バーリントン・ストアーズ（BURL）2026年度第2四半期決算説明会：関税還付金の再投資に伴いEPS見通しを引き上げ

主要なポイント

• バーリントン・ストアーズ（NYSE: BURL）の2026年度第2四半期業績は、総売上高が前年同期比11%増、既存店売上高が2%増となりました。2年累積の既存店売上高成長率は7%でした。
• 関税返還金を除く調整後EBITマージンは100ベーシスポイント拡大して7.0%となり、調整後EPSは前年同期の39%増に続き38%増の2.37ドルとなりました。
• 同社は約5,500万ドルの関税返還金を受け取り、報告ベースの第2四半期EPSを0.64ドル押し上げました。経営陣は全額を第3および第4四半期に顧客価値の強化へ再投資する計画であり、通期業績への影響は中立的になると見込んでいます。
• バーリントンは2026年度の調整後EPS見通しを11.77ドル〜11.97ドル（前年度比16%〜18%増）に上方修正しました。通期の総売上高は10%〜11%増、既存店売上高は3%〜4%増を見込んでいます。
• 新規出店は引き続き主要な成長ドライバーです。バーリントンは第2四半期にグロスで51店舗、ネットで45店舗を出店し、期末店舗数は1,287店舗となりました。経営陣は2026年度通期で約115店舗の純増を見込んでいます。
• 経営陣は、中・低所得層の消費圧力、ガソリン価格の高騰、秋の暖登の可能性に引き続き慎重な姿勢を示しています。一方で、価格訴求力の向上や前年の関税に伴う商品構成制限の一巡による売上の上振れ可能性も挙げています。

主要財務データ

売上総利益率の向上は商品利益率の70ベーシスポイント改善を反映したもので、運賃費用の10ベーシスポイント増加によって一部相殺されました。売上高比での製品調達コストは20ベーシスポイント低下しました。調整後販管費比率も、主に店舗関連コストの減少と総売上高成長に伴うレバレッジ効果により50ベーシスポイント低下しました。

事業および営業業績

バーリントンは過去12か月間でグロス178店舗、ネット149店舗を新規開店し、店舗数を13%増加させました。新店舗の平均総面積は約2万7,000平方フィートで、経営陣は年間売上高700万ドル以上を生み出し、投資回収期間は2年未満になると見込んでいます。

出店ペースの加速に伴い、自社店舗間の競合（カニバリゼーション）による既存店売上高への逆風は、近年の約1ポイントから第2四半期には約1.5ポイントに拡大しました。経営陣はこの高い影響が2026年度の残りの期間も続くと予想していますが、新店舗による純増売上高と採算性は引き続き魅力的であるとしています。

サプライチェーンの生産性向上は、新しいサバナ配送センターの立ち上げ費用があったにもかかわらず、20ベーシスポイントのレバレッジ（費用改善効果）をもたらしました。同施設は4月に入荷商品の受け入れを開始し、出荷フローのサポートも始めました。経営陣は、その規模と自動化により、長期的には処理能力と生産性が強化されると見込んでいます。

カテゴリー別では、ビューティおよびアクセサリーが最も好調でした。ホーム（家庭用品）は、前年に関税の影響を受けた商品構成の再構築が進み、7月に全社平均を上回り、8月もその好調が続きました。経営陣は、家具、キッチン用品、玩具の好調に加え、ギフト、玩具、ホリデー商戦向け商品のリザーブ在庫および発注残が良好であることを挙げました。

地域別の業績は幅広い地域に及びました。北東部と中西部は全社平均を上回った一方、南西部は遅れをとりました。第2四半期の既存店売上高は、取引件数（客数）がほぼ横ばいとなる中、主にお客単価（バスケットサイズ）の上昇が牽引しました。

