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    Earnings call· Jan 2026(Q4 FY25)

    Burlington Stores Q4 FY25 earnings call BURL

    Mar 5, 2026 Source

    Executive summary

    Burlington Stores Q4 FY25 — Strong Sales and Margin Expansion Despite Tariffs

    Burlington Stores delivered strong Q4 and full-year FY25 results, exceeding guidance through strategic margin management in response to tariffs. The company is bullish on its FY26 sales outlook, driven by resilient customer trends, favorable tax refunds, and internal initiatives like assortment localization and new store growth, while maintaining a focus on continued margin expansion.

    Highlights

    5

    • Q4 total sales increased 11%, building on 10% growth last year, demonstrating continued market share gains.

    • Q4 comparable store sales grew 4%, handily beating guidance of 0-2% and achieving a strong 10% two-year comp stack.

    • Q4 adjusted EBIT margin expanded 100 basis points, 50 basis points above the high end of guidance, driven by gross margin and SG&A leverage.

    • Full-year FY25 adjusted EPS grew 22%, following 34% growth last year, well ahead of original guidance.

    • Management is "bullish" on the FY26 sales outlook, raising comp guidance to 1-3% due to resilient customer trends and internal initiatives.

    Concerns

    3

    • Tariff-related assortment gaps, particularly in home businesses, were a drag on sales upside in Q3 and Q4 FY25.

    • Q1 FY26 adjusted EBIT margin is guided down 60 to 100 basis points due to gross margin pressure from tariff anniversary, a markdown timing shift, and new DC start-up costs.

    • A significant winter storm in January impacted many major markets, costing approximately 1 point of comp for Q4 and several points for the month of January.

    Guidance & targets

    10
    CategoryTargetConfidence
    Total Sales Growth
    8% to 10%
    high materiality
    High
    Net New Store Openings
    110
    medium materiality
    High
    Comp Store Sales Growth
    1% to 3%
    high materiality
    High
    Adjusted EBIT Margin
    flat to an increase of 20 basis points
    high materiality
    High
    Adjusted Earnings Per Share
    $10.95 to $11.45
    high materiality
    High
    Capital Expenditures (net of landlord allowances)
    $875 million
    medium materiality
    High
    Total Sales Growth
    9% to 11%
    medium materiality
    High
    Comp Store Sales Growth
    2% to 4%
    high materiality
    High
    Adjusted EBIT Margin
    down 60 to down 100 basis points
    high materiality
    High
    Adjusted Earnings Per Share
    $1.60 to $1.75
    high materiality
    High

    Operational metrics

    29
    Total sales growth
    11%YoY
    Q4 FY25

    On top of 10% total sales growth last year.

    2-year comp stack
    10%
    Q4 FY25

    For comparable store sales.

    Operating margin expansion
    100YoY
    Q4 FY25

    Adjusted EBIT margin expansion.

    Adjusted EPS growth
    21%YoY
    Q4 FY25

    Represents a 21% increase versus the prior year.

    Gross margin rate
    43.7%increase of 80 bps YoY
    Q4 FY25

    Driven by 60 bps increase in merchandise margin and 20 bps decrease in freight expenses.

    Product sourcing costs
    $232 millionvs $217 million in Q4 FY24
    Q4 FY25

    Product sourcing costs levered 30 basis points as a percentage of sales.

    Adjusted SG&A costs
    40lower than last year
    Q4 FY25

    The leverage in SG&A was primarily driven by leverage from store payroll and occupancy costs on higher sales in the quarter.

    Adjusted EBIT margin
    12.1%
    Q4 FY25

    Well above the high end of guidance.

    Adjusted EPS
    $4.99
    Q4 FY25

    Well above the high end of guidance.

    Total liquidity
    $2.2 billion
    end of Q4 FY25

    Consisted of $1.2 billion in cash and $926 million in availability on ABL.

    Cash balance
    $1.2 billion
    end of Q4 FY25

    Part of total liquidity.

