2, 2025 | 362,889 | $200.66 | 11. Commitments and Contingencies This note outlines the Company's legal proceedings, letters of credit arrangements, and purchase commitments. It states that the Company is party to various lawsuits but believes their final resolution will not materially adversely affect its financial position. It also details outstanding letters of credit and significant purchase commitments for unreceived goods - The Company is involved in various legal proceedings, including class or collective actions, but believes the final resolution will not have a material adverse effect on its financial position or results of operations[96] - As of August 2, 2025, the Company had $51.8 million in letters of credit outstanding for lease agreements, insurance, and utilities, and $2.6 million for merchandising agreements[97] - The Company had $2.01 billion of purchase commitments related to goods not yet received as of August 2, 2025[98] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's financial condition, operating results, liquidity, and capital resources, including an executive summary and critical accounting policies Executive Summary This executive summary introduces Burlington Stores, outlines strategic initiatives, discusses key uncertainties, and presents key performance and non-GAAP financial measures Introduction Burlington Stores, Inc. is a nationally recognized off-price retailer offering high-quality, branded merchandise at everyday low prices, operating 1,138 stores across 46 states, Washington D.C., and Puerto Rico as of August 2, 2025 - Burlington Stores operates 1,138 stores as of August 2, 2025, across 46 states, Washington D.C., and Puerto Rico[103] - The Company offers in-season, high-quality branded merchandise at up to 60% off other retailers' prices[103] Fiscal Year Fiscal 2025 is defined as the 52-week year ending January 31, 2026, and Fiscal 2024 as the 52-week year ending February 1, 2025, with the first and second quarters of both years consisting of 13 weeks - Fiscal 2025 is the 52-week year ending January 31, 2026[104] - Fiscal 2024 is the 52-week year ending February 1, 2025[104] Store Openings, Closings, and Relocations During the first six months of Fiscal 2025, the Company opened 44 new stores, including eight relocations, and permanently closed six stores, bringing the total store count to 1,138 as of August 2, 2025 - Opened 44 new stores (inclusive of 8 relocations) and permanently closed 6 stores during the six months ended August 2, 2025[105] - Total store count as of August 2, 2025, is 1,138 stores[105] Ongoing Initiatives for Fiscal 2025 The Company is focused on driving comparable store sales growth through effective sales chasing, leaner inventories, and enhanced merchandising capabilities. It also aims to expand and improve its retail store base with a disciplined real estate strategy and enhance operating margins by improving operational flexibility, optimizing markdowns and supply chain, and challenging expenses - Initiatives to drive comparable store sales growth include: more effectively chasing sales trends, operating with leaner inventories, investing in merchandising capabilities, and enhancing/introducing new product categories[106][107] - Plans to expand and enhance the retail store base by adhering to a market-focused real estate strategy, aiming for 2,000 stores long-term and averaging 100 net new stores per year through Fiscal 2028[110] - Strategies to enhance operating margins include: improving operational flexibility, optimizing markdowns, optimizing the supply chain (e.g., lower freight costs, automation), and challenging expenses to drive operating leverage[110] Uncertainties and Challenges The Company faces significant uncertainties from the current macroeconomic and geopolitical environments, with prolonged inflationary pressures negatively impacting discretionary spending of its core low-income customers. Other challenges include the seasonal nature of sales, weather conditions, and intense competition in the fragmented U.S. retail market, which puts pressure on margins - High level of uncertainty in macroeconomic and geopolitical environments, with prolonged inflationary pressures negatively impacting the discretionary spending of low-income shoppers[109] - The business is subject to seasonal influences, with higher sales and net income generally realized in the second half of the year (back-to-school and holiday seasons)[112] - The U.S. retail apparel and home furnishings markets are highly fragmented and competitive, leading to increased pressure on margins[114][115][116] Key Performance and Non-GAAP Measures This section defines and presents key performance indicators and non-GAAP financial measures, with reconciliations, to highlight financial performance and trends - Net income for the three months ended August 2, 2025, was $94.2 million (vs $73.8 million in prior year), and for the six months was $195.0 million (vs $152.3 million in prior