Burlington is still a coat factory to many shoppers, and that was a bad thing this year

By Tomi Kilgore

The off-price retailer bucked the trend set by its peers with a sales miss, as warmer than usual weather led to a big drop in store traffic

Burlington's stock is dropping after the company missed sales expectations, as unusually warm weather led to a significant drop in store traffic.

Shares of Burlington Stores Inc. took a dive Tuesday, as the off-price retailer failed to follow in its peers' footsteps by reporting fiscal third-quarter sales that missed expectations.

Comparable-store sales, or sales of stores open at least a year, rose from a year ago, but by a much slower pace than what Wall Street projected. The company (BURL) said the problem was that after the back-to-school season, foot traffic to its stores "fell off significantly" because of unseasonably warm weather in its major markets. Keep in mind that it was only about a dozen years ago that the company's retail-store brand name changed.

Chief Executive Michael O'Sullivan said on the post-earnings call with analysts that many shoppers still think of the company as Burlington Coat Factory, its previous name.

"Outerwear is a great business and a source of competitive strength. But this means that in [the third quarter], our comp trend is very sensitive to weather, much more so than competitors," O'Sullivan said, according to an AlphaSense transcript. "In some years, the impact is positive; in some years, it is negative. This year, it was negative."

The stock tumbled 10.7% in recent midday trading, which put it on track to suffer its biggest one-day drop since it sank 15% on May 20, 2022.

The selloff suggests investors were hoping for something more like what fellow off-price retailers TJ Maxx and Marshalls parent TJX Cos. (TJX) and Ross Stores Inc. (ROST) reported recently. Those companies beat sales expectations, and their stocks were rallying into record territory on Tuesday.

An area that used to be dominated by lower-income shoppers, TJX and Ross Stores showed that higher earners are now also taking part in the treasure-hunt shopping for which the chains are known. And while Burlington started to benefit from that trend again once the weather cooled off later in October, it wasn't enough to offset the weakness seen in September.

Also read: Another off-price retailer just turned more optimistic about is future. Bargain hunting is the name of the game.

"The comp numbers that our peers have just reported reaffirm that the off price shopper at all income levels is alive and well," O'Sullivan said. "Leaving aside the weather, the major implication for us is that we need to take better advantage of that than we did in the third quarter."

Despite the sales miss, Burlington still managed to beat profit expectations, like its peers, and raised its full-year profit outlook for a second straight quarter, citing cost cuts and tariff-mitigation efforts.

But for the quarter to Nov. 1, total sales grew 7.1% to $2.71 billion, just below the average analyst estimate compiled by FactSet, $2.73 billion. And comparable-store sales increased 1%, while the FactSet consensus called for 2.6% growth.

At least the profitability of those sales improved, with gross margins up to 44.2% from 43.9%, as freight expenses declined.

Net income jumped 15.6% to $104.8 million, while adjusted earnings per share, which excludes nonrecurring items, of $1.80 beat the FactSet consensus of $1.64.

The company also raised its full-year adjusted EPS guidance range to $9.69 to $9.89 from $9.19 to $9.59.

"Our merchandising and operating teams did an outstanding job mitigating the negative margin impact from tariffs," O'Sullivan said. "We are passing along all of this third quarter upside to our full year 2025 earnings guidance."

And despite the total sales miss, the company nudged up its full-year sales growth outlook to 7% to 9% from 7% to 8%.

Burlington's stock has now lost 10.9% in 2025, while TJX shares have run up 26% and shares of Ross Stores have climbed 16.3%. The S&P 500 index SPX has advanced 14.9% year to date.

-Tomi Kilgore

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11-25-25 1247ET