With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The companies on this annual list make a conscious effort to be supportive, inclusive workplaces.

2025 Best Large Workplaces for Women_Burlington Stores, Inc._US1__68a71ffe383bc91cadd06a8c_1

Employees say:"Burlington truly is a caring company that offers everyone an opportunity to grow and flourish and reach their full potential within the organization. Burlington actively invests in the growth and advancement of its team members. I am proud to work for a company who considers the well-being of their associates and provides such a supporting environment for personal and professional development."

100 Best Large Workplaces for Women

See which workplaces made this year's list.

2025_GPTW_Retail_Large_Burlington Stores, Inc._US1__685d56f6023fa8a02634236e_1

Best Large Workplaces in Retail

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

GPTW Retail Large 2024-Burlington Stores, Inc._US1__20240712204823_6

Employees say:"All ideas are valued and heard. Senior leadership exudes the company's culture and encourages us to step out of our comfort zone. I have autonomy to make the decisions for my team and to take appropriate risks. My senior leadership truly listens and respects my opinions. We don't always agree, however I have never felt ashamed when redirected or my ideas were not implemented."

Industries included in the sector are automotive retail, general merchandisers, internet retail, and specialty retail.

Fortune Sector Leaders: Retailing

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

GPTW 2023 Best Workplaces Retail Large Burlington Stores, Inc_5

Employees say: 
 
"All ideas are valued and heard. Senior leadership exudes the company's culture and encourages us to step out of our comfort zone. I have autonomy to make the decisions for my team and to take appropriate risks. My senior leadership truly listens to my methodology and respects my opinions."

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Great Places to Work in Retail Large- 2022-Burlington Stores, Inc._1400608-4

Employees say: 
 
“This is truly a diverse caring company. The organization is super flexible with work life and personal life and will help out in any they can to help you get the job done if you need support. Everyone that I've had the pleasure to work with are always smiling, they are kind, willing to help resolve questions or concerns. I feel very comfortable going to other internal departments to seek help when it's needed or just to get to know them and learn what they do it helps build strong relationships with my peers. It feels good when I walk down the hallway and I greet my peers and they greet back with a smile. I've learned so much working at Burlington and I love what I do. I look forward to many more years with them!”

This year’s Fortune 500 marks the 68th running of the list.

Our 2021 list of the 100 best companies to work for, as ranked by their employees. See which companies made the list.

100 Best Companies 2021-70-Burlington Stores, Inc.

While off-price retailers like Burlington Stores are typically among the fastest-growing chains, not having e-commerce really dinged the company during the early weeks of the pandemic when stores were largely closed. But Burlington still paid employees who got sick from COVID up to two weeks’ pay while they quarantined. As stores reopened in early summer, Burlington brought back its furloughed employees and restored pay to initial levels.

Fortune 100 Best Companies to Work For

These companies foster supportive cultures, where employees find opportunities for growth with help from their colleagues.

Best Large Workplaces New York 2021-Burlington-Stores

Employees say: 
 
“The people here were all super nice and welcoming when I first started. At Burlington, the managers are super nice and see mistakes as learning opportunities and as a part of doing business.”

Best Large Workplaces in New York

See which retailers made this year's list.

Best-Workplaces-Retail-2021-Burlington-Stores

Employees say: 
 
“This is a very welcoming company. They don't judge people and their value based on "titles" and there are many opportunities to improve and grow. Our associates are very friendly, fun, welcoming and diverse making Burlington such a fun place to work.”

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-471-Burlington Stores

2020 was a brutal year for retail and Burlington Stores was no exception. The company reported a loss of $216.5 million in net income for 2020 and a 21% decrease in total sales compared to 2019. Yet, as bargain hunters emerge from their pandemic-induced hibernation, the New Jersey-based off-price retailer could benefit; in the first quarter of 2021, the company reported a 35% year-over-year sales increase.

Best-Workplaces-Retail-2020-Burlington

Employees say: 
 
"Very impressed with our opening after COVID. Not only was management ready to deal with the unexpected possibilities of re-opening, but they were well organized for the additional responsibilities of our 50% off sale."

The companies on this year's list make a conscious effort to be supportive, inclusive workplaces.

Best Workplaces Women 2020-Burlington Stores, Inc

Employees say: 
 
“There are a lot of women in management. Makes me feel like they take the role of women in the workplace seriously.”

This year's Fortune 500 marks the 66th running of the list.

F500-2020-424-Burlington-Stores

Discount apparel retailer Burlington Stores has recently tacked against prevailing trends in its industry. It opened 76 new physical locations in 2019, and it announced in March 2020 that it would wind down its ecommerce operations.

