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Burlington Beats Earnings But Warm Weather Dampens Sales

MarketDash Editorial Team
13 days ago
Burlington Stores exceeded profit expectations and raised its guidance, but investors focused on softer comparable sales and weather-related traffic challenges that kept shoppers away from stores.

Burlington Stores, Inc. (BURL) had one of those classic Wall Street moments Tuesday: beat earnings, raise guidance, watch your stock tumble anyway. The off-price retailer posted strong profits and bumped up its outlook, but investors zeroed in on what the numbers didn't show—robust sales growth and enthusiastic consumer demand.

Sometimes the story behind the numbers matters more than the numbers themselves, and Burlington's quarter told a tale of shoppers who simply stayed home when the weather refused to cooperate.

Following the results, Telsey Advisory Group's Dana Telsey maintained an Outperform rating on Burlington and kept her $350 price target in place, suggesting the long-term story remains intact despite near-term headwinds.

The Numbers That Mattered

Burlington reported third-quarter adjusted earnings of $1.80 per share, comfortably ahead of the $1.64 analyst consensus. That's the good news. Quarterly sales came in at $2.710 billion, up 7% year over year but missing the Street's $2.739 billion expectation. Comparable store sales rose just 1%, a modest gain that raised eyebrows.

CEO Michael O'Sullivan didn't mince words about what happened: "Traffic to our stores fell off significantly after the back-to-school period driven by unseasonably warm temperatures in our major markets."

When it's too warm to think about winter coats and sweaters, people apparently don't rush to off-price retailers to stock up. But O'Sullivan offered a silver lining: "Our comp trend then picked up to mid-single-digits in mid-October once the weather cooled, and that strong trend has continued through the first three weeks of November."

So the business isn't broken—it just needed Mother Nature to remember it's supposed to be fall.

Margin Improvements and Balance Sheet

Gross margin in the quarter improved to 44.2% from 43.9% in the prior year, a 30 basis point expansion. Merchandise margin contributed 10 basis points of that gain, while freight expense savings added another 20 basis points.

Adjusted EBITDA reached $266 million versus $229 million last year, excluding $11 million in expenses tied to bankruptcy-acquired leases. That represented an 80 basis point improvement as a percentage of sales.

Burlington closed the quarter with $584.079 million in cash and equivalents. Long-term debt stood at $2.015 billion, up from $1.542 billion a year earlier.

Guidance Gets an Upgrade

Despite the weather-induced sales wobble, Burlington lifted its full-year 2025 adjusted EPS outlook to $9.69-$9.89, up from the prior range of $9.19-$9.59 and above the $9.52 consensus estimate. The company now expects total sales to climb about 8% for the year, nudging up from its earlier 7%-8% forecast.

Management plans to spend approximately $950 million in net capital expenditures and open 104 net new stores. The retailer also raised its depreciation and amortization forecast to roughly $395 million from $385 million, and now expects adjusted EBIT margin expansion of 60-70 basis points, well ahead of the prior 20-40 basis point outlook.

For the fourth quarter, Burlington guided adjusted EPS to $4.50-$4.70, essentially in line with the $4.64 Street estimate. Total sales are expected to grow 7%-9% for the period.

O'Sullivan reminded investors about the bigger picture: "As discussed previously, we expect our operating income to grow to approximately $1.6 billion by 2028. At this point, we are tracking very well against this earnings target."

Market Reaction

None of that reassurance stopped the stock from falling. BURL shares traded down 11.75% to $251.05 on Tuesday, a reminder that beating expectations doesn't always mean winning over investors. When you deliver modest comparable sales growth in a consumer-facing business, the market starts asking uncomfortable questions about demand, regardless of how well you managed margins.

The takeaway? Burlington is executing well operationally, but it still needs customers to show up. And sometimes that requires the weather's cooperation.

Back to News

Burlington Beats Earnings But Warm Weather Dampens Sales

MarketDash Editorial Team
13 days ago
Burlington Stores exceeded profit expectations and raised its guidance, but investors focused on softer comparable sales and weather-related traffic challenges that kept shoppers away from stores.

Burlington Stores, Inc. (BURL) had one of those classic Wall Street moments Tuesday: beat earnings, raise guidance, watch your stock tumble anyway. The off-price retailer posted strong profits and bumped up its outlook, but investors zeroed in on what the numbers didn't show—robust sales growth and enthusiastic consumer demand.

Sometimes the story behind the numbers matters more than the numbers themselves, and Burlington's quarter told a tale of shoppers who simply stayed home when the weather refused to cooperate.

Following the results, Telsey Advisory Group's Dana Telsey maintained an Outperform rating on Burlington and kept her $350 price target in place, suggesting the long-term story remains intact despite near-term headwinds.

The Numbers That Mattered

Burlington reported third-quarter adjusted earnings of $1.80 per share, comfortably ahead of the $1.64 analyst consensus. That's the good news. Quarterly sales came in at $2.710 billion, up 7% year over year but missing the Street's $2.739 billion expectation. Comparable store sales rose just 1%, a modest gain that raised eyebrows.

CEO Michael O'Sullivan didn't mince words about what happened: "Traffic to our stores fell off significantly after the back-to-school period driven by unseasonably warm temperatures in our major markets."

When it's too warm to think about winter coats and sweaters, people apparently don't rush to off-price retailers to stock up. But O'Sullivan offered a silver lining: "Our comp trend then picked up to mid-single-digits in mid-October once the weather cooled, and that strong trend has continued through the first three weeks of November."

So the business isn't broken—it just needed Mother Nature to remember it's supposed to be fall.

Margin Improvements and Balance Sheet

Gross margin in the quarter improved to 44.2% from 43.9% in the prior year, a 30 basis point expansion. Merchandise margin contributed 10 basis points of that gain, while freight expense savings added another 20 basis points.

Adjusted EBITDA reached $266 million versus $229 million last year, excluding $11 million in expenses tied to bankruptcy-acquired leases. That represented an 80 basis point improvement as a percentage of sales.

Burlington closed the quarter with $584.079 million in cash and equivalents. Long-term debt stood at $2.015 billion, up from $1.542 billion a year earlier.

Guidance Gets an Upgrade

Despite the weather-induced sales wobble, Burlington lifted its full-year 2025 adjusted EPS outlook to $9.69-$9.89, up from the prior range of $9.19-$9.59 and above the $9.52 consensus estimate. The company now expects total sales to climb about 8% for the year, nudging up from its earlier 7%-8% forecast.

Management plans to spend approximately $950 million in net capital expenditures and open 104 net new stores. The retailer also raised its depreciation and amortization forecast to roughly $395 million from $385 million, and now expects adjusted EBIT margin expansion of 60-70 basis points, well ahead of the prior 20-40 basis point outlook.

For the fourth quarter, Burlington guided adjusted EPS to $4.50-$4.70, essentially in line with the $4.64 Street estimate. Total sales are expected to grow 7%-9% for the period.

O'Sullivan reminded investors about the bigger picture: "As discussed previously, we expect our operating income to grow to approximately $1.6 billion by 2028. At this point, we are tracking very well against this earnings target."

Market Reaction

None of that reassurance stopped the stock from falling. BURL shares traded down 11.75% to $251.05 on Tuesday, a reminder that beating expectations doesn't always mean winning over investors. When you deliver modest comparable sales growth in a consumer-facing business, the market starts asking uncomfortable questions about demand, regardless of how well you managed margins.

The takeaway? Burlington is executing well operationally, but it still needs customers to show up. And sometimes that requires the weather's cooperation.

    Burlington Beats Earnings But Warm Weather Dampens Sales - MarketDash News