Burlington Stores Inc. (Burlington (BURL)) had a mixed bag of news for investors on Thursday. The off-price retailer reported fiscal second-quarter results that showed strong earnings growth and improved margins, but a revenue miss and a weak third-quarter outlook sent shares tumbling.
Total revenue rose about 11% year over year to $3.002 billion, just shy of the $3.020 billion analysts were expecting. Adjusted earnings, however, jumped 38% to $2.37 per share, beating the $2.18 consensus. That figure excludes tariff refunds and certain costs tied to leases acquired through bankruptcy proceedings.
Earnings and Margins Strengthen
On a GAAP basis, net income nearly doubled to $184 million from $94 million, with diluted earnings climbing to $2.88 per share from $1.47. The quarter marked Burlington's 15th consecutive period of double-digit earnings growth, a streak that shows no signs of slowing.
Net sales rose 11% to $2.998 billion, while comparable-store sales increased 2%. Gross margin expanded 250 basis points to 46.2%, a solid improvement. Excluding a $55 million benefit from tariff refunds, merchandise margin still improved by 70 basis points, and adjusted EBIT margin expanded 100 basis points.
Inventory, Liquidity and Buybacks
Merchandise inventory rose 9% to $1.541 billion, reflecting 149 net new stores and an 11% increase in comparable-store inventory. Reserve inventory accounted for 43% of the total, a key metric for off-price retailers.
Burlington ended the quarter with 1,287 stores. Operating cash flow totaled $334.6 million during the first half, and the company held $704 million in unrestricted cash with $1.646 billion in total liquidity. Debt stood at $1.914 billion.
The retailer also repurchased 270,279 shares for $87 million, leaving $218 million under its buyback authorization.
Full-Year Outlook Raised
Looking ahead, Burlington raised its fiscal 2026 adjusted earnings forecast to $11.77 to $11.97 per share, up from $11.45 to $11.80. The consensus estimate is $11.78, so the new range sits comfortably above expectations.
The company also lifted its sales outlook to between $12.724 billion and $12.839 billion, up from its previous range of $12.607 billion to $12.838 billion. However, the new range remains below the $12.960 billion analysts had penciled in.
Burlington plans to open about 115 net new stores and spend roughly $875 million on capital investments.
Third-Quarter Guidance Disappoints
During the earnings call, CEO Michael O'Sullivan said Burlington has grown more cautious about consumers. He noted that the sharp rise in gas prices that began in March has persisted, further stretching moderate- and lower-income households already struggling with elevated living costs.
That caution is reflected in the third-quarter guidance. Burlington expects adjusted earnings of $1.60 to $1.70 per share, well below the $2.03 estimate. Sales are projected at $2.954 billion to $3.009 billion, compared with the $2.981 billion consensus.
The outlook includes $55 million in tariff refunds and planned reinvestment, resulting in a neutral impact on full-year earnings. Burlington plans to reinvest about 40% of the refunds in the third quarter and 60% in the fourth quarter.
BURL Price Action: Burlington Stores shares were trading 6.28% lower at $294.27 at the time of publication Thursday, according to market data.