From groceries to apparel to home decor, see which companies made the list.

Burlington Stores-Best Workplaces in Retail 2019

Employees say: 
“There is a smile on most associates' faces and the offices in general have a upbeat nature to it. We are given the opportunity to grow and it shows through Burlington's efforts to engage and develop employees.”

At the Best Workplaces for Women, company leaders foster mentorship and career growth.

Burlington Stores-Best Large Workplaces for Women 2019

An employee supervisor says: 
 
"They hire people because their potential as an employee - they don't care what preference you have in your personal life, or gender, or nationality. They recognize you as a good employee and encourage you to keep growing with the company." 
 
Read the Great Place to Work review .

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

Best Large Workplaces for Women 2018_Burlington Stores

Employees say: 
 
&nbsp; 
 
"A wonder management team of women who make it fun and engaging for all the employees." 
 
&nbsp; 
 
Read the Great Place to Work review .

This year's Fortune 500 marks the 63rd running of the list.

Fortune’s annual list of the 100 Best Workplaces for Women highlights companies with generous benefits, flexible schedules, and an emphasis on balancing work and life. 

Best Workplaces for WomenBurlington Stores, Inc.

Employees say: "We are a retailer that has a strong focus on being a caring company and serving a purpose in the community. It's great to be able to provide our customers with great values, but it's especially heartwarming to be part of something bigger and make a difference in our local communities nationwide." 
 
&nbsp; 
 
"Upper level management cares and interacts with all employees. Your voice counts. " Read the .

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Burlington Stores, which operates the Burlington Coat Factory chain, is an off-price retailer of high-quality branded merchandise at deep discounts, typically selling items for 60% off department store prices. Its first store opened in Burlington, N.J., in 1972. It now has around 1,100 stores in 46 states, and its merchandise assortment has expanded to include women’s ready-to-wear apparel, menswear, youth apparel, beauty products, and more. Like rival businesses including Ross Stores and TJX, Burlington not only sells close-out items that went unsold at department stores; it also offers merchandise made by top brands, which sell them directly to Burlington Stores.

Q2 2027

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Burlington Stores (BURL): Company Profile, Stock Price, News, Rankings

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Burlington Stores

burlington stores

Good morning and thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the Burlington Stores Fiscal 2026 First Quarter Operating Results. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. To withdraw your question, simply press star one again. I would now like to turn the conference over to David Glick, Group Senior Vice President, Investor Relations and Treasurer for Burlington Stores. Please go ahead.

Thank you, operator, and good morning, everyone. We appreciate everyone's participation in today's conference call to discuss Burlington Stores' Fiscal 2026 First Quarter Operating Results. Our presenters today are Michael O'Sullivan, our Chief Executive Officer, and Kristin Wolfe, our EVP and Chief Financial Officer. Before I turn the call over to Michael, I would like to inform listeners that this call may not be transcribed, recorded, or broadcast without our express permission. A replay of the call will be available until June 4th, 2026. We take no responsibility for inaccuracies that may appear in transcripts of this call by third parties. Our remarks in the Q&A that follows are copyrighted today by Burlington Stores. Remarks made on this call concerning future expectations, events, strategies, objectives, trends, or projected financial results are subject to certain risks and uncertainties.

Actual results may differ materially from those that are projected in such forward-looking statements. Such risks and uncertainties include those that are described in the company's 10-K and in our filings with the SEC, all of which are expressly incorporated herein by reference. Please note that the financial results and expectations we discuss today are on a continuing operations basis. Reconciliations of the non-GAAP measures we discuss today to GAAP measures are included in today's press release. As a reminder, as indicated in this morning's press release, all profitability metrics discussed on this call exclude costs associated with bankruptcy-acquired leases. These pre-tax costs amounted to $7 million and $6 million during the fiscal first quarters of 2026 and 2025, respectively, and $10 million and $35 million for the full fiscal years 2026 and 2025, respectively. Here's Michael.

Thank you, David. Good morning, everyone, and thank you for joining us. I would like to cover three topics this morning. Firstly, I will discuss our first quarter results. Secondly, I will talk about our outlook for the rest of the year. Finally, I will comment on our new store opening program. After that, Kristin will walk through the financial details. Okay, let's talk about the first quarter. I will start with the headline. We delivered yet another quarter of very strong earnings growth, with EPS increasing 26%. This marks our 14th consecutive quarter of double-digit earnings growth. This track record demonstrates our ability to consistently convert higher sales into margin expansion, thereby driving very strong earnings flow-through. Moving on to sales, I will start with total sales growth. Total sales is the most obvious and reliable proxy for retail market share.

