Burlington Stores, Inc.

Burlington Stores, Inc. operates as a nationally recognized off-price retailer of high-quality, branded merchandise at everyday low prices, having opened its first store in Burlington, New Jersey in 1972 selling primarily coats and outerwear. The company has expanded its store base to 1,212 ¹ stores as of January 31, 2026, operating in 46 states, Washington D.C. and Puerto Rico. The U.S. retail apparel and home furnishings markets are highly fragmented and competitive, with the company competing against department stores, off-price retailers, specialty stores, online retailers, discount stores, wholesale clubs, outlet stores, and certain traditional full-price retail chains that have developed off-price concepts. The company's core customer is 25-49 years old, more ethnically diverse than the general population, with most having an annual household income of $25,000-$100,000, residing in midsize to large metropolitan areas.

The company competes on a combination of factors including price, breadth, quality and style of merchandise offered, in-store experience, level of customer service, ability to identify and respond to new and emerging fashion trends, brand image and scalability. Primary competitors named in the filing include department stores, off-price retailers, internet retailers, specialty stores, discount stores, wholesale clubs, and outlet stores, as well as certain traditional full-price retail chains that have developed off-price concepts. The company believes its ability to chase sales within the off-price model enables it to provide customers with nationally branded, fashionable, high quality products at a compelling value, and it carries many different brands, none of which accounted for more than 5% of net purchases during Fiscal 2025, Fiscal 2024 or Fiscal 2023.

The company generates revenue primarily through the sale of merchandise at its brick-and-mortar stores, with over 99% ² of net sales derived from stores operated as Burlington Stores. Revenue is transactional in nature, recorded at the point of sale and delivery of merchandise, net of allowances for estimated future returns based on historical return rates. The company also generates other revenue, which amounted to $17.303 million ³ in Fiscal 2025, $18.080 million ⁴ in Fiscal 2024, and $18.494 million ⁵ in Fiscal 2023, primarily from sublease income and service revenue. The company's customer segments include value-oriented and brand-conscious customers seeking quality merchandise at compelling prices, motivated by a frequently changing assortment that encourages repeat visits.

The company offers an extensive selection of in-season, fashion-focused merchandise at up to 60% off other retailers' prices, including women's ready-to-wear apparel, menswear, youth apparel, baby, beauty, footwear, accessories, home, toys, gifts and coats. Sales percentage by major product category for Fiscal 2025 was: ladies apparel 20% ⁶, accessories and shoes 28% ⁷, home 20% ⁸, mens apparel 17% ⁹, kids apparel and baby 12% ¹⁰, and outerwear 3% ¹¹. For Fiscal 2024, the percentages were: ladies apparel 21% ¹², accessories and shoes 27% ¹³, home 20% ¹⁴, mens apparel 17% ¹⁵, kids apparel and baby 12% ¹⁶, and outerwear 3% ¹⁷. For Fiscal 2023, the percentages were: ladies apparel 21% ¹⁸, accessories and shoes 27% ¹⁹, home 20% ²⁰, mens apparel 17% ²¹, kids apparel and baby 12% ²², and outerwear 3% ²³. The company's strategy to chase the sales trend allows flexibility to purchase less pre-season merchandise with the balance purchased in-season and opportunistically, and to shift purchases between suppliers and categories.

During Fiscal 2025, the company opened 113 ²⁴ new stores and closed 9 ²⁵ stores, exclusive of 18 ²⁶ relocations, bringing the store count to 1,212 ²⁷ as of January 31, 2026. The company purchased 178 ²⁸ acres of land in Buckeye, Arizona for the purpose of building a distribution center expected to be operational in Fiscal 2028. On May 20, 2025, the Board of Directors authorized the repurchase of up to $500.0 million ²⁹ of common stock, authorized to be executed through May 20, 2027. During Fiscal 2025, the company repurchased 985,594 ³⁰ shares of common stock for $251.4 million ³¹ under its share repurchase program. On June 11, 2025, the company entered into an amendment to the Term Loan Facility providing for $500.0 million ³² of incremental term loans. On July 25, 2025, the company amended the ABL Line of Credit to increase commitments from $900.0 million ³³ to $1,000.0 million ³⁴ and extend the maturity date to July 25, 2030. The company also entered into interest rate swap agreements during the second quarter of Fiscal 2025: a $200.0 million ³⁵ swap with a fixed interest rate of 3.76% ³⁶ and a $100.0 million ³⁷ swap with a fixed interest rate of 3.73% ³⁸.

