BURL's Q1 Earnings Top Estimates, Comparable Store Sales Flat Y/Y

Burlington Stores, Inc. BURL has reported first-quarter fiscal 2025 results, wherein revenues and earnings grew year over year. While the top line missed the Zacks Consensus Estimate, the bottom line beat. 

Burlington Stores achieved higher sales year over year in the first quarter, driven by effective merchandising, supply-chain improvements and store-expansion efforts. Earnings exceeded expectations, supported by higher sales, margins and operational efficiencies. 

In the past three months, this Zacks Rank #3 (Hold) company has lost 3.6% compared with the industry’s 2% decline.

More on Burlington Stores’ Q1 Financial Results

Burlington Stores reported adjusted earnings of $1.60 per share, which surpassed the Zacks Consensus Estimate of $1.42. The bottom line rose 18.5% from $1.35 per share in the year-ago quarter. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Total revenues of $2,504 million jumped 6% from the prior-year quarter but came below the Zacks Consensus Estimate of $2,534 million. Net sales climbed 6.1% to $2,500.1 million while other revenues fell 7.1% to $3.9 million. The company’s comparable store sales remained flat year over year. Our model had anticipated flat comparable store sales for the fiscal first quarter.

Insight Into BURL’s Margins & Costs

The gross margin was 43.8%, up 30 basis points (bps) from first-quarter fiscal 2024. This also surpassed our estimate of a gross margin of 43.5%. The merchandise margin increased 20 bps and freight expenses, as a percentage of net sales, improved 10 bps year over year.

Adjusted selling, general and administrative (SG&A) expenses rose 4.8% year over year to $669.5 million. Adjusted SG&A expenses, as a percentage of net sales, were 26.8%, down 30 bps from first-quarter fiscal 2024. We estimated adjusted SG&A expenses, as a percentage of net sales, to be 26.7%. 

Product sourcing costs were $197 million, up from $183 million in the year-ago quarter. Such costs comprise the processing goods costs via its supply chain and buying expenses.

Adjusted EBITDA increased 12.6% from the first quarter of fiscal 2024 to $238.1 million, excluding $6 million of expenses in each period related to the bankruptcy acquired leases. Adjusted EBIT was $146.3 million, up 13.1% from the year-ago quarter.

BURL’s Financial Snapshot: Cash, Debt and Equity Overview

The company ended the reported quarter with cash and cash equivalents of $371.1 million, long-term debt of $1.64 billion and stockholders’ equity of $1.35 billion. BURL exited the fiscal first quarter with $1.12 billion of liquidity, including $371 million of unrestricted cash and $748 million available under its ABL facility.

Burlington Stores ended the quarter with $1.65 billion of outstanding total debt, comprising $1.24 billion under its term-loan facility, $297 million of convertible notes and $100 million of borrowings under its ABL facility.

The company bought back 445,285 shares for $105 million under its share repurchase plan in the fiscal first quarter. As of May 3, 2025, BURL had $158 million remaining under its existing share repurchase authorization. On May 20, 2025, the company's board authorized repurchasing up to an additional $500 million of its common stock, which will be executed through May 2027.

BURL’s Q2 & Fiscal 2025 Guidance

Management cited that tariffs are likely to put immense pressure on the company’s merchandise margin. However, it is confident about tackling this pressure if tariffs do not rise from the existing levels. BURL is on track to accomplish its original guidance. Also, the off-price model is well-positioned to navigate a dynamic landscape.

For the second quarter of fiscal 2025, the company expects total sales to grow in the band of 5-7%, with comparable store sales expected to remain between flat and up 2% compared with the second quarter of fiscal 2024. The adjusted EBIT margin is projected in the range of down 30 bps to flat year over year, excluding about $11 million of expected expenses related to bankruptcy-acquired leases in the fiscal second quarter. Favorable timing of expenses is likely to adversely impact Q2.

Second-quarter adjusted earnings per share (EPS) are expected to be between $1.20 and $1.30 compared with $1.24 earned in the prior-year quarter. The EPS view excludes $8 million, net of tax, of planned expenses connected with bankruptcy-acquired leases in the second quarter of fiscal 2025. Management expects an effective tax rate of almost 24%. 

For fiscal 2025, the company continues to expect total sales to increase in the band of 6-8% year over year. This projection assumes comparable store sales will rise between 0% and 2%. BURL recorded sales growth of 11% and comparable store sales increase of 4% in fiscal 2024. Capital expenditures, net of landlord allowances, are expected to be approximately $950 million. 

Depreciation and amortization are likely to be $385 million, while net interest expenses are projected to be $57 million. Management forecasts an adjusted effective tax rate of about 25% for the current fiscal year. The company plans to open around 100 net stores. The adjusted EBIT margin is expected to improve 0-30 basis points from the previous fiscal year, excluding $33 million of planned costs with respect to the bankruptcy-acquired leases in fiscal 2025. Adjusted EPS is still projected between $8.70 and $9.30, higher than $8.35 earned in the prior fiscal year. This excludes $25 million, net of tax, of expected expenses related to bankruptcy-acquired leases in fiscal 2025 and assumes a count of roughly 64 million shares.

Stocks to Consider

Some better-ranked stocks are Urban Outfitters URBN, Canada Goose GOOS and Genesco GCO.

Urban Outfitters, a lifestyle specialty retailer offering apparel and accessories, sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. 

The Zacks Consensus Estimate for Urban Outfitters’ current financial-year’s earnings and sales implies growth of 20.9% and 8%, respectively, from the year-ago actuals. URBN delivered a trailing four-quarter average earnings surprise of 29%.

Canada Goose is a global outerwear brand. GOOS is a designer, manufacturer, distributor and retailer of premium outerwear for men, women and children. It carries a Zacks Rank #2 (Buy) at present.

The Zacks Consensus Estimate for Canada Goose’s current financial-year’s earnings and sales implies growth of 10% and 2.9%, respectively, from the year-ago actuals. GOOS delivered a trailing four-quarter average earnings surprise of 57.2%.

Genesco, a branded company that sells footwear and accessories, currently has a Zacks Rank of 2.

The Zacks Consensus Estimate for GCO’s current financial-year’s earnings and sales implies growth of 63.8% and 0.6%, respectively, from the year-ago actuals. GCO delivered a trailing four-quarter average earnings surprise of 37.2%.

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This article originally published on Zacks Investment Research (zacks.com).

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