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Burlington Stores, Inc. (BURL)·Q2 2026 Earnings Summary

Executive Summary

  • Burlington delivered a high-quality beat: total revenue $2.705B and GAAP diluted EPS $1.47; adjusted EPS $1.72, driven by stronger merchandise margin, lower freight, and SG&A leverage . Versus Wall Street (S&P Global), Q2 2026 revenue beat $2.63B* consensus and EPS (Primary) beat $1.29* consensus. Values retrieved from S&P Global.
  • Full-year FY2025 guidance raised: total sales to +7–8% (from +6–8%), comps +1–2% (from 0–2%), adjusted EBIT margin +20–40 bps (from 0–30 bps), adjusted EPS to $9.19–$9.59 (from $8.70–$9.30); net interest expense lowered to ~$50M (from ~$57M) .
  • Management remains cautious for back half (weather sensitivity, tariff inflation risk) but “ready to chase” trends; merchandising and store “2.0” initiatives cited as key structural drivers of multi-year comp and margin gains .
  • Balance sheet/liquidity solid: $1.694B liquidity (cash $748M; ABL availability $946M) and total debt $2.039B; term loan upsized to fund purchase of highly-automated West Coast DC; $26M buybacks in Q2 .
  • Near-term stock catalysts: sustained margin expansion despite tariff pressure; elevated reserve inventory enabling chase; raised FY EPS guidance; disciplined pricing strategy amid industry-wide AUR increases .

What Went Well and What Went Wrong

What Went Well

  • Strong comp and margin execution: comps +5% on top of +5% last year; gross margin +90 bps YoY; adjusted EBIT margin +120 bps YoY . CEO: “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” .
  • Merchandising 2.0 and Stores 2.0 delivering: rapid assortment pivots to mitigate tariffs; redesigned layouts and stronger store standards driving sales lift; customer service scores at all-time highs .
  • Inventory discipline and reserve strategy: comparable store inventory down 8% with faster turns and lower markdowns; reserve inventory at 50% (most pre-tariff), enabling flexible chase in H2 .

What Went Wrong

  • Tariff pressure on merchandise margin: management expects lower merch margin in Q3 and more pronounced pressure in Q4, partially offset by vendor negotiations, assortment remix, and savings .
  • Category softness in Home: tariff-driven supply dislocations (e.g., bedding, cookware, toys) weighed on Home comps in Q2 .
  • Weather sensitivity and regional variability: Midwest weakest due to early-quarter weather; outsized sensitivity to outerwear mix in Q3 increases risk concentration .

Financial Results

Quarter-over-Quarter Trending (oldest → newest)

MetricQ4 2025Q1 2026Q2 2026
Total Revenue ($USD Billions)$3.277 $2.504 $2.705
GAAP Diluted EPS ($)$4.02 $1.58 $1.47
Adjusted EPS ($)$4.13 $1.67 $1.72
Gross Margin Rate (%)42.9% 43.8% 43.7%
Adjusted EBIT Margin (%)11.1% 6.1% 6.0%
Comparable Store Sales (%)+6% 0% +5%

Year-over-Year Comparison (Q2 2024 → Q2 2026)

MetricQ2 2024Q2 2026
Net Sales ($USD Billions)$2.461 $2.701
GAAP Diluted EPS ($)$1.15 $1.47
Adjusted EPS ($)$1.24 $1.72
Gross Margin Rate (%)42.8% 43.7%
Adjusted EBITDA ($USD Millions)$205 $257

Q2 2026 Actual vs Wall Street Consensus (S&P Global)

MetricConsensus Q2 2026*Actual Q2 2026
Primary EPS ($)$1.29*$1.59*
Revenue ($USD Billions)$2.6329*$2.70397*

Values retrieved from S&P Global.

KPIs and Operating Metrics (oldest → newest)

MetricQ4 2025Q1 2026Q2 2026
Store Count (period end)1,108 1,115 1,138
Reserve Inventory (% of total)46% 48% 50%
Comp Store Inventory YoY-3% -8% -8%
Product Sourcing Costs ($MM)$217 $197 $209
Liquidity ($MM)$1,822 $1,119 $1,694
Total Debt ($MM)$1,711 $1,652 $2,039
Share Repurchases ($MM)$61 $105 $26

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Sales Growth (%)FY 2025+6% to +8% +7% to +8% Raised
Comp Store Sales Growth (%)FY 20250% to +2% +1% to +2% Raised
Adjusted EBIT Margin (vs LY, bps)FY 2025+0 to +30 bps +20 to +40 bps Raised
Adjusted EPS ($)FY 2025$8.70–$9.30 $9.19–$9.59 Raised
Net Interest Expense ($MM)FY 2025~$57 ~$50 Lowered
Adjusted Effective Tax Rate (%)FY 2025~25% ~25% Maintained
Capex, net of allowances ($MM)FY 2025~$950 ~$950 Maintained
Net New Stores (count)FY 2025~100 ~100 Maintained
Depreciation & Amortization ($MM)FY 2025~$385 ~$385 Maintained
Total Sales Growth (%)Q3 2025N/A+5% to +7% N/A
Comp Store Sales Growth (%)Q3 2025N/A0% to +2% N/A
Adjusted EBIT Margin (vs LY, bps)Q3 2025N/A-20 bps to flat N/A
Adjusted EPS ($)Q3 2025N/A$1.50–$1.60 N/A