In Q1, we notched up 14% total sales growth. This was on top of 6% total sales growth in 2025 and 11% growth the year before that. This means that cumulatively, our business is now 34% bigger than it was 3 years ago. We are taking retail market share through new store openings and comp store sales growth. As I described a moment ago, we are achieving strong and consistent earnings flow-through on these incremental sales. Let's talk about comp stores. Comp store sales increased 6% in Q1, well above our guidance of 2%-4%. I was very pleased with our flexibility in chasing the sales trend while also managing our liquidity and inventory levels to drive strong merchant margin leverage on this comp growth. Our comp trends were broad-based across businesses and geographies, with particular strength in ladies' apparel, beauty, and accessories.

One particular call-out was the strength of our warm weather categories. Historically, we have not been happy with our seasonal transitions. Our legacy as an outerwear retailer means that our processes and systems have often been too slow in responding to weather variations, especially in early spring or in the fall. This year, our upgraded allocation and localization capabilities enabled us to make faster, smarter, and more precise allocation decisions. This helped drive sales and merchant margin through more efficient use of merchandise receipts and inventory. Okay. Let me turn to profitability. Our operating margin in Q1 expanded by 20 basis points. This was significantly ahead of our guidance. As a reminder, we had expected a decline of 60 basis points-100 basis points, driven by headwinds specific to Q1.

As it turned out, we rolled right over these headwinds and delivered operating margin expansion that was 100 basis points above the midpoint of our guidance. The drivers of this margin outperformance were higher merchant margin and stronger supply chain productivity. This operating margin expansion, together with the ahead-of-plan sales, drove an EPS gain of 26%. As I have just described, we faced specific margin headwinds as we lapped Q1 of 2025. We had expected EPS in the quarter to be flat. So, 26% growth is an impressive beat. Again, this strong earnings flow-through is a consistent pattern stretching back many quarters. Now, let's move on to forward guidance. I will start with the full year. We are updating our full-year guidance to pass along the entire sales and earnings favorability from the first quarter.

We are now expecting full-year comp sales growth of 2%-4% and EPS growth of 13%-16%. For the second quarter, we are guiding comp growth of 1%-3%, and with this comp growth, we expect to drive an EPS increase of 19%-28%. This second quarter guidance signals our confidence in driving strong margin leverage and EPS growth, even in a quarter where we are guiding to modest, i.e., 1%-3% comp store sales growth. As a reminder, in Q2, we will be lapping our strongest quarterly comparison versus last year. In terms of the back half, we continue to feel good about the comp outlook that we discussed in our March call. As a reminder, at that point, we called out potential comp upside in Q3 and maybe even in Q4.

Before I hand over to Kristin, I would like to briefly comment on our new store, our store relocation, and our store downsize programs. In Q1, we opened 40 gross new stores. We relocated six stores and closed four for a net increase of 30 stores. We are very pleased with the pace and quality of these new store openings. For the full year, we now anticipate 135 gross new stores. Stripping out relocations and closures, we expect this to yield 115 net new stores. This is slightly ahead of our prior guidance of 110 net new stores for 2026. Aside from our new store program, we are also very pleased with the progress we are making in transforming our legacy store base through relocations and downsizes.

Store relocations continue to perform well, typically delivering a sales lift of 5%-10% as we upgrade the physical store and move into higher traffic centers with stronger co-tenancy. Our downsize program is also driving very strong results. This program is targeted at older stores where we like the location, but the store is oversized. As a reminder, we downsized 20 stores in 2025, and we are ramping this program to about 30 stores this year. In a typical downsize project, we cut the square footage in half, giving the excess space back to the landlord or subleasing to a co-tenant. On average, we are seeing a reduction in occupancy costs of about 200 basis points. The financial returns are very attractive, and we plan to ramp this program in the years ahead. Taken together, new stores, relocations, and downsizes have driven a huge step up in sales productivity.

In 2019, our sales per selling square foot was languishing around $220. Fast forward to today and it is now around $350 per sq ft. That's a 55% increase in sales productivity in a 6-year period. We talk a lot about sales growth, it is important to call out that our sales growth is happening in smaller, more productive stores. This is important because we expect that this higher sales productivity will drive leverage in occupancy expenses as new stores join the comp base and their sales ramp up over time, and as we relocate or downsize many more of our existing stores to our smaller store format. Looking ahead, we are on track to exceed 1,500 stores by the end of 2028. Of these, over 80% will have been opened or relocated or downsized since 2019. Our legacy of old, oversized, and low-productivity stores is diminishing.

