Burlington jumps after earnings blowout, tariff success drives growth
Off-price retailer's 199% EPS beat highlights successful tariff mitigation as FY26 guidance tops expectations
Burlington Stores shares rose in early trading Thursday after the off-price retailer delivered a fourth-quarter earnings blowout that dramatically exceeded expectations, with executives crediting "spectacularly successful" actions to mitigate tariff headwinds.
The Burlington, New Jersey-based company reported adjusted earnings per share of $4.99 for the quarter ended January 31, 2025, surpassing its own guidance range of $4.50 to $4.70 by 21% and marking a 21% increase from the prior year. Total sales grew 11% to $3.64 billion, while comparable store sales increased 4%.
The strong performance capped a fiscal year in which Burlington achieved adjusted EPS of $10.17, up 22% from fiscal 2024, on total sales growth of 9% to $11.5 billion. Comparable store sales for the full year increased 2%.
Chief Executive Officer Michael O'Sullivan highlighted the company's strategic response to tariff pressures that initially threatened margins. "When tariffs were introduced in April, we took actions to offset the negative margin impact of tariffs," O'Sullivan said in the earnings statement. "These actions were spectacularly successful in driving earnings."
The results showed margin expansion despite the tariff challenges. Adjusted EBIT margin in the fourth quarter increased 100 basis points year-over-year, coming in 50 basis points above the high end of company expectations. For the full fiscal year, adjusted EBIT margin reached 8.0%, an 80 basis point improvement.
Gross margin in the fourth quarter improved to 43.7% of net sales, up 80 basis points from the prior year, driven by merchandise margin expansion of 60 basis points and freight expense improvement of 20 basis points.
Burlington also announced strong guidance for fiscal 2026, projecting adjusted EPS of $10.95 to $11.45, representing 7% to 13% growth from fiscal 2025 levels. The company expects total sales growth of 8% to 10% and comparable store sales growth of 1% to 3%.
The retailer plans to open 110 net new stores in fiscal 2026, plus a new distribution center in Savannah, Georgia, as part of its expansion strategy. Capital expenditures are expected to reach approximately $875 million.
The earnings beat comes amid a resilient U.S. retail environment, with January retail sales showing four consecutive months of growth according to National Retail Federation data. Analysts have been bullish on Burlington ahead of the report, with JPMorgan raising its price target to $356 and Barclays setting a $335 target in late February and early March.
Burlington's off-price model, which focuses on branded apparel at discount prices, has proven particularly resilient in challenging economic environments as consumers trade down from full-price retailers. The company's strong merchandising and inventory management have been key differentiators in a crowded retail landscape.
Inventory at quarter-end stood at $1.31 billion, up 5% year-over-year, while comparable store inventory increased 12%. Reserve inventory—stock acquired at substantial discounts—declined to 40% of total inventory from 46% in the prior year, indicating improved sourcing efficiency.
The company returned $59 million to shareholders through share repurchases in the quarter, buying back 223,863 shares, with $385 million remaining under its authorization. Liquidity remained robust at $2.16 billion, comprising $1.23 billion in unrestricted cash and $926 million in availability under its asset-based credit facility.