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2025, Q1 2026)Current Period (Q2 2026)Trend
Tariffs & MacroCaution on uncertainty; potential inflation and consumer risk; framework to manage conservatively and chase Incremental tariff pressure in H2; offsets via vendors, assortment remix, selective retails, faster turns, SG&A savings; cautious H2 guide Elevated risk with identified offsets
Merchandising 2.0Elevation strategy drove Q4 comp; flexibility to react to trend Rapid assortment pivots away from high-tariff categories; margin plans remodeled Execution deepening
Stores 2.0Nimble execution in fall; margin leverage All-time high customer service scores; ~50% fleet retrofitted to new layout; sales lift Positive, scaling through 2026
Reserve Inventory46% of inventory; enables chase 50% of inventory; majority pre-tariff; flexible chase capacity Increasing as strategic lever
Pricing/AURAUR up; trade-down behavior evident alongside need-a-deal strength AUR up mid-single digits; cautious on retails given price-sensitive customer Moderately higher AUR; disciplined pricing
Supply Chain & DC AutomationPurchased Savannah DC; higher capex Purchased automated West Coast DC; term loan raised; ABL upsized to $1B Building owned automated DC network
Regional/DemographicSE/SW above chain; lower-income and trade-down drove Q4 SE/NE strongest; Midwest weakest; lower-income and Hispanic (ex-PR/border) slightly above chain Mixed, weather-sensitive yet resilient core segments

Management Commentary

  • “We are pleased with our exceptional performance in the second quarter… Adjusted EBIT Margin increased 120 basis points, while Adjusted EPS grew 39% versus the second quarter of last year.” — Michael O’Sullivan, CEO .
  • “Merchandising 2.0… pivoting away from categories with the greatest tariff exposure… remixing and remodeling our margin plans to find offsets.” — Michael O’Sullivan .
  • “Customer service scores are running at historical all time highs… we have retrofitted about half of the chain to this new design… we are seeing a nice sales lift.” — Michael O’Sullivan on Stores 2.0 .
  • “Q2 adjusted EBIT margin was 6%, 120 bps higher than last year… adjusted EPS in Q2 was 1.72… driven by faster turns, lower markdowns, lower shortage, and freight savings.” — Kristin Wolfe, CFO .

Q&A Highlights

  • Back-half conservatism: Standard playbook—plan cautiously, ready to chase; strong merchandise supply and robust reserve inventory support upside if weather cooperates .
  • Tariff impact and offsets: Expect merch margin pressure in Q3/Q4; offsets include vendor cost work, assortment remix, selective retail increases, faster turns, supply chain and SG&A savings; EBIT expansion higher in Q4 vs Q3 .
  • Pricing strategy: Industry AURs rising selectively; Burlington remains disciplined due to price-sensitive customer; will assess retails based on broader industry pricing moves .
  • Margin drivers in Q2: Lower shortage (favorable physical inventory), faster turns reducing markdowns, freight leverage; SG&A leverage from savings and comp .
  • Inventory strategy: Comp store inventory deliberately down; reserve inventory up 43% YoY in dollars (50% of total), mostly pre-tariff, enabling flexible chase .
  • Balance sheet & interest expense: $500M term loan; ABL upsized to $1B (matures 2030); hedged $300M; interest expense forecast updated to ~$50M .

Estimates Context

  • Q2 2026 beat vs S&P Global consensus: EPS (Primary) $1.59 actual vs $1.29* consensus; Revenue $2.704B actual vs $2.633B* consensus. Values retrieved from S&P Global.
  • Note: S&P Global “Primary EPS” differs from company’s “Adjusted EPS” ($1.72), which excludes expenses associated with bankruptcy-acquired leases; ensure consistency when updating models .

Key Takeaways for Investors

  • Beat-and-raise quarter: Significant EPS/revenue beats and raised FY EPS/margin/sales guidance signal durable execution amid tariffs—supports estimate revisions higher . Values retrieved from S&P Global.
  • Structural drivers intact: Merchandising 2.0 and Stores 2.0 are increasingly visible in comps and margin, with fleet retrofits continuing through 2026 .
  • Cushion for H2: Elevated reserve inventory (50%) and strong vendor availability provide flexibility to chase if trends improve; mitigates tariff/outerwear weather risk .
  • Pricing discipline: Industry AURs rising, but Burlington cautious on retails to protect value perception and traffic—reduces downside risk to demand .
  • Supply chain investments: Owning automated DCs (Savannah, West Coast) should support productivity and long-term margin expansion; near-term debt increased modestly with hedging .
  • Liquidity/shareholder returns: $1.694B liquidity and ongoing buybacks ($26M in Q2; $632M authorization remaining) provide capital flexibility .
  • Near-term trading lens: Watch Q3 outerwear/weather, tariff headlines, and merchandise margin trajectory; Q4 expected to show more pronounced EBIT expansion per management .

Values retrieved from S&P Global.