Burlington Stores (NYSE:BURL) reported fiscal fourth-quarter 2025 results that exceeded its sales and profitability expectations, while management emphasized that tariff-driven merchandising decisions in 2025 helped protect margins and earnings growth. Executives also outlined a more optimistic sales outlook for 2026, supported by easier comparisons, improving assortment opportunities and continued progress on the company’s Burlington 2.0 initiatives.
Fourth-quarter results: sales, comps and margin expansion
CEO Michael O’Sullivan said total sales increased 11% in the fiscal fourth quarter, building on 10% total sales growth in the prior-year quarter. Comparable store sales rose 4%, which management described as well above its guidance range of 0% to 2% given a difficult comparison against 6% comp growth last year and “tariff-related gaps” in parts of the assortment.
On profitability, O’Sullivan said Burlington delivered 100 basis points of operating margin expansion and 21% earnings per share growth in the quarter. CFO Kristin Wolfe provided additional detail, including:
- Adjusted EBIT margin: 12.1%, up 100 basis points versus last year and 50 basis points above the high end of guidance.
- Gross margin rate: 43.7%, up 80 basis points, driven by a 60 basis point increase in merchandise margin and a 20 basis point decrease in freight expenses.
- Adjusted EPS: $4.99, up 21% year over year and above the high end of guidance.
Wolfe said product sourcing costs were $232 million versus $217 million in Q4 2024, but leveraged 30 basis points as a percentage of sales due to supply chain productivity and cost savings. Adjusted SG&A costs leveraged 40 basis points, primarily due to leverage in store payroll and occupancy costs on higher sales.
How tariffs reshaped 2025: protecting earnings at the expense of some sales
For the full fiscal year 2025, Burlington reported 9% total sales growth and 2% comp growth. O’Sullivan described the headline result as “extraordinarily strong earnings growth on a relatively modest comp sales increase,” as Burlington produced 80 basis points of operating margin expansion and 22% EPS growth.
Management attributed much of the year’s strategy shift to tariffs introduced in April 2025. O’Sullivan said the company decided not to let tariffs erode the operating margin progress it had built over the prior few years. Actions taken to offset tariff impact included:
- Pivoting away from and planning down receipts in categories facing the greatest margin pressure from tariffs, “mostly in our home businesses.”
- Reducing inventory levels across the store to drive faster turns and lower markdowns.
- Raising retails in select fast-turning categories where customer resistance was limited.
- “Aggressively” pursuing expense savings across the P&L.
O’Sullivan said those steps proved effective, enabling Burlington to reiterate and later raise earnings guidance during the year, before reporting full-year operating margin expansion and EPS growth ahead of the original guidance provided in March.
At the same time, he said the tariff response reduced sales upside, particularly by creating assortment gaps in home categories. O’Sullivan cited Q3 as an example, when unseasonably warm weather hurt outerwear; in prior years, Burlington could lean on non-seasonal home categories, but in 2025 those categories were more constrained. He also said that even in Q4—despite the strong 4% comp—Burlington likely could have sold more in key holiday categories such as toys, gifting and housewares if it had maintained its original receipt plans.
Balance sheet, inventory and capital deployment
Wolfe said comparable store inventories were up 12% at the end of Q4 versus the prior year, which she described as deliberate as Burlington prepared for anticipated Q1 demand tied to tax refunds and underlying business momentum. Reserve inventory represented 40% of total inventory, down from 46% last year and “more in line with historical levels” at year-end, according to Wolfe.
Burlington ended Q4 with approximately $2.2 billion in total liquidity, including $1.2 billion in cash and $926 million of availability under its ABL facility, with no borrowings outstanding on the ABL. The company repurchased $59 million in stock during Q4 and $251 million for the year, and it had $385 million remaining under its authorization expiring in May 2027.
On stores, Burlington finished fiscal 2025 with 1,212 stores. Wolfe said the company opened 131 new stores in 2025, relocated 18 and closed nine, resulting in 104 net new stores for the year.
2026 outlook: higher comp guidance, store growth and a softer Q1 margin setup
Management said it is “bullish” on 2026 sales, citing customer resilience seen in Q4 trends, expectations for a more favorable tax refund season, and easier comp comparisons—especially in quarters affected by tariff-related assortment gaps in 2025. O’Sullivan also pointed to continued progress on Burlington 2.0 initiatives, including completion of the Store Experience 2.0 remodel and expanded Merchandising 2.0 capabilities such as regional and store-level localization.
For fiscal 2026, Wolfe guided to:
- Total sales growth: 8% to 10%.
- Net new stores: 110, with about 60% opening in the first half of the year.
- Comparable store sales: up 1% to 3% for the year.
- Adjusted EBIT margin: flat to up 20 basis points versus 2025.
- Adjusted EPS: $10.95 to $11.45, up 8% to 13%.
- Capital expenditures: about $875 million, net of landlord allowances.
For the first quarter of 2026, Burlington expects total sales growth of 9% to 11% and comp growth of 2% to 4%, but it guided to adjusted EBIT margin down 60 to 100 basis points year over year and adjusted EPS of $1.60 to $1.75 versus $1.67 last year. Wolfe said Q1 margin pressure reflects several factors, including modest gross margin pressure tied to not “anniversarying” tariffs, a markdown timing shift into Q1 from Q2, supply chain deleverage related to start-up costs for a new Savannah distribution center planned to open in Q2, and lapping some one-time favorable expense items from Q1 2025.
In Q&A, Wolfe said November and December comps combined were mid-single digits and accelerated closer to Christmas. January also posted a mid-single digit comp, but a significant winter storm that caused several hundred store closures reduced comp by about a point for the full quarter and by several points in January. She said momentum continued into February, and Q1 “is off to a very strong start.”
Strategy themes: elevation, home opportunity and localization
O’Sullivan reiterated that the elevation strategy is driving higher customer perception scores, stronger growth in higher price buckets and higher transaction size, while he noted Burlington has executed the strategy without sacrificing margin.
He also said Burlington’s home businesses—gifting, home decor, housewares, bedding, toys and seasonal decor—remain a major opportunity in 2026 now that the industry and supply base have had time to adjust to tariffs. On supply, he described the off-price buying environment as “excellent,” with ample availability across most categories.
Finally, management said localization is a meaningful longer-term opportunity as Burlington expands store- and class-level planning, strengthens localization analytics, adjusts planning regions and invests in merchandising systems and processes. O’Sullivan said the company is “a long way behind” off-price peers on localization, but expects it to become an important driver over the next several years.
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.
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