Burlington Stores, Inc. (BURL Quick QuoteBURL - Free Report) reported third-quarter fiscal 2025 results, wherein both revenues and earnings grew year over year. Top line lagged the Zacks Consensus Estimate and bottom line surpassed the same.

Store traffic softened after the back-to-school period due to unusually warm weather in key markets, but comparable sales trends strengthened once temperatures cooled, with this positive momentum continuing into November.

The company delivered strong margin and earnings performance for the quarter, driven by effective merchandising and operational execution that helped offset tariff-related pressures. This outperformance is being incorporated into the company’s updated full-year earnings outlook.

Improving margin and expense trends have also led the company to raise its earnings expectations for the fourth quarter, resulting in a further increase to its full-year guidance. Despite recent sales momentum, BURL is maintaining its previously issued fiscal fourth-quarter comparable sales outlook due to challenging prior-year comparisons.

The company remains encouraged by the performance of its new store opening program, weather-adjusted comparable sales growth and the rapid progress being made in margin expansion. The long-term objective of reaching approximately $1.6 billion in operating income by fiscal 2028 remains on track.

More on Burlington Stores’ Q3 Financial Results

Burlington Stores reported adjusted earnings of $1.80 per share, which surpassed the Zacks Consensus Estimate of $1.59. The bottom line rose 16.1% from the year-ago quarter.

Total revenues of $2,710.4 million jumped 7.1% from the prior-year quarter and lagged the Zacks Consensus Estimate of $2,711 million. Net revenues climbed nearly 7.1% to $2,706 million, while other revenues fell 1.9% to $4.4 million. The company’s comparable store sales increased 1% year over year. Our model anticipated a 1.5% rise in comparable store sales for the fiscal third quarter.

Insight Into BURL’s Margins

The gross margin was 44.2%, up 30 basis points from the third quarter of fiscal 2024. This also surpassed our estimate of gross margin of 43.6%. Merchandise margin rose 10 basis points and freight costs improved 20 basis points.

Adjusted selling, general and administrative (SG&A) expenses rose 7.8% year over year to $733.7 million. Adjusted SG&A, excluding $11 million in costs related to bankruptcy-acquired leases in the third quarter of fiscal 2025, represented 26.7% of net sales compared with 26.9% in the third quarter of fiscal 2024, a 20-basis-point improvement. We estimated adjusted SG&A expenses, as a percentage of net sales, to be 27.4%. 

Product sourcing costs were $214 million, up from $209 million in the year-ago quarter. As a percentage of net sales, this represents a 40-basis-point decline. Such costs comprise the processing goods costs via the supply chain and buying expenses.

Adjusted EBITDA increased 11.5% from the third quarter of fiscal 2024 to $255.2 million, excluding $11 million of expenses related to the bankruptcy-acquired leases. Adjusted EBITDA margin increased 80 basis points year over year. Adjusted EBIT was $155.9 million, up 10.3% from the year-ago quarter. Adjusted EBIT margin increased 60 basis points year over year.

BURL’s Financial Snapshot: Cash, Debt and Equity

The company ended the reported quarter with cash and cash equivalents of $584.1 million, long-term debt of $2.02 billion and stockholders’ equity of $1.53 billion. BURL exited the fiscal third quarter with total liquidity of $1.53 billion, consisting of $584 million in unrestricted cash and $948 million of availability under its ABL facility.

Total outstanding debt at quarter-end was $2.04 billion, including $1.72 billion under the Term Loan facility, $297 million in Convertible Notes and no borrowings on the ABL facility.

During the third quarter of fiscal 2025, the company repurchased 213,972 shares of its common stock for $61 million under the share repurchase program. At the end of the fiscal third quarter, $444 million remained authorized under the current repurchase program.

BURL’s Q4 Guidance

For the fourth quarter of fiscal 2025, the company currently estimates total sales will rise 7% to 9%, reflecting comparable store sales growth of 0% to 2%. The company now expects adjusted EBIT margin to increase 30-50 basis points from last year, compared with its prior outlook for a margin range from a decline of 10 basis points to an increase of 30 basis points. The current outlook excludes approximately $7 million of expenses related to bankruptcy-acquired leases in the fourth quarter of fiscal 2025 and $5 million incurred in the prior period. 

Adjusted EPS is currently expected to range from $4.50 to $4.70 compared with $4.13 last year and the previous estimate of $4.30 to $4.60. The current outlook excludes $5 million of anticipated net-of-tax expenses related to bankruptcy-acquired leases in the fourth quarter of fiscal 2025 and $4 million incurred in the prior period.

Fiscal 2025 View for BURL

For fiscal 2025 (the 52 weeks ending Jan. 31, 2026), the company now expects total sales to grow approximately 8%, on top of the 11% increase recorded for the 52 weeks ended Feb. 1, 2025. This compares with its prior outlook for a 7-8% increase. 

This outlook assumes comparable store sales growth of 1% to 2%, following a 4% increase in the prior 52-week period. Capital expenditures, net of landlord allowances, are projected to be approximately $950 million, and the company plans to open 104 net new stores. 

Adjusted EBIT margin is now expected to improve 60-70 basis points from the prior fiscal year, compared with the earlier outlook calling for an improvement of 20-40 basis points, excluding $34 million of anticipated costs associated with bankruptcy-acquired leases in fiscal 2025 and $16 million incurred in fiscal 2024.

Adjusted EPS is now projected to be between $9.69 and $9.89, up from the previous forecast of $9.19-$9.59 and above the $8.35 earned last year. This excludes $26 million, net of tax, of expected expenses related to bankruptcy-acquired leases in fiscal 2025 and assumes a share count of approximately 64 million.

BURL Stock Past Three-Month Performance

Image Source: Zacks Investment Research

In the past three months, this Zacks Rank #3 (Hold) company has gained 1.9% against the industry’s 0.1% decline.

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