year), driven by higher sales and increased gross margin rate[118] - Adjusted Net Income increased by $24.3 million to $101.8 million for the three months and by $40.0 million to $204.3 million for the six months ended August 2, 2025, compared to the prior year[125] Reconciliation of Net Income to Adjusted Net Income (in thousands of dollars) | Reconciliation of net income to Adjusted Net Income: | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (in thousands of dollars) | $94,185 | $73,760 | $195,018 | $152,274 | | Net favorable lease costs (in thousands of dollars) | $1,932 | $3,138 | $4,070 | $6,108 | | Costs related to debt amendments (in thousands of dollars) | $— | $— | $112 | $— | | Impairment charges - long-lived assets (in thousands of dollars) | $1,580 | $— | $2,095 | $8,210 | | Litigation matters (in thousands of dollars) | $6,750 | $1,925 | $6,334 | $1,925 | | Tax effect (in thousands of dollars) | $(2,690) | $(1,336) | $(3,290) | $(4,217) | | Adjusted Net Income (in thousands of dollars) | $101,757 | $77,487 | $204,339 | $164,300 | - Adjusted EBIT increased by $35.7 million to $150.9 million for the three months and by $52.6 million to $297.2 million for the six months ended August 2, 2025. Adjusted EBITDA increased by $43.9 million to $245.7 million for the three months and by $70.6 million to $483.8 million for the six months ended August 2, 2025[129] Reconciliation of Net Income to Adjusted EBIT and Adjusted EBITDA (in thousands of dollars) | Reconciliation of net income to Adjusted EBIT and Adjusted EBITDA | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (in thousands of dollars) | $94,185 | $73,760 | $195,018 | $152,274 | | Interest expense (in thousands of dollars) | $17,427 | $16,582 | $33,237 | $33,231 | | Interest income (in thousands of dollars) | $(4,124) | $(6,128) | $(8,835) | $(14,200) | | Net favorable lease costs (in thousands of dollars) | $1,932 | $3,138 | $4,070 | $6,108 | | Costs related to debt amendments (in thousands of dollars) | $— | $— | $112 | $— | | Impairment charges - long-lived assets (in thousands of dollars) | $1,580 | $— | $2,095 | $8,210 | | Litigation matters (in thousands of dollars) | $6,750 | $1,925 | $6,334 | $1,925 | | Income tax expense (in thousands of dollars) | $33,139 | $25,907 | $65,178 | $57,032 | | Adjusted EBIT (in thousands of dollars) | $150,889 | $115,184 | $297,209 | $244,580 | | Depreciation and amortization (in thousands of dollars) | $94,810 | $86,659 | $186,593 | $168,624 | | Adjusted EBITDA (in thousands of dollars) | $245,699 | $201,843 | $483,802 | $413,204 | - Comparable store sales increased by 5% for the three months and 2% for the six months ended August 2, 2025[133] - Gross margin as a percentage of net sales increased to 43.7% for the three months (from 42.8%) and 43.8% for the six months (from 43.2%) ended August 2, 2025, driven by increased merchandise margin and decreased freight costs[135] - Inventory at August 2, 2025, increased to $1.41 billion (from $1.22 billion at August 3, 2024), primarily due to increased reserve inventory and 81 net new stores. Comparable store inventories decreased 8%[136] Results of Operations This section provides a detailed analysis of the company's financial performance, discussing changes in key income statement items and their drivers for the reported periods Income Statement Items as Percentage of Net Sales | | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | 100.0% | 100.0% | 100.0% | 100.0% | | Total revenue | 100.1% | 100.2% | 100.2% | 100.2% | | Cost of sales | 56.3% | 57.2% | 56.2% | 56.8% | | Selling, general and administrative expenses | 35.2% | 35.1% | 35.0% | 35.1% | | Depreciation and amortization | 3.5% | 3.5% | 3.6% | 3.5% | | Impairment charges - long-lived assets | 0.1% | — | — | 0.2% | | Interest expense | 0.6% | 0.7% | 0.6% | 0.7% | | Total costs and expenses | 95.5% | 96.1% | 95.1% | 95.9% | | Income before income tax expense | 4.6% | 4.1% | 5.1% | 4.3% | | Income tax expense | 1.2% | 1.1% | 1.3% | 1.2% | | Net income | 3.4% | 3.0% | 3.8% | 3.1% | Three Month Period Ended August 2, 2025 Compared With the Three Month Period Ended August 3, 2024 Net sales increased by 9.7% to $2,701.0 million, driven by new stores and a 5% comparable store sales increase. Cost of sales as a percentage of net sales decreased to 56.3% due to improved merchandise margin and lower freight costs. Selling, general and administrative expenses increased by 9.9% due to new stores and incentive compensation. Net income rose to $94.2 million, primarily from higher sales and gross margin rate - Net sales increased by $239.8 million (9.7%) to $2.70 billion, driven by 81 net new stores and a 5% increase in comparable store sales[143] - Cost of sales as a percentage of net sales decreased to 56.3% (from 57.2%), primarily due to increased merchandise margin and decreased freight costs[144] - Selling, general and administrative expenses increased by $86.0 million (9.9%) to $949.9 million, primarily