One last point to make. For the last couple of years, we have been retrofitting existing stores to Store Experience 2.0. This program is designed to make our stores feel more exciting, easier to shop and more off-price. Our retrofitted stores have received very positive customer feedback and have seen a nice sales lift. We anticipate completion of this Store Experience 2.0 program across the chain by the end of this year. I would now like to turn the call over to Kristin to walk through the financial details of our first quarter results and our updated guidance. Kristin?

Thank you, Michael, and good morning, everyone. I will start with some additional color on our first quarter performance. I will share details on our guidance for Q2 and for the full year. Starting with the first quarter, total sales grew 14%, while comp store sales increased 6%, well above our guidance range of 2%-4% comp growth. The gross margin rate for the first quarter was 44.1%, an increase of 30 basis points versus last year. This was driven by a 20 basis point increase in merchandise margin and a 10 basis point decrease in freight expenses. Product sourcing costs were $216 million versus $197 million in the first quarter of 2025. Product sourcing costs decreased 30 basis points as a percentage of sales versus last year as we continue to execute on our supply chain productivity and cost savings initiatives.

Adjusted SG&A costs in the first quarter increased 20 basis points versus last year. Q1 adjusted EBIT margin was 6.3%, 20 basis points higher than last year. This was well above our guidance range of down 100 basis points to down 60 basis points. In March, we spoke to a few discrete factors that we expected would pressure Q1 margins, but we were able to more than offset those with stronger than anticipated sales, disciplined markdown execution, and continued supply chain productivity. Our Q1 adjusted earnings per share was $2.10, which also came in well above our guidance range of $1.60-$1.75. This represents a 26% EPS increase versus Q1 last year and our continued ability to turn strong top-line growth into even stronger earnings growth. At the end of the quarter, comparable store inventories increased 11% versus the end of the first quarter of 2025.

Our reserve inventory was 41% of our total inventory versus 48% of our inventory last year. We are very pleased with the quality of the merchandise and the values that we have in reserve. We ended the quarter with approximately $1.7 billion in total liquidity. This consisted of $747 million in cash and $942 million in availability on our ABL. We had no outstanding borrowings at the end of the quarter on the ABL. During the quarter, we repurchased $81 million in common stock. At the end of Q1, we had $304 million remaining on our share repurchase authorization. This expires in May of 2027. Staying on capital structure, in March, we completed a repurchase of $111 million of our 2027 convertible notes. This transaction reduced the outstanding balance of the 2027 convert to $186 million.

In Q1, as Michael mentioned, we opened 40 gross new stores, relocated six stores, and closed four stores. This resulted in the addition of 30 net new stores in Q1, bringing our store count at the end of the quarter to 1,242 stores. Now, moving to our updated fiscal 2026 full year guidance. This guidance excludes approximately $10 million of costs associated with bankruptcy acquired leases versus $35 million in 2025. We are increasing our outlook for the full year 2026, passing through the entire Q1 upside to the full year. Total sales are now expected to increase 9%-11% versus our original guidance of 8%-10%. We are now expecting 115 net new store openings this year. This is up from our original outlook of 110 net new stores.

We anticipate that the majority of our 2026 new store openings will occur in the first half of the year. For the full year 2026, we're now forecasting comp store sales to increase in the range of 2%-4%, and our adjusted EBIT margin to expand by 10 basis points to 30 basis points versus last year. Passing through the entire Q1 EPS upside results in adjusted earnings per share guidance in the range of $11.45-$11.80, up 13%-16% versus FY 2025, and well above our initial 2026 full year guidance. Moving now to our second quarter guidance, which excludes approximately $3 millions of expenses associated with bankruptcy acquired leases versus $11 million in Q2 of 2025. For Q2, we expect comp store sales to be up 1%-3% and total sales to increase 10%-12%.

We are guiding Q2 operating margin expansion to increase 30 basis points to 60 basis points versus the second quarter of 2025. This translates to an adjusted EPS outlook in the range of $2.05-$2.20, compared to last year's second quarter EPS of $1.72. Our sales trend for May month to date is tracking at the high end of our comp sales guidance range. That said, our month-by-month comparisons get more difficult as we move through the quarter. For the back half of fiscal 2026, our outlook remains unchanged. We expect comp store sales to increase 1%-3%, total sales to increase 8%-10%, adjusted EBIT margins to increase 10 basis points to 30 basis points, and earnings per share in the range of $7.30-$7.50. Capital expenditures net of landlord allowances is still expected to be approximately $875 million in fiscal 2026. I will now turn the call back over to Michael.

Thank you, Kristin. Before I hand it back to the operator for your questions, I would like to summarize the main points from this morning's call. Firstly, we are pleased with our Q1 results. 14% sales growth, 6% comp growth, and an EPS increase of 26%. These results add to an already very impressive track record of consistently converting sales growth into strong margin expansion and earnings flow-through. Secondly, we have raised our full year outlook, passing through the entire upside from Q1.

