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Burlington Stores (BURL +7%) is trading sharply higher today after reporting its Q2 (Jul) results this morning, hitting a new 3-year high. This off-price retailer delivered its largest EPS beat in over 4 years, while Revenue increased 9.7% yr/yr to $2.7 bln, accelerating from 6% growth in Q1 (Apr) and topping expectations. Comp store sales jumped +5%, well above prior guidance of flat to +2%. Adding to the positive move, the company raised its guidance for EPS, revenue, and comps, underscoring how its strategic initiatives and value are resonating with consumers in the current macro environment.

• BURL attributed its strong Q2 results directly to its Burlington 2.0 initiatives. Merchandising 2.0 gave buyers the tools to pivot assortment and margins in response to tariff shocks, while Stores 2.0 upgrades delivered a noticeable sales lift. Additionally, recently opened stores, many of which are now entering the comp base, also contributed. Management emphasized these initiatives are still in the early stages and expected to drive further gains over time.
• BURL's comp of +5% was a bright spot, accelerating nicely from the flat comp in Q1 (Apr). Its comp was driven by higher transaction size, while traffic was "flattish." Management noted that the trend in Q2 started out slowly, mostly related to cooler weather in the Midwest and Northeast. Its trend picked up in June and July as weather normalized. BURL's strong heritage in outwear means that it is a bit more sensitive to seasonal weather variations than other retailers. Another impressive metric was its operating margin, which expanded 120 bps yr/yr, driven by stronger merchandising margins and expense efficiencies across P&L.
• What stands out about the nice comp lift is that management noted that its newer stores are ramping ahead of chain averages, which it expects to create a comp tailwind that should build over the next few years.
• The company is a bit cautious heading into the second half of the year. Management is holding comp guidance at +0-2% for Q3 and Q4, noting uncertainty, sensitivity to weather, and a tough +6% comp in Q4 (Jan) of last year. Additionally, BURL is not passing the full Q2 EPS beat into FY26 guidance due to incremental tariff pressure. Still, this reflects its standard playbook of planning conservatively and chasing sales when trends strengthen.

Overall, this was a great quarter for BURL, as comp sales accelerated nicely. Investors are not really responding to the cautious Q3 outlook, as the company is typically conservative and has delivered substantial EPS upside in recent quarters. On a final note, it was nice to see the stock push above the $300 level for the first time since 2021, with investors now looking ahead to continued comp tailwinds from younger stores and Burlington 2.0 initiatives.