Burlington Stores — Second Quarter Fiscal 2026 Earnings Summary

Financial Performance

• Total sales increased 11% year-over-year to $2,998 million for the quarter ended August 1, 2026, following a 10% increase in the prior year period.
• Comparable store sales increased 2% year-over-year, compared to a 5% increase in the prior year period.
• Net income was $184 million ($2.88 per diluted share) for the quarter, compared to $94 million ($1.47 per diluted share) in the prior year.
• Adjusted EPS, excluding tariff refunds and bankruptcy acquired lease expenses, increased 38% to $2.37 per share, following a 39% increase in the prior year.
• Gross margin rate was 46.2% of net sales, an increase of 250 basis points from 43.7% in the prior year; excluding $55 million in tariff refunds, merchandise margin expanded 70 basis points.
• SG&A was 34.0% of net sales, down from 35.2% in the prior year; adjusted SG&A (excluding bankruptcy acquired lease expenses) was 26.2% of net sales, down from 26.7%.
• Adjusted EBIT margin increased 100 basis points year-over-year.
• Net income for the first six months of Fiscal 2026 increased 53% to $299 million ($4.67 per share), compared to $195 million ($3.05 per share) in the prior period.
• Adjusted EBITDA for the quarter was $324 million, up from $257 million in the prior year, representing a 130 basis point increase as a percentage of sales.
• Adjusted EBIT for the quarter was $210 million, up from $162 million in the prior year, representing a 100 basis point increase as a percentage of sales.

Guidance and Future Outlook

• Full-year Fiscal 2026 Adjusted EPS guidance raised to $11.77 to $11.97, compared to $10.17 in Fiscal 2025.
• Full-year Fiscal 2026 comparable store sales guidance set at 3% to 4%, up from 2% in Fiscal 2025.
• Full-year Fiscal 2026 total sales growth guidance set at 10% to 11%, up from 9% in Fiscal 2025.
• Full-year Fiscal 2026 adjusted EBIT margin guidance increased by 20 to 40 basis points versus Fiscal 2025.
• Third Quarter Fiscal 2026 total sales growth guidance set at 9% to 11%, with comparable store sales growth of 1% to 3%.
• Third Quarter Fiscal 2026 adjusted EPS guidance set at $1.60 to $1.70, compared to $1.80 in the prior year.
• Full-year Fiscal 2026 capital expenditures expected to be approximately $875 million.
• Full-year Fiscal 2026 depreciation and amortization expected to be approximately $460 million.
• Full-year Fiscal 2026 net interest expense expected to be approximately $55 million.
• Full-year Fiscal 2026 adjusted effective tax rate expected to be approximately 25%.

Business Segments and Product Lines

• The company operates 1,287 stores across 47 states, Washington D.C., and Puerto Rico as of the end of the second quarter.
• The company opened 149 net new stores during the second quarter.
• Merchandise inventories increased 9% to $1,541 million, driven by new store openings and an 11% increase in comparable store inventory.
• Reserve inventory, composed of merchandise purchased opportunistically for future months or seasons, decreased to 43% of total inventory from 50% in the prior year period.
• Product sourcing costs, included in SG&A, were $226 million, up from $209 million in the prior year.

Market and Competitive Landscape

• The company noted that rising living costs have made life difficult for many customers, positioning its strategy to deliver sharper values.
• The company intends to reinvest $55 million in tariff refunds received during the quarter back into the business to enhance value offerings for shoppers.
• The company operates in the off-price retail sector, offering branded apparel, footwear, accessories, and home merchandise at up to 60% off other retailers' prices.

Risks and Challenges

• The press release cites general economic conditions, inflation, and domestic/international political situations as potential risks affecting consumer confidence and spending.
• Competitive factors, including e-commerce growth, competitor pricing, and market consolidation, are identified as risks.
• Risks include seasonal fluctuations in sales and inventory, potential closure of destination retailers in shopping areas, and changing consumer preferences.
• Operational risks include supply chain disruptions, labor costs, import risks (tariffs, trade policies), and cybersecurity threats.
• Financial risks include the ability to service debt obligations, comply with debt covenants, and the volatility of stock price.

Management Commentary and Tone

• CEO Michael O'Sullivan expressed pleasure with the strong financial performance, highlighting the 15th consecutive quarter of double-digit EPS growth.
• Management emphasized the ability to consistently convert sales growth into margin expansion and earnings growth.
• The company plans to reinvest tariff refunds to provide sharper values to customers rather than taking a one-time earnings boost.
• Management stated that the direct impact of tariff refunds is expected to be neutral to full-year earnings due to the planned reinvestment.
• The tone reflects confidence in underlying performance, noting that the Q2 beat supports the raised full-year guidance.

Other Key Points

• The company received $55 million in tariff refunds during the second quarter.
• The company repurchased 270,279 shares of common stock for $87 million during the second quarter.
• As of the end of the second quarter, $218 million remained on the share repurchase program authorization.
• Total debt outstanding was $1,914 million, including $1,712 million on the Term Loan facility and $186 million in Convertible Notes.
• Liquidity ended the quarter at $1,646 million, comprised of $704 million in unrestricted cash and $942 million in availability on the ABL facility.
• The company is evaluating the relocation of its corporate headquarters, with timing and costs currently uncertain.
• The company operates under the name Burlington Stores and is a Fortune 500 company.