Burlington Stores, Inc. (NYSE:BURL) stock fell Tuesday even as the off-price retailer delivered stronger profit and raised its outlook.

Investors weighed the upbeat earnings and improved guidance against softer sales momentum and a cautious read on consumer demand.

Following the results, Telsey Advisory Group’s Dana Telsey reiterated an Outperform rating on Burlington Stores and kept her $350 price forecast unchanged.

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The company reported third-quarter adjusted earnings per share of $1.80, beating the analyst consensus estimate of $1.64.

Metrics

Quarterly sales of $2.710 billion (+7% year over year) missed the Street view of $2.739 billion. Comparable store sales increased 1%.

“Traffic to our stores fell off significantly after the back-to-school period driven by unseasonably warm temperatures in our major markets,” Michael O’Sullivan, CEO, said.

“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,” the CEO added. 

Gross margin in the quarter under review was 44.2% versus 43.9% in the year-ago period, an increase of 30 basis points. Merchandise margin expanded by 10 basis points, while freight expense improved 20 basis points.

Adjusted EBITDA was $266 million versus $229 million in the year-ago period, excluding $11 million of expenses associated with bankruptcy-acquired leases in the third quarter of fiscal 2025, an increase of 80 basis points as a percentage of sales. 

The company exited the quarter with cash and equivalents worth $584.079 million.

Long-term debt at the end of the quarter expanded to $2.015 billion from $1.542 billion in the year-ago period.

Outlook

Burlington Stores lifted its 2025 adjusted EPS outlook to $9.69–$9.89, up from $9.19–$9.59, beating the $9.52 consensus estimate.

The retailer now expects total sales to rise by about 8% for the full year (prior view: 7%-8%).

Burlington expects net capital expenditures of about $950 million and plans to open 104 net new stores.

The company forecasts roughly $395 million in depreciation and amortization (prior view: $385 million), and a 60–70 basis point adjusted EBIT margin expansion (prior view: 20 to 40 basis points).

Burlington guided fourth-quarter adjusted EPS to $4.50–$4.70, slightly bracketing the $4.64 Street estimate. The company also expects total sales to grow between 7% and 9% for the quarter.

“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,” O’Sullivan said.

Price Action: BURL stock was trading lower by 11.75% to $251.05 at last check Tuesday.

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