Our expectations for the balance of the year remain unchanged from our commentary in our March call, including the potential for upside in Q3 and maybe even in Q4. Lastly, we continue to be very excited about our new store relocation, and store downsize programs. These programs have contributed to remarkable growth in our sales productivity. I would now like to turn the call over for your questions.

Thank you. Ladies and gentlemen, we will now begin the Q&A session. And at this time, I would like to remind everyone in order to ask a question, please press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, press star one again. In the interest of time, we kindly ask that you please limit yourself to one question and one follow-up. Our first question comes from the line of Matthew Boss with JPMorgan. Please go ahead.

Great, thanks, and congrats on a nice quarter.

Michael, in March, you said you were bullish about the outlook for 2026. That was pretty much before the outbreak of war in the Middle East and the subsequent run-up in gas prices. Have these factors caused you to feel less bullish on the outlook at all today?

Well, good morning, Matt. Thank you for the question. You're right, a lot has happened since early March. The direct answer to your question is we still feel bullish, especially about the back half of the year. As I recall, back on that call in March, we described external and internal drivers of optimism. On the external side, we cited the resilience of our customer. Well, we just reported 6% comp growth for Q1, well ahead of guidance. When we look at our underlying customer data, the key indicators continue to look positive across demographics and income bands. By the way, we estimate that higher tax refunds in Q1 were worth about 1.5 to 2 points of comp. Even if you strip those out, our comp growth in Q1 was still mid-single digit.

The other external factor that we cited back on the March 5th call was that we expected tariffs to be less disruptive to pricing and supply this year. Well, check. That is what we are seeing. The supply of off-price merchandise is excellent right now. Now, on that call, we also talked about internal drivers of optimism. Again, I would say those have not changed. We see potential upside in Q3 and perhaps in Q4 as we lap easier comparisons in Q3 and as we lap tariff related assortment gaps in both quarters. We continue to be excited about those opportunities. With all that said, I would acknowledge that we're perhaps a little more wary now than we were in March, based on higher gas prices and the potential impact on inflation. We're watching the trend very closely and looking for any change in consumer behavior.

We haven't seen it yet, but as an off-price retailer, that is what we do. We watch to see how the trend changes. The benefit of the off-price model, when it's well executed, is that we can tap the brakes or we can hit the accelerator if we need to. The last point I would make is if the external environment does get more difficult and if the consumer becomes more focused on value, then we don't regard that as a bad thing. In fact, as a value retailer, it could turn into an opportunity.

Great color. Kristin, as a follow-up, on your second quarter guidance, even with a relatively modest comp growth, you're projecting earnings growth of over 20% at the midpoint of the forecast. Could you walk through the bottom-line drivers and just additional details?

Matt, good morning. Yes, thanks for that question. For Q2, we're guiding 30basis points to 60 basis points of operating margin expansion on comps of 1%-3%. That translates, I think as you said in your question, to EPS growth of 19% on the low end and 28% on the high end. Couple of drivers of the margin expansion in Q2. One is higher gross margin we're planning for. We're planning for higher merch margin in the quarter. This is driven by anticipated markdown favorability, modestly faster turns, and a favorable shortage accrual rate relative to Q2 of last year. Partially offsetting this, the merch margin is some modest pressure in freight expenses due to higher fuel rates projected for the quarter. One driver is in gross margin from higher merch margin. The second is leverage in product sourcing costs driven by supply chain.

We're continuing to execute productivity initiatives across all our DCs. These savings are, of course, pressured slightly by the continued start-up costs of our new distribution center in Savannah, Georgia, which became operational late in the first quarter. There are also some puts and takes in SG&A that we believe will give us some slight leverage in Q2, certainly on the three comp. I just close by reiterating, we've consistently demonstrated the ability to drive strong earnings growth, even on modest comp sales growth. Our internal plans and our guidance reflect just that.

Our next question comes from the line of Ike Boruchow with Wells Fargo. Please go ahead.

Hey, morning, everyone. Michael, I wanted to ask you a bigger picture question. I guess, as you look across retail, off price and non-off price, what do you see happening in terms of major competitive trends, I guess just bigger picture? How do any of those trends, if you see anything, what are the ramifications of that on Burlington specifically?

Well, good morning. Good morning, Ike. Thank you for the question. It's actually good to talk about the big picture. Sometimes on these calls, it can get very easy to get caught up in the details of quarterly performance. Again, I appreciate the question. When I look across retail, and this has been true for a long time now, I see a major restructuring going on. The key driver of that restructuring is the consumer's desire for value. The retailers that can consistently offer great value are winning, and those that cannot offer great value are losing. Now, I think perhaps the strongest evidence for that is the growth of off-price. For Q1, we just reported 14% total sales growth, and this 14% was on top of 6% last year and 11% the year before. When you look at our off-price peers, they are also driving terrific growth.