driven by 81 net new stores and an increase in incentive compensation[145] - Depreciation and amortization expense increased to $94.8 million (from $86.7 million), driven by new/non-comparable stores and supply chain capital expenditures[147] - Net income for the second quarter of Fiscal 2025 was $94.2 million, up from $73.8 million in the prior year, primarily due to higher sales and increased gross margin rate[155] Six Month Period Ended August 2, 2025 Compared With the Six Month Period Ended August 3, 2024 Net sales improved by 7.9% to $5,201.1 million, driven by new stores and a 2% comparable store sales increase. Cost of sales as a percentage of net sales decreased to 56.2% due to improved merchandise margin and lower freight costs. Selling, general and administrative expenses increased by 7.6% but decreased as a percentage of net sales due to improved store payroll costs. Net income increased to $195.0 million, primarily from higher sales and gross margin rate - Net sales improved by $382.6 million (7.9%) to $5.20 billion, driven by 81 net new stores and a 2% increase in comparable store sales[156] - Cost of sales as a percentage of net sales decreased to 56.2% (from 56.8%), primarily due to increased merchandise margin and decreased freight costs[157] - Selling, general and administrative expenses increased by $128.8 million (7.6%) to $1.82 billion, primarily driven by 81 net new stores, but decreased as a percentage of net sales to 35.0% (from 35.1%)[158] - Depreciation and amortization expense increased to $186.6 million (from $168.6 million), driven by supply chain capital expenditures and new/non-comparable stores[160] - Net income for the six months ended August 2, 2025, was $195.0 million, up from $152.3 million in the prior year, primarily due to higher sales and increased gross margin rate[168] Liquidity and Capital Resources This section assesses the company's ability to generate cash and meet financial obligations, detailing cash flow activities, capital expenditures, share repurchases, and debt strategies Cash Flow for the Six Month Period Ended August 2, 2025 Compared With the Six Month Period Ended August 3, 2024 Cash and cash equivalents decreased by $247.1 million in the first half of Fiscal 2025. Operating cash flow decreased to $150.5 million due to working capital changes. Investing activities used $581.4 million, primarily for supply chain and store expansion. Financing activities provided $183.8 million, mainly from the Term Loan Facility upsize, partially offset by the 2025 Convertible Notes settlement - Cash and cash equivalents decreased by $247.1 million during the six months ended August 2, 2025 (compared to a $265.4 million decrease in the prior year)[173] - Net cash provided by operating activities decreased to $150.5 million (from $209.8 million in prior year), primarily due to changes in working capital[174] - Net cash used in investing activities increased to $581.4 million (from $362.3 million in prior year), mainly due to increased capital expenditures for supply chain and store openings[175] - Net cash provided by financing activities was $183.8 million (compared to $113.0 million used in prior year), driven by the Term Loan Facility upsize, partially offset by the 2025 Convertible Notes settlement[176] - Working capital at August 2, 2025, was $480.3 million, an increase from $79.3 million at August 3, 2024, primarily due to increased inventory and decreased current maturities of long-term debt[177] Capital Expenditures Capital expenditures, net of landlord allowances, totaled $639.9 million for the six months ended August 2, 2025. The Company estimates total capital expenditures of approximately $950 million for Fiscal 2025, with significant allocations to store expenditures ($445 million) and supply chain initiatives ($415 million) - Capital expenditures, net of landlord allowances, amounted to $639.9 million for the six months ended August 2, 2025[178] - Estimated capital expenditures for Fiscal 2025 are approximately $950 million (net of $55 million landlord allowances), including $445 million for store expenditures and $415 million for supply chain initiatives[179][180] Share Repurchase Program The Board of Directors authorized an additional $500.0 million for common stock repurchases through May 20, 2027. The Company repurchased 547,759 shares for $131.1 million during the first half of Fiscal 2025, with $632.1 million remaining under its share repurchase authorizations - The Board of Directors authorized an additional $500 million for common stock repurchases through May 20, 2027[181] - During the six months ended August 2, 2025, the Company repurchased 547,759 shares of common stock for $131.1 million[182] - As of August 2, 2025, $632.1 million remained under the Company's share repurchase authorizations[182] Dividends The Company currently retains all available funds and future earnings to finance capital expenditures, business initiatives, and potential capital structure