Operational Wins Fuel Burlington's Earnings Beat and Raised Targets

Burlington Stores Inc. (BURL) posted stronger-than-expected adjusted earnings per share (EPS) in the third quarter of fiscal 2025, lifting full-year guidance amid robust sales growth and improved margins. The off-price retailer reported total sales of $2.71 billion for the period, a 7% year-over-year increase, though revenue fell slightly short of the $2.72 billion consensus estimate. Adjusted EPS came in at $1.80, surpassing the $1.64 expected by analysts and reflecting a 16% year-over-year improvement. The company's gross margin expanded to 44.2% from 43.9% in the prior year, driven by tighter control over freight costs and merchandise margins.

CEO Michael O'Sullivan highlighted that unseasonably warm weather in October initially dampened traffic post-back-to-school season but noted a rebound as temperatures cooled mid-month. Operational strategies, including tariff mitigation and inventory management, contributed to a 60-basis-point increase in adjusted EBIT margin, outpacing the 52-week fiscal 2024 margin. The company also benefited from lower SG&A expenses, which decreased by 40 basis points as a percentage of net sales.

Burlington raised its full-year 2025 adjusted EPS guidance to a range of $9.69 to $9.89, up from the previous $9.19 to $9.59, citing sustained margin trends and cost discipline. The updated forecast excludes $34 million in anticipated expenses related to bankruptcy-acquired leases, ensuring a clearer view of core operations. For the fourth quarter, the company expects total sales growth of 7% to 9% and adjusted EBIT margin expansion of 30 to 50 basis points, despite challenging year-ago comparisons.

Looking ahead, Burlington plans to open 104 net new stores in fiscal 2025 and allocate approximately $950 million in capital expenditures, net of landlord allowances. The retailer remains on track to meet its long-term operating income target of $1.6 billion by 2028, with liquidity standing at $1.53 billion as of quarter-end. Share repurchases continued during the period, with $61 million spent on 213,972 shares under the company's $444 million remaining buyback authorization.

The stock's positive performance has drawn attention from analysts, with UBS noting the company's strategic positioning to handle import tariffs. However, recent earnings estimates have seen mixed revisions, with three upward and seven downward adjustments for revenue in the past three months.