The customer is voting for value, off-price is delivering that value. The growth that we and our off-price peers are achieving, of course, is not coming out of thin air. It's coming from traditional retail, from full-price retailers, if you like. I don't see any signs of that slowing down. In fact, if the economic environment were to deteriorate in the next few months, I think that could further accelerate the growth of off-price. On the second part of your question, what are the ramifications for Burlington? Well, of course, it means we have a big opportunity. I would say that for us to take advantage of that opportunity, we have to continue to improve how we execute the off-price model. We're very aware we have two very successful off-price peers.

We've made a huge amount of progress, we know that we're behind those companies in some key capabilities like localization of the assortment or automation of our supply chain. I regard that as good news. It means that we have a huge opportunity ahead of us. I think it's also worth calling out that to go after that upside, at Burlington, we do not have to try new and radical things. For our off-price peers, I think it's different. At their stage in development, it makes sense for them to invest in new ideas. That might mean, I don't know, expanding internationally or making big changes to their model. For us, we're at an earlier stage of development. We need to stay focused on the basics of off-price, controlling liquidity, managing inventory, chasing the trend, and delivering great value.

I guess I would wrap up my answer by saying that the proof of this strategy for me is in our numbers. For full year 2026, our updated guidance is for mid-teens EPS growth, and that's on top of 22% EPS growth last year and 34% the year before that. I know the phrase "focus on the basics" does not sound very sexy, especially with a British accent, but it is working for us. Over the last few years, it's driven very strong and consistent earnings growth.

Oh, thanks. I applaud the British accent. I'll go to Kristin Wolfe with the follow-up. Maybe, Kristin Wolfe, just to look back at Q1, just remind us, what were the factors that were supposed to create the headwinds in Q1 for the margin contraction? What basically happened outside of just the comp being better that was able to offset that and drive the margin expansion you ultimately put up? Thanks, guys.

Thanks, Ike. Good morning. Yeah, good question. First, let me step back and say we're very pleased with the flow-through we saw in the first quarter. Operating margin expanded 20 basis points. That was 100 basis points above the midpoint of our guidance. When we guided Q1 in March, we embedded a few known headwinds that we expected would pressure operating margin, and really disciplined execution, coupled with stronger than expected sales, drove better flow-through than we originally anticipated. Let me call out a few drivers. First, we saw strong merchandise margin performance up 20 basis points.

This was versus our expectation of lower merch margin in the quarter, really driven by disciplined markdown, better markdown execution, which was better than we expected, and also driven by the quality of our buys. This was a meaningful contributor to the upside. Freight also leveraged 10 basis points as we more than offset any fuel pressures in transportation. The second major area is we continue to make great progress, really better than expected progress, on our supply chain productivity initiatives. That drove 30 basis points of leverage in the quarter. This is all despite start-up costs from our new Savannah DC, and this is what drove the leverage on the product sourcing line.

Overall, for Q1, margin improvement on gross margin and on product sourcing more than offset some slight deleverage we saw in SG&A, and that was really driven by higher incentive comp compared to Q1 last year and higher marketing spend in the quarter. Let me just, final point I'd like to make is that the flow-through we saw here really reflects the strength of the operating model. Meaning, when we deliver sales above expectations, we expect to see meaningful earnings leverage relative to our guide, and that's what we saw in Q1.

Our next question comes from the line of Lorraine Hutchinson with the Bank of America. Please go ahead.

Thanks. Good morning. Michael, over the last 3 years, your EPS growth has typically exceeded 20%. Do you think that by driving earnings, you may have missed some comp growth?

Oh, good morning, Lorraine. Good to hear from you. Thank you for the question. It's a great question, and it's actually something that we wrestle with internally all the time. In our business, the most direct way to drive sales is to turn on receipts and flow more merchandise to stores, and then to run with higher inventory levels and more markdowns. Conversely, the way to consistently drive earnings is to carefully control the flow of receipts and to very tightly manage inventory levels. Now, I would say that at Burlington, historically, we were not good when it came to controlling receipts and inventory. In more recent years, we've worked hard at this, and I think we've become very good at it. The evidence for that is the huge increase in our merchant margin over the last several years.