    ABL availability
    $926 million
    end of Q4 FY25

    No borrowings outstanding at the end of the quarter on ABL.

    Annual share repurchases
    $251 million
    FY25

    Bringing annual share repurchases to $251 million.

    Total sales growth
    9%YoY
    FY25

    On top of 11% in 2024.

    Operating margin expansion
    80YoY
    FY25

    On top of 100 basis points last year.

    Merchandise margin increase
    40YoY
    FY25

    Despite the negative impact from tariffs.

    Freight expenses improvement
    20YoY
    FY25

    Improved by 20 basis points.

    Product sourcing costs leverage
    20YoY
    FY25

    Levered by 20 basis points.

    Adjusted SG&A leverage
    30YoY
    FY25

    Achieved 30 basis points of leverage on adjusted SG&A.

    Depreciation and amortization deleverage
    20YoY
    FY25

    Offset by 20 basis points of deleverage and higher depreciation and amortization costs.

    New store openings
    131
    FY25

    While relocating 18 stores and closing 9 stores.

    Store relocations
    18
    FY25

    Relocated to smaller format locations, mostly in busier nearby strip centers, seeing good sales lift and reduction in occupancy costs.

    Store downsizings
    20
    FY25

    Reduced footprint, refurbished, modernized, and improved reduced space, seeing strong returns driven by significantly lower occupancy costs and sales lift.

    Adjusted EBIT margin leverage
    10 to 15per point of comp above 3%
    FY26

    Expected incremental leverage for every point of comp above the 3%.

    Supply chain costs leverage
    20YoY
    FY25

    On top of 50 basis points of leverage in FY24.

    Supply chain costs deleverage
    10 to 20YoY
    Q1 FY26

    Expected deleverage related to the start-up costs from the new Savannah distribution center.

    Winter storm comp impact
    1
    Q4 FY25

    Cost about 1 point of comp on the full quarter and several points for the month of January.

    November and December combined comp sales growth
    mid-single digits
    Q4 FY25

    Trend accelerated closer to Christmas.

    January comp sales growth
    mid-single digits
    Q4 FY25

    Would have been stronger if not for the significant winter storm.

    Industry KPIs

    7
    MetricValueDetails
    Sg a OPEX ratio40bps
    Comparable sales4%%
    Store count growth1,212stores
    Gross margin drivers43.7%%
    Share buyback capital return$59 millionUSD
    Inventory position markdown risk12%%
    Distribution supply chain cost economics30bps

    Risks & headwinds

    6
    Tariff impact on margins and assortmentFY25, Q3 and Q4 FY25

    Significantly reduced earnings growth in 2025; led to assortment gaps in home businesses.

    Mitigation: Recalibrated plans, pivoted away from tariff-impacted categories, reduced inventory, raised retails, pursued expense savings. Expect tariffs unlikely to represent same margin challenge in 2026.

    Unseasonably warm weatherQ3 FY25

    Hurt outerwear business in Q3 FY25.

    Mitigation: None stated directly, but noted that non-seasonal businesses (home) could not pick up slack due to tariff-related assortment shifts.

    Winter storm impact on salesJanuary (Q4 FY25)

    Cost about 1 point of comp on the full Q4 FY25 and several points for the month of January.

    Mitigation: None stated, but noted strong trend resumed once dug out from storm.

    New DC start-up expensesFY26, especially Q1 FY26

    Significant start-up expenses associated with opening new Savannah DC, driving some deleverage in 2026, specifically 10-20 bps in Q1.

    Mitigation: Offset by continued productivity and cost-saving initiatives elsewhere in the supply chain; long-term expectation for cost efficiencies and faster processing times.

    Markdown timing shiftQ1 FY26

    Puts some modest pressure on Q1 FY26 gross margin.

    Mitigation: None stated, but part of the overall Q1 margin dynamics that are expected to be offset by improvements in subsequent quarters.

    Lapping one-time favorable itemsQ1 FY26

    Impacts Q1 FY26 margins.