initiatives, and does not anticipate paying cash dividends in the near term - The Company intends to retain all available funds and future earnings to fund capital expenditures and business initiatives, and does not anticipate paying cash dividends in the near term[184] Operational Growth During the first half of Fiscal 2025, the Company opened 44 new stores (including 8 relocations) and closed 6 stores, bringing the total store count to 1,138. The Company plans to open 100 net new stores in Fiscal 2025 - During the six months ended August 2, 2025, the Company opened 44 new stores (inclusive of 8 relocations) and closed 6 stores, resulting in a total of 1,138 stores[186] - The Company plans to open 100 net new stores during Fiscal 2025[186] Debt and Hedging As of August 2, 2025, the Company's debt obligations include $1,727.1 million under the Term Loan Facility and $297.1 million of 2027 Convertible Notes, with no outstanding ABL borrowings. Recent amendments include a $500.0 million incremental term loan and an increase in ABL commitments to $1,000.0 million with an extended maturity. The Company also entered into new interest rate swap agreements totaling $300.0 million to hedge variable rate exposure - As of August 2, 2025, debt obligations include $1.73 billion under the Term Loan Facility, $297.1 million of 2027 Convertible Notes, and $23.9 million of finance lease obligations, with no outstanding ABL Line of Credit borrowings[187] - On June 11, 2025, the Company incurred $500 million of incremental term loans under the Term Loan Facility[190] - On July 25, 2025, the ABL Line of Credit commitments were increased from $900 million to $1 billion, and the maturity date was extended to July 25, 2030[192] - On June 12, 2025, the Company entered into new interest rate swap agreements totaling $300 million notional amount with fixed interest rates of 3.76% and 3.73%[201] - In total, the Company has interest rate swaps hedging $1.1 billion of variable rate exposure under its Term Loan Facility, expiring on September 24, 2031[202] Certain Information Concerning Contractual Obligations As of August 2, 2025, the Company had $2,012.7 million in purchase commitments for unreceived goods and $4,879.2 million in future minimum lease payments under operating leases - As of August 2, 2025, the Company had $2.01 billion of purchase commitments for unreceived goods[203] - As of August 2, 2025, the Company had $4.88 billion of future minimum lease payments under operating leases[203] Critical Accounting Policies and Estimates The Company's critical accounting policies and estimates are consistent with those disclosed in its Fiscal 2024 10-K, involving significant management judgments and estimates that affect reported financial amounts - Critical accounting policies and estimates are consistent with those disclosed in the Fiscal 2024 10-K[205] Safe Harbor Statement This statement provides a cautionary note regarding forward-looking statements in the report, emphasizing that actual results may differ materially due to various risks and uncertainties, including economic conditions, competition, seasonality, and regulatory changes. It advises against relying on past financial performance as an indicator of future results - Forward-looking statements are subject to risks and uncertainties, including general economic conditions, competitive factors, seasonal fluctuations, and regulatory requirements[207] - Past financial performance should not be relied on as an indication of future performance[208] Recent Accounting Pronouncements This section refers to Note 1, 'Summary of Significant Accounting Policies,' for a discussion of recent accounting pronouncements and their impact on the Condensed Consolidated Financial Statements - Refer to Note 1, 'Summary of Significant Accounting Policies,' for a discussion of recent accounting pronouncements[209] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section highlights recent material changes to the Company's market risk profile, specifically noting the incurrence of $500.0 million in incremental term loans, the entry into $300.0 million in new interest rate swap agreements, and the amendment of the ABL Line of Credit to increase commitments and extend maturity - On June 11, 2025, the Company incurred $500 million of incremental term loans under the Term Loan Facility[210] - On June 12, 2025, the Company entered into new interest rate swap agreements totaling $300 million[211] - On July 25, 2025, the ABL Line of Credit was amended to increase aggregate principal commitments to $1 billion and extend the maturity date to July 25, 2030[212] Item 4. Controls and Procedures Management, including the principal executive and financial officers, evaluated the effectiveness of the Company's disclosure controls and procedures as of August 2, 2025, and concluded they were effective. No material changes in internal control over financial reporting occurred during the quarter - The Company's