Our inventory turns are much faster now, and our markdowns are much lower. We like those results. Going back to your challenge, I do think that we may have an opportunity to loosen our belts a notch and get slightly more aggressive on sales. There are some high potential merchandise categories where it might make sense for us to take up purchase commitments and maybe run with a little more inventory. Let me be clear, let me reassure investors, I'm not signaling a major shift here. We're very focused on long-term earnings growth. We strongly believe in discipline of the off-price model, control liquidity, manage inventory, and chase the trend. That's the proven model. It works. In fact, it drives terrific earnings leverage. 22% EPS growth last year, 34% the year before that.

Thanks. Then Kristin, sticking with that theme, your comp guidance for the full year of 2%-4% is below some of your off-price peers, but your EPS growth guidance of 13%-16% is in line. Can you talk about what's driving this leverage?

Good morning, Lorraine. Yes, thanks for the question. I'll walk down the P&L for the full year and really kind of give you the puts and takes on the earnings guidance. First, we're expecting overall leverage in gross margin. Higher merch margin is more than offsetting some slight deleverage in freight costs driven by higher fuel rates that are embedded in our guidance. The anticipated higher merch margin is driven by disciplined control of inventory, translating to efficient markdown execution, faster turns, and better buying.

Then as I move down the P&L, as I mentioned earlier, I'm really pleased with the leverage we're seeing in product sourcing costs driven by supply chain. We anticipate supply chain costs levering in 2026, and this is all despite the opening of a brand-new distribution center in the year. In SG&A, there are also a couple puts and takes, but one line item I want to call out is on occupancy. We expect occupancy costs to lever this year as we continue to drive up sales productivity, and we're starting to see some of the benefits of downsizing stores and reducing occupancy expenses. The last point I'll make on the full year is that we expect 10 basis points to 15 basis points of incremental leverage for every additional point of comp.

Our next question comes from the line of Brooke Roach with Goldman Sachs. Please go ahead.

Good morning. Thank you for taking our question. Michael, in your opening statement, you talked about the increase in sales per square foot as you've opened new stores and relocated or downsized older stores. How much more opportunity do you see to drive the sales productivity ahead?

Well, good morning, Brooke. Thank you for the question. The direct answer is that we still have huge opportunity on sales productivity. My goal over the next few years is to further significantly drive up sales productivity in terms of sales per square feet. As you said, in the prepared remarks, I talked about that, and I quoted the data. In 2019, we had sales productivity that was down in the $200-$220 per square foot range, and we're now up around $350 per square foot. I should add, that's with a lot of new stores in the base. Now, as with many key performance indicators, I think we've made huge progress.

When you look at our competitive benchmarks, it's clear that we still have plenty of opportunity ahead of us. Of course, part of that opportunity will come naturally from comp growth across all stores in the chain. At Burlington, we have a lot of new stores that have opened in the last few years that are going to ramp up over the next several years. Those stores are smaller format, 25,000 sq ft boxes. As those new stores ramp up, they'll have an outsized impact on our sales productivity. Add to that the other programs, our downsize and our relocation programs, they have a direct impact on sales productivity of older existing stores.

These are large stores with existing sales volumes, and essentially what we're doing is moving them into a smaller format location. There are several reasons to think that our sales productivity is going to continue to move up. Now, of course, the reason that that is important is occupancy expenses are a big part of our cost base. By continuing to drive up sales productivity over the next few years, we should be able to leverage that expense, and that should provide a nice tailwind to our operating margin over the next few years.

Great. Then as a follow-up, you mentioned the strength of the warm weather businesses in 1Q. Can you talk a little bit more about those businesses? I'd also be interested in hearing more about how your new allocation systems helped to drive the comp trend in those businesses this quarter.

Good. Yeah. Thank you for that question. Yeah. Warm weather categories account for about 25% of our sales in the first quarter, very significant. Those businesses include all the categories you might expect: shorts, short-sleeved tops, swimwear, sandals, sunglasses, and so on. In Q1, those categories achieved double-digit comp growth, well ahead of the chain. Weather was a piece of that early in the quarter, overall, the impact of weather in Q1 was somewhat mixed. It was helpful in February and March, it was unsettled and less favorable through April. I'm very happy with how we were able to navigate those trends and drive our warm weather businesses in the first quarter.

Over the last couple of years, we've begun to roll out more sophisticated localization tools and processes, and that meant that in Q1, we were able to plan and allocate receipts between different regions in a much more granular and intentional way, and we were able to respond much more effectively and in more detail to performance variations across regions. That helped drive sales, but it also helped drive merchant margin. Stepping back, I know that many investors have heard me say this before. We have terrific consistency when it comes to driving quarterly earnings growth, but we're much less consistent when it comes to quarterly comp growth.