Total revenue for Fiscal 2025 was $11,566.910 million ³⁹, compared to $10,634.823 million ⁴⁰ in Fiscal 2024, representing an increase driven by net sales growth of $932.9 million ⁴¹ or 8.8% ⁴². Net sales were $11,549.607 million ⁴³ in Fiscal 2025 versus $10,616.743 million ⁴⁴ in Fiscal 2024. Net income was $610.153 million ⁴⁵ in Fiscal 2025 compared to $503.639 million ⁴⁶ in Fiscal 2024, an increase primarily driven by higher sales and increased gross margin rate. Gross margin as a percentage of net sales expanded to 43.8% ⁴⁷ during Fiscal 2025, compared with 43.2% ⁴⁸ during Fiscal 2024. Cash and cash equivalents increased $237.8 million ⁴⁹ during Fiscal 2025 to $1,232.525 million ⁵⁰ as of January 31, 2026.

For the fiscal year ending January 30, 2027 (Fiscal 2026), the company plans to open approximately 110 ⁵¹ net new stores. The company estimates capital expenditures of approximately $875 million ⁵², net of approximately $55 million ⁵³ of landlord allowances, including approximately $420 million ⁵⁴ for store expenditures and approximately $290 million ⁵⁵ to support supply chain initiatives, largely related to completing the build-out of the distribution center in Georgia and beginning construction on a distribution center in Arizona.

The company continues to pursue its long-term store target of 2,000 ⁵⁶ stores, based on its smaller store prototype and the ongoing opportunity presented by accelerating retail disruption and industry-wide store closures. The company plans to open 100 ⁵⁷ stores per year on average, prioritizing 25,000 ⁵⁸ square foot stores located in busy, convenient strip malls. The company also plans to downsize existing stores to incorporate new store designs and reduce occupancy costs. The company is expanding and modernizing its supply chain network, with the Ellabell, Georgia distribution center occupying approximately 2,057,000 ⁵⁹ square feet expected to be fully operational during Fiscal 2026, and the Buckeye, Arizona distribution center expected to be operational in Fiscal 2028.

The company's merchandising strategy is centered on delivering compelling value while remaining responsive to evolving customer preferences, with key initiatives including focusing on fashion, quality, brand, and price to inform buying decisions, enabling buyers to spend more time in the market, following off-price principles of opportunistic buying and in-season purchasing, building capabilities to localize the assortment by region and store, and continuing to grow the merchandising talent base. The company also plans to invest in advertising that drives traffic to stores and communicate a strong value message to new and existing shoppers.

The company expects gross margin rate improvement driven by improved merchandise margin and freight costs. Product sourcing costs, which are included in selling, general and administrative expenses, decreased approximately 20 ⁶⁰ basis points as a percentage of net sales during Fiscal 2025 compared with Fiscal 2024. The company continues to focus on supply chain efficiency initiatives and store payroll costs to manage selling, general and administrative expenses as a percentage of net sales, which decreased to 33.1% ⁶¹ during Fiscal 2025 from 33.4% ⁶² during Fiscal 2024.

The company is investing in supply chain capabilities to support growth and improve operational efficiency, including driving cost savings through speed, flexibility, and efficiency in distribution and transportation, and expanding and modernizing the supply chain network with flexible and efficient distribution centers. The company purchased 178 ⁶³ acres of land in Buckeye, Arizona for a distribution center expected to be operational in Fiscal 2028. The company also continues to invest in information technology and other business initiatives.

