Burlington Stores (NYSE:BURL) reported stronger-than-expected fiscal first-quarter results, with executives saying the off-price retailer benefited from broad-based comp growth, better markdown execution and supply chain productivity.
Chief Executive Officer Michael O’Sullivan said the company delivered a 26% increase in adjusted earnings per share, marking what he called Burlington’s 14th consecutive quarter of double-digit earnings growth. Total sales rose 14% in the quarter, while comparable store sales increased 6%, above the company’s prior guidance range of 2% to 4%.
Executive Vice President and Chief Financial Officer Kristin Wolfe said first-quarter adjusted EPS was $2.10, above Burlington’s guidance range of $1.60 to $1.75. Adjusted EBIT margin was 6.3%, up 20 basis points from the prior year and ahead of guidance that had called for a 60- to 100-basis-point decline.
Comparable Sales Beat Guidance
O’Sullivan said first-quarter comp trends were “broad-based across businesses and geographies,” with particular strength in ladies’ apparel, beauty and accessories. He also highlighted warm-weather categories, including shorts, short-sleeved tops, swimwear, sandals and sunglasses, which he said accounted for about 25% of first-quarter sales and posted double-digit comp growth.
The company attributed part of the strength to upgraded allocation and localization capabilities. O’Sullivan said Burlington historically had struggled with seasonal transitions, in part because of its legacy as an outerwear retailer, but newer systems allowed the company to make more precise allocation decisions.
“We know that we’re never going to be able to control the weather, but we can get better at responding to it,” O’Sullivan said during the question-and-answer session.
Wolfe said the Northeast and Midwest were the top-performing regions in the quarter, while the Southeast and West were in line with the chain and the Southwest trailed. She said the comp gain was driven by both higher transactions and a larger basket, with basket growth reflecting higher average unit retail.
Margins Improve Despite Expected Headwinds
Burlington’s gross margin rate was 44.1% in the first quarter, up 30 basis points from a year earlier. Wolfe said that included a 20-basis-point increase in merchandise margin and a 10-basis-point decrease in freight expenses. Product sourcing costs were $216 million, up from $197 million a year earlier, but decreased 30 basis points as a percentage of sales as the company continued supply chain productivity and cost-savings initiatives.
Wolfe said the company had entered the quarter expecting several margin headwinds, but stronger-than-anticipated sales, disciplined markdown execution and supply chain productivity more than offset those pressures. She also cited the quality of buys as a factor supporting merchandise margin performance.
Adjusted SG&A costs increased 20 basis points versus last year, which Wolfe said reflected factors including higher incentive compensation and marketing spend. The company ended the quarter with approximately $1.7 billion in total liquidity, including $747 million in cash and $942 million of availability on its asset-based lending facility, with no outstanding borrowings on the ABL. Burlington repurchased $81 million of common stock during the quarter and ended with $304 million remaining on its share repurchase authorization, which expires in May 2027.
Full-Year Outlook Raised
Burlington raised its full-year fiscal 2026 outlook, passing through the entire first-quarter upside. The company now expects total sales to increase 9% to 11%, up from prior guidance of 8% to 10%. Comparable store sales are expected to rise 2% to 4%.
The company forecast adjusted EBIT margin expansion of 10 to 30 basis points for the full year and adjusted EPS of $11.45 to $11.80, representing growth of 13% to 16% versus fiscal 2025. The guidance excludes approximately $10 million of costs associated with bankruptcy-acquired leases, compared with $35 million in 2025.
For the second quarter, Burlington guided for comparable sales growth of 1% to 3% and total sales growth of 10% to 12%. The company expects operating margin expansion of 30 to 60 basis points and adjusted EPS of $2.05 to $2.20, compared with $1.72 in the year-ago quarter. Wolfe said May month-to-date sales were tracking at the high end of the comp guidance range, though comparisons become more difficult as the quarter progresses.
Wolfe said the second-quarter margin outlook assumes higher merchandise margin, driven by anticipated markdown favorability, modestly faster turns and a favorable shortage accrual rate compared with last year. Those gains are expected to be partially offset by modest freight pressure from higher fuel rates. She said the company recently locked in ocean and domestic contracts for the next year at favorable rates, though higher diesel prices from current projections could pose an incremental risk.
Store Growth and Productivity Remain Key Priorities
Burlington opened 40 gross new stores in the first quarter, relocated six stores and closed four, resulting in 30 net new stores and a quarter-end store count of 1,242. For the full year, the company now expects 135 gross new stores and 115 net new stores, up from its prior outlook of 110 net new stores.
O’Sullivan said Burlington remains on track to exceed 1,500 stores by the end of 2028. Wolfe said the company is comfortable opening at least 110 net new stores in both 2027 and 2028 and continues to see new stores open at about $7 million in sales in their first full year, with payback in just under two years.
O’Sullivan also emphasized relocations and downsizes as important drivers of productivity. He said relocations typically deliver a sales lift of 5% to 10% as Burlington upgrades stores and moves into higher-traffic centers. The downsize program targets older stores where the company likes the location but considers the box oversized. Burlington downsized 20 stores in 2025 and expects about 30 this year, with typical projects cutting square footage in half and reducing occupancy costs by about 200 basis points on average.
O’Sullivan said Burlington’s sales per selling square foot has increased from about $220 in 2019 to roughly $350 today. He said new stores, relocations and downsizes should continue to support occupancy leverage over time.
Executives Say Consumer Remains Resilient
During the call, analysts asked about gas prices, inflation and broader retail trends. O’Sullivan said Burlington remains “bullish” about the year, particularly the back half, while acknowledging the company is “a little more wary” than it was in March because of higher gas prices and the potential impact on inflation.
O’Sullivan said the company has not yet seen a change in consumer behavior, adding that stores in lower-income trade areas continued to outperform the chain in the first quarter. Stores in higher-income areas still posted mid-single-digit comp growth, he said. Stores in high-Hispanic areas also posted mid-single-digit comp growth, broadly in line with the chain.
O’Sullivan said higher tax refunds contributed an estimated 1.5 to 2 percentage points to first-quarter comp growth. Excluding that benefit, he said, comp growth still would have been in the mid-single digits.
The CEO also said the supply of off-price merchandise is “excellent right now” and that tariffs have been less disruptive to pricing and supply than last year. Wolfe said Burlington has filed for tariff refunds, but the company has not included any potential benefit in its guidance because the amount and timing remain uncertain.
O’Sullivan said the broader retail environment continues to favor off-price retailers as consumers prioritize value. “The customer is voting for value, off-price is delivering that value,” he said.
About Burlington Stores (NYSE:BURL)
Burlington Stores, Inc is an American off-price retailer that sells apparel and home goods at discounted prices. The company’s merchandise assortment includes clothing for women, men and children, plus baby products, footwear, accessories, beauty items, toys and home décor. Burlington’s merchandising strategy focuses on offering branded and private-label goods at lower prices than traditional department stores by sourcing excess inventory, closeouts and opportunistic buys from manufacturers and other retailers.
The business traces its roots to the Burlington Coat Factory name established in the early 1970s and has since evolved into a broader off-price retailer that carries a wide range of seasonal and everyday merchandise.