That's especially true, or it has been especially true, in the first and the third quarters, when weather variations tend to be the most impactful. Our Coat Factory heritage means that our seasonal transitions historically just haven't been nimble enough. We know that we're never going to be able to control the weather, but we can get better at responding to it. Our localization initiative is going to be an important piece of that.

Our next question comes from the line of Adrienne Yih with Barclays. Please go ahead.

Thank you very much. Good morning, everybody. Congrats on a great quarter. Great follow-through. Michael, I was wondering if you can talk about some of the demographic trends that you're seeing by segment. Historically, you've made a little bit of comments on the sub 40K category versus the above category. Wondering if you can help us out with any changes that you're seeing there. Could typically we see that inflationary pressure of gas in particular sort of creeping up? If you can help there, that would be great. Thank you.

Yeah. Good morning, Adrienne. It's a good question. As you say, it's something that we look at all the time and often comment on. I would say the good news is that there's not a lot to call out in the data. I would say the only real headline is that our stores that are in lower income trade areas continue to outperform the rest of the chain. I don't want to overstate it, but it is real. In the first quarter, stores in trade areas with lower median household income had comp growth that was clearly above the chain. Now that said, stores in higher income areas still achieved mid-single digit comp growth.

The key takeaway from that data for me is that we continue to see resilience among lower income shoppers despite high gas prices, despite inflation creeping up. As for other demographic factors, again, not much to call out. We pay very close attention, as you know, to trends among Hispanic shoppers. In Q1, stores in high Hispanic areas had mid-single digit comp growth, so more or less in line with the chain. Again, we continue to feel good about that important demographic.

Fantastic. Then my follow-up for Kristin. The topic of the year, I suppose, is tariffs and now tariff refunds. Can you talk about how you are treating those throughout the rest of the year as guidance? I assume that you filed for them. Just any color or commentary on where they are and what you're assuming for the rest of the year. Thanks so much.

Great. Good morning, Adrienne. Yes, very topical. As you've heard from many other retailers, we have also filed for tariff refunds, but it's highly uncertain how much we will receive and when we could receive the refunds. We have not factored any of that into our guidance.

Okay. The assumption for current is the incremental 10%, I assume?

Our next question comes from the line of Dana Telsey with Telsey Advisory Group. Please go ahead.

Hi, good morning, and congratulations on the progress. Kristin, can you expand a little bit on the new store pipeline, how you're thinking about what is the smaller size of the box you're looking at, regional growth, and what the pipeline could look like? Also, along with that, the new store performance, and then I have a quick follow-up.

Great. Thanks, Dana. Good morning. For 2026, for the full year, we now expect 135 gross new stores. Once you strip out relocations and closures, we expect to yield 115 net new stores in 2026. This is slightly ahead of the prior guidance we gave of 110 net new stores for 2026. We were able to pull forward the openings of several stores that were borderline 2026 openings, and we feel good about opening these additional five new stores by the end of the third quarter this year. Given the timing, these additional new store openings did not really move the needle on the overall total sales growth guidance. Turning to your question on the pipeline, we continue to feel very good about 2027 new store pipeline. The 2028 pipeline is also robust.

We are comfortable opening at least 110 net new stores in 2027 and in 2028. We are well on our way to hitting or likely exceeding that 1,500 store mark by the end of 2028. I think you had in the last part of your question on new store performance, we continue to be pleased with the performance of new stores. We continue to see stores open at about $7 million of sales in their first full year and achieve a payback in just under 2 years. Lastly, after these new stores enter the comp base, we see them meaningfully out-comp the chain for several years.

Got it. Thank you. Just higher freight and fuel costs, what are you seeing and how are you planning? Thank you.

Yeah. Great question. We are, of course, seeing higher fuel costs and surcharges driven by the higher diesel costs. In the first quarter, we were able to lever overall freight costs as transportation cost savings initiatives offset those higher fuel rates. The higher fuel, and those incremental surcharges are baked into our full year guidance. As I mentioned, I think in an earlier question on full year 2026 guidance, we are expecting modest deleverage in freight for the year, driven by higher fuel costs. I strive to manage the P&L proactively. We've found offsets to these surcharges. That's all incorporated into our guidance.

Let me also call out, in the same vein, we recently locked in our ocean and domestic contracts for the next year at favorable rates. We've got great partnerships here. This should help us control freight costs in 2026. I guess, of course, if diesel fuel prices go up further from here and where they're projected, that could be an incremental risk to our guidance.

Our next question comes from the line of Mark Altschwager with Baird. Please go ahead.

Good morning. Thank you for taking my question. Michael, first, was hoping you could give us an update on the elevation strategy, just where you are in the rollout and what's working.

Burlington Stores (BURL) Q1 2027 Earnings Call Transcript

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