The company estimates capital expenditures of approximately $875 million ⁶⁴ for Fiscal 2026, net of approximately $55 million ⁶⁵ of landlord allowances. The company has a share repurchase authorization of up to $500.0 million ⁶⁶ authorized on May 20, 2025, to be executed through May 20, 2027, with $385.0 million ⁶⁷ remaining as of January 31, 2026. The company currently does not anticipate paying cash dividends in the near term, intending to retain all available funds and any future earnings to fund capital expenditures, business initiatives, and support potential opportunistic capital structure initiatives.

The company faces headwinds from a high level of uncertainty in the current macroeconomic and geopolitical environments, with prolonged inflationary pressures potentially continuing to negatively impact the discretionary spending of the low-income shopper, its core customer. Consumer spending habits are affected by prevailing global economic conditions, costs of basic necessities, levels of employment, salaries and wage rates, prevailing interest rates, reductions in government benefits, housing and food costs, energy and fuel costs, commodities pricing, income tax rates and policies, immigration policies, consumer confidence, and consumer perception of economic conditions. The imposition of significant tariffs on imports from certain countries by the U.S. has heightened uncertainty in the global trade environment, and on February 20, 2026, the U.S. Supreme Court issued a ruling limiting the authority to impose tariffs under the International Emergency Economic Powers Act, creating uncertainty regarding the potential recovery of tariffs previously assessed.

The company faces execution risks related to its growth plans, including the ability to successfully open and operate new stores and expand distribution capabilities. The success of these strategies depends on the current retail environment, identification of suitable markets, availability of real estate meeting criteria for traffic, square footage, co-tenancies, lease economics, demographics, negotiation of acceptable lease terms, construction costs, availability of financing, hiring, training and retention of competent sales personnel, and effective management of inventory. The company also faces risks from increased competition, as the U.S. retail industry continues to face increased pressure on margins, and lower-to-moderate income shoppers continue to face economic pressure due to higher cost of living.

The company faces material risks from a downturn in general economic conditions or consumer spending, as its core customer has an annual household income of $25,000-$100,000 and is particularly sensitive to inflationary pressures, with prolonged inflation potentially negatively impacting discretionary spending. The imposition of significant tariffs on imports from certain countries by the U.S. has heightened uncertainty, and on February 20, 2026, the U.S. Supreme Court issued a ruling limiting the authority to impose tariffs under the International Emergency Economic Powers Act, creating uncertainty regarding the potential recovery of tariffs previously assessed. The company faces increased competition from other retailers, including department stores, off-price retailers, internet retailers, and traditional full-price retail chains that have developed off-price concepts, which could reduce its competitive advantage. The company's ability to sustain its growth plans depends on successfully opening and operating new stores and expanding distribution capabilities, with a long-term store target of 2,000 ⁶⁸ stores, and failure to execute these strategies could adversely affect financial condition and results of operations. The company's substantial indebtedness as of January 31, 2026, including $1,719.4 million ⁶⁹ under its Term Loan Facility and $297.1 million ⁷⁰ of 2027 Convertible Notes, with estimated cash required for interest payments of approximately $93.2 million ⁷¹ for the fiscal year ending January 30, 2027, creates risks if the company is unable to generate sufficient cash flow to service its debt obligations.

Management's message emphasizes a focus on several ongoing strategic initiatives aimed at operating with flexibility, responsiveness, and efficiency while delivering great value to customers through continued improvement in the execution of the off-price model. Key strategic priorities for Fiscal 2026 include merchandising initiatives centered on fashion, quality, brand, and price to inform buying decisions, enabling buyers to spend more time in the market, following off-price principles of opportunistic buying and in-season purchasing, building capabilities to localize assortment by region and store, and continuing to grow the merchandising talent base. The company also plans to open approximately 110 ⁷² net new stores in Fiscal 2026 and estimates capital expenditures of approximately $875 million ⁷³, net of approximately $55 million ⁷⁴ of landlord allowances. Management acknowledges uncertainties and challenges including macroeconomic conditions, inflation, trade and tariff policies, seasonality, weather conditions, and competition, but believes that the company's strategy to chase the sales trend allows flexibility to obtain better terms with suppliers to help offset rising costs of goods.