disclosure controls and procedures were evaluated and deemed effective as of August 2, 2025[213] - There were no material changes in internal control over financial reporting during the quarter ended August 2, 2025[214] PART II—OTHER INFORMATION This part provides additional information including legal proceedings, risk factors, equity security sales, and exhibits Item 1. Legal Proceedings The Company is involved in various legal proceedings, including class or collective actions alleging violations of federal and state wage and hour laws, but believes the final resolution of these matters will not have a material adverse effect on its financial position or results of operations - The Company is party to class or collective actions and other lawsuits, but believes the final resolution will not materially adversely affect its results of operations, financial position, liquidity, or capital resources[96][215] Item 1A. Risk Factors This section updates risk factors from the Fiscal 2024 Form 10-K, emphasizing macroeconomic, geopolitical, inflationary, and international trade risks - The risk factor regarding general economic conditions has been replaced, highlighting high uncertainty in macroeconomic and geopolitical environments, and prolonged inflationary pressures negatively impacting the discretionary spending of core low-income shoppers[217] - New tariffs and potential retaliatory measures by other countries may increase inflationary pressure and raise the costs of merchandise[219] - The risk factor concerning foreign and domestic operations and international tax/tariff policies has been replaced, emphasizing dependence on timely receipt of quality merchandise from overseas vendors and exposure to risks like political/labor instability, port disruptions, and changes in import duties/tariffs[221][222][223] - Uncertainty in tax and trade policies, tariffs, and government regulations could increase product costs or restrict imports, potentially having a material adverse effect on the business[224][225] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section provides a table detailing the Company's common stock repurchases during the three fiscal months ended August 2, 2025, under its publicly announced share repurchase programs, including the average price paid per share and the remaining authorized amount Common Stock Repurchases (in thousands of dollars) | Month | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands of dollars) | | :--- | :--- | :--- | :--- | :--- | | May 4, 2025 through May 31, 2025 | 43,670 | $251.47 | 43,670 | $646,964 | | June 1, 2025 through July 5, 2025 | 18,460 | $230.41 | 18,460 | $642,711 | | July 6, 2025 through August 2, 2025 | 40,344 | $263.61 | 40,344 | $632,076 | | Total | 102,474 | | 102,474 | | - As of August 2, 2025, the approximate dollar value of shares that may yet be purchased under the repurchase programs is $632.1 million[226] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[227] Item 4. Mine Safety Disclosures This section indicates that the disclosures related to mine safety are not applicable to the Company - Mine Safety Disclosures are not applicable[228] Item 5. Other Information This section discloses that Travis Marquette, the Company's President and Chief Operating Officer, adopted a Rule 10b5-1(c) plan for the sale of up to 50% of his net vested shares from restricted stock units and performance stock units in 2025 and 2026 - Travis Marquette, President and COO, adopted a Rule 10b5-1(c) plan to sell up to 50% of his net vested shares from restricted stock units and performance stock units in 2025 and 2026[230] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including amendments to the 2022 Omnibus Incentive Plan, Executive Change in Control Severance Plan, and various credit agreements, along with certifications Exhibits Filed with Form 10-Q | Exhibit Number | Exhibit Description | | :--- | :--- | | 10.1+ | First Amendment to the Burlington Stores, Inc. 2022 Omnibus Incentive Plan. | | 10.2+ | Burlington Stores, Inc. Executive Change in Control Severance Plan. | | 10.3 | Amendment No. 12, dated as of June 11, 2025, to the Credit Agreement dated as of February 24, 2011. | | 10.4 | Sixth Amendment to Second Amended and Restated Credit Agreement, dated as of December 22, 2021. | | 31.1† | Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a). | | 31.2† | Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a). | | 32.1† | Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350. | | 32.2† | Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350. | | 101.INS† | Inline XBRL Instance Document. | | 104† | Cover Page Interactive Data File. | SIGNATURES The report is duly signed on behalf of Burlington Stores, Inc. by Michael O'Sullivan, Chief Executive Officer, and Kristin Wolfe, Chief Financial Officer, on August 28, 2025 - The report was signed by Michael O'Sullivan, Chief Executive Officer, and Kristin Wolfe, Chief Financial Officer, on August 28, 2025[238]