    Mitigation: None stated, but part of the overall Q1 margin dynamics that are expected to be offset by improvements in subsequent quarters.

    What to watch in Q1 FY26

    5

    Q1 FY26 Comp Store Sales Growth

    next quarter
    CurrentStrong start, momentum continued into February
    Target2% to 4% increase

    Why it matters

    This will indicate the effectiveness of strategies to leverage tax refunds and address prior-year assortment gaps, confirming customer resilience and sales momentum.

    Comp store sales are assumed to increase 2% to 4% for Q1.

    Q&A highlights

    6

    What drove the Q4 sales beat, and why does management believe more sales could have been achieved?

    Q4 sales were strong, but the mix was different than planned due to tariffs. The company deliberately pulled back on tariff-impacted home categories to protect margins, focusing on profitable sales in apparel, footwear, beauty, and accessories. While this dampened overall sales, it drove earnings growth. The opportunity in home categories remains for 2026.

    “The way I think about this is our mission is not just to chase sales, is to chase profitable sales. And looking back, I'm very pleased with how smartly and flexibly our teams responded in that situation.”

    asked by Matthew Boss · answered by Michael O'Sullivan

    2 min read6 chapters

    Detailed Narrative

    01

    Q4 Performance and Drivers

    Burlington Stores reported strong Q4 FY25 results, with total sales up 11% and comparable store sales up 4%, exceeding guidance. This performance was attributed to the success of the elevation strategy, which focused on offering better, more recognizable brands and higher quality at value price points. The strategy led to higher comp growth rates in higher-priced buckets and a mid-single-digit increase in average unit retail, demonstrating customer responsiveness to value despite economic pressures.

    02

    FY25 Strategic Response to Tariffs

    In FY25, Burlington recalibrated its operating strategies in response to tariffs, prioritizing earnings growth over maximizing sales. This involved pivoting away from tariff-impacted home businesses, reducing inventory to drive faster turns and lower markdowns, raising retails in select fast-turning categories, and aggressively pursuing expense savings. This strategy successfully delivered 80 basis points of operating margin expansion and 22% EPS growth, despite dampening sales upside in certain categories.

    03

    2026 Sales Outlook and Optimism

    Management expressed a "bullish" outlook for 2026 sales, driven by both external and internal factors. External drivers include resilient customer trends, an expected more favorable tax refund season, and the industry's adjustment to tariffs. Internally, easier comp comparisons in Q1, Q3, and Q4, the opportunity to address tariff-related assortment gaps in home businesses, and continued progress on Burlington 2.0 initiatives (Store Experience 2.0, Merchandising 2.0 localization) are expected to fuel growth.

    04

    Supply Chain and New DC Initiatives

    Burlington continues to make significant progress in reducing supply chain expenses, leveraging productivity initiatives and cost savings. The company is opening a new, highly automated distribution center in Savannah, Georgia, in Q2 2026, which is more than twice the size of its current largest DC. While this will incur significant start-up costs and cause near-term deleverage, it is expected to drive long-term cost efficiencies, faster processing times, and modest freight leverage.

    05

    New Store Program and Store Transformation

    The company is running ahead of its long-range plan to open approximately 500 net new stores over five years, with 110 planned for FY26. New stores are performing strongly, meeting or exceeding sales and comp growth expectations. Burlington is also actively transforming its store base through relocation and downsizing programs, moving older, oversized stores to smaller, more efficient formats in busier locations, which is driving sales lifts and reducing occupancy costs.

    06

    Localization Initiatives

    Localization is identified as a major opportunity for Burlington, aiming to customize assortments based on region, climate, income levels, and demographics. While acknowledging that this is a long-term capability to build, the company is now in a position to make significant progress through Merchandising 2.0 capabilities, including better planning, analytics, and regional design. This initiative is expected to be a key driver of growth over the next several years.

    AI-generated summary of the company’s earnings call. Not investment advice.