Burlington Stores Raises Annual Outlook As CEO Highlights Strong Margins

Burlington Stores, Inc. BURL stock surged after it posted second-quarter fiscal 2025 revenue of $2.705 billion, up 10% from a year earlier and above the $2.652 billion consensus estimate. Comparable store sales rose 5%.

Net income was $94 million, or $1.47 per diluted share, versus $74 million, or $1.15 per share, a year ago. Adjusted earnings were $1.72 per share, up from $1.24 last year and ahead of the $1.32 estimate.

Gross margin expanded 90 basis points to 43.7%, helped by stronger merchandise margin and lower freight expense. Adjusted EBIT margin rose 120 basis points, with adjusted EBIT of $162 million compared with $118 million last year.

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Adjusted EBITDA increased to $257 million from $205 million. SG&A expenses were 35.2% of sales, while adjusted SG&A improved to 26.7% from 27.0%.

For the first six months of fiscal 2025, revenue grew 8% to $5.21 billion. Net income was $195 million, or $3.05 per share, versus $152 million, or $2.37 per share, a year ago.

Adjusted net income rose to $217 million, or $3.39 per share, from $171 million, or $2.66 per share. Adjusted EBIT reached $314 million, up from $254 million.

Operating cash flow for the first six months was $150.53 million, down from $209.81 million a year ago.

The company closed the second quarter of fiscal 2025 with total liquidity of $1.69 billion, consisting of $748 million in unrestricted cash and $946 million in available capacity under its ABL facility.

Total debt stood at $2.04 billion, primarily made up of $1.73 billion in term loan borrowings and $297 million in convertible notes, with no outstanding borrowings on the ABL facility.

In the second quarter, the company repurchased 102,474 shares of common stock for $26 million under its ongoing buyback program. At quarter-end, $632 million remained authorized for future repurchases.

Inventories increased 16% to $1.42 billion, though comparable store inventories fell 8%. Reserve inventory made up 50% of the total, compared with 41% a year earlier.

Burlington Stores ended the second quarter of fiscal 2025 with 1,138 locations across 46 states, Washington, D.C., and Puerto Rico.

CEO Michael O’Sullivan said, “Comparable store sales increased 5%, which was on top of 5% comparable store sales growth in the second quarter of last year. We also saw very strong margin and earnings performance. Adjusted EBIT Margin increased 120 basis points, while adjusted EPS grew 39% versus the second quarter of last year. This was a high-quality earnings beat driven by ahead of plan sales, higher merchandise margin, lower freight expense and leverage on SG&A expenses.”

Outlook

For fiscal 2025, Burlington raised its adjusted EPS outlook to $9.19 to $9.59 from $8.70 to $9.30, compared with the $9.41 estimate.

Full-year sales guidance was lifted to $11.38 billion to $11.49 billion, from $11.27 billion to $11.49 billion, but remains below the $11.58 billion consensus.

For the third quarter, Burlington guided adjusted EPS of $1.50 to $1.60, short of the $1.71 estimate, and sales of $2.66 billion to $2.71 billion, below the $2.76 billion forecast.

O’Sullivan added, “Given the strength of the second quarter, we are raising our full year earnings guidance. The third quarter is off to a solid start, and as is our practice, we will manage our business conservatively and be ready to chase. We see a clear link between our very strong second quarter sales and earnings results and the key Burlington 2.0 strategies.”

Price Action: BURL shares are trading higher by 7.38% to $300.99 premarket at last check Thursday.

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