01—Abstract
Summary
Summary of the 8-K filed May 29, 2025. Cited figures are marked; the original filing is the authoritative source.
Burlington Stores (BURL) reported first quarter fiscal 2025 results (quarter ended May 3, 2025) with total sales up 6% to $2.50 billiona, in line with guidance, and comparable store sales flat, also at the guidance midpoint.
Net income was $101 millionb, or $1.58 per diluted share, versus $79 million, or $1.22, a year earlier. Excluding bankruptcy-acquired lease expenses and other non-GAAP items, Adjusted EPS rose 18% to $1.67 (the press release's own reconciliation table shows $1.60 on a slightly different adjustment basis, which investors should note), well ahead of guidance. Management said roughly half of the beat came from favorable timing of expenses that will weigh on Q2.
The outlook is mixed. Management maintained full-year Adjusted EPS guidance of $8.70 to $9.30c and expects total sales growth of 6% to 8%, but warned that tariffs will create significant pressure on merchandise margins. The company says it can offset that pressure elsewhere in the P&L as long as tariffs do not rise from current levels.
Second-quarter Adjusted EPS guidance of $1.20 to $1.30d sits below the prior-year $1.24, reflecting the timing shift and tariff-related headwinds. Balance sheet and capital allocation were notable. Merchandise inventories rose 15% year over year to $1.32 billion, while comparable store inventories fell 8%, and reserve inventory climbed to 48% of total from 40%.
Operating cash flow was negative $29 million, driven by a working capital build and reduced payables, and capital expenditures were $410 million in the quarter, roughly 2.5 times the prior year. Cash fell to $371 million, and total debt was $1.65 billion after repaying the 2025 convertible notes. The board added a $500 million buyback authorization on May 20, 2025, on top of $158 million remaining.
02—Key points
Key Highlights
- Total sales rose 6% to $2.50 billion and comparable store sales were flat, both at the midpoint of guidance.
- GAAP diluted EPS was $1.58 (up from $1.22); Adjusted EPS was $1.67 (up 18%), well ahead of guidance, with about half the beat from expense timing that shifts into Q2.
- Gross margin rose 30 bps to 43.8%, with merchandise margin up 20 bps, but management expects tariffs to significantly pressure merchandise margin going forward.
- Full-year FY2025 Adjusted EPS guidance of $8.70 to $9.30 was maintained, excluding $25 million (net of tax) of bankruptcy-acquired lease expenses.
- Q2 Adjusted EPS guidance of $1.20 to $1.30 is below the prior-year $1.24, reflecting timing and tariff pressure.
- Operating cash flow was negative $29 million amid inventory growth of 15% and capex of $410 million; liquidity was $1.12 billion.
- The board authorized an additional $500 million share repurchase through May 2027, alongside $158 million remaining under the existing program.
03—Questions
Frequently Asked Questions
Is Burlington on track to meet its full-year 2025 earnings guidance?
Management reaffirmed full-year Adjusted EPS guidance of $8.70 to $9.30. The CEO said the Q1 beat and planned offsets elsewhere in the P&L provide a path to the original guidance, but only if tariffs do not rise from current levels. Q2 guidance is lower, and the company is still relying on cost offsets to absorb tariff pressure.
How significant is the tariff risk to Burlington's margins?
Management expects tariffs to put significant pressure on merchandise margin. The company says it can offset this with savings elsewhere in the P&L if tariffs stay at current levels. Any further increase would make that offset harder, so tariff policy is the key variable for the margin outlook.
Why is inventory up sharply while comparable store inventory is down?
Total merchandise inventory rose 15% to $1.32 billion, but comparable store inventory fell 8%. The difference reflects a higher share of reserve inventory (48% versus 40% a year ago), which is opportunistically purchased and held for future store deliveries or next season. This gives flexibility, but it also raises questions about working capital and markdown risk.
Why was operating cash flow negative in the quarter?
Operating cash flow was negative $29 million, compared with positive $49 million a year earlier. The main drivers were a $119 million decline in accounts payable, a $65 million increase in inventory, and changes in other current assets and liabilities. Investors should watch whether this reflects timing or a sustained shift in working capital.
What is the impact of the bankruptcy-acquired lease expenses?
Burlington excludes these expenses from its Adjusted metrics. The company expects about $33 million of such expenses in fiscal 2025 at the EBIT level, or about $25 million net of tax at the EPS level, and about $11 million in Q2 alone. GAAP results therefore carry a meaningful drag that adjusted figures do not show.
04—Continue