経営陣による業績見通し（ガイダンス）

2026年度の見通しには、第2四半期における5,500万ドルの関税返還金による恩恵と、第3・第4四半期にわたる同資金の再投資計画が含まれています。経営陣は通期の純影響がニュートラルになると予測しています。返還金の約40%を第3四半期に、60%を第4四半期に再投資する予定です。

関税返還金の再投資は、第3および第4四半期にEBITマージンが前年同期比で低下すると見込まれる理由となっています。経営陣によると、これらの投資を除いた秋の基調的な見通しに変更はなく、調整後EBITマージンは10〜30ベーシスポイントの改善が見込まれ、秋の調整後EPSは7.30〜7.50ドルと予測されています。

バーリントンは2026年度にグロスで135店舗、ネットで約115店舗の新規開店を引き続き見込んでいます。経営陣は毎年少なくとも110店舗の純増ペースを維持し、2028年末までに1,500店舗に達する、あるいは上回る可能性が高いと確信しています。

リスクおよび注視項目

経営陣は消費需要に対する警戒感を強めています。ガソリン価格の高騰や小売セクターのまちまちな既存店売上高は、中・低所得世帯が引き続き圧力を受けていることを示唆しています。バーリントンの第2四半期の既存店売上高成長率2%も、マイケル・オサリバンCEOが達成を望んでいた水準を下回りました。

平年より暖かい秋・冬の天候が、特に9月下旬から11月にかけてアウターウェアの需要を押し下げる可能性があります。バーリントンはこのリスクを軽減するため、アウターウェアの展開比率を引き下げ、天候に左右されにくいカテゴリーを増やし、地域ごとの在庫最適化を拡大しました。

第2四半期末の既存店在庫は11%増加しました。経営陣はこの増加の原因として、ホーム部門の在庫の再構築、新学期向け商品受入れの一部前倒し、ビューティやアクセサリーなどの高回転カテゴリーへの選択的投資を挙げています。

アナリスト質疑応答のハイライト

• 関税返還金戦略：経営陣は、5,500万ドルをより魅力的な価格価値へ再投資することは、生活費上昇に直面する顧客を支援することを意図したものだと説明しました。バーリントンは、返還金を一回限りの利益として保持しなくても利益目標を達成できると考えています。
• マージン拡大：第2四半期の収益性は、商品値決めの改善、関税圧力の軽減、値下げのタイミング、棚卸減耗の減少、配送センターの生産性向上、および販管費のレバレッジ（効率化）の恩恵を受けました。燃料関連の物流コスト上昇や減価償却費の増加が一部相殺要因となりました。
• 下半期の売上見通し：経営陣は、価格価値の向上や前年の天候・関税関連の混乱に対する比較のしやすさから、上振れの可能性があると見ています。しかし、消費者の不確実性、競合他社の価格施策、天候リスクを理由に、売上高見通しを据え置きました。
• 消費動向：低所得層商圏の店舗は引き続き全社平均を上回る実績を示し、ヒスパニック人口比率の高い地域の店舗は全社平均と同水準の業績となりました。
• ホーム部門の回復：品揃えの不備が解消されたことで、ホーム部門は7月および8月に全社平均を上回る実績を上げました。同カテゴリーは特にギフト、玩具、ホリデー商品において、第4四半期にさらに重要性を増すと見込まれています。
• 追加の関税返還金：バーリントンは、異議申し立てが確定するにつれて少額の追加支給が行われる可能性はあるものの、すでに計上された金額を超える重大な返還金は見込んでいません。

決算説明会（トランスクリプト）全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good morning, and welcome to Burlington Stores, Inc. 2Q 2026 Earnings Webcast. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to David Glick, Group Senior Vice President. Please go ahead.

David Glick

Thank you, operator, and good morning, everyone. We appreciate everyone's participation in today's conference call to discuss Burlington's fiscal 2026 second 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 expressed permission. A replay of the call will be available until September 3, 2026. We take no responsibility for inaccuracies that may appear in transcripts of this call by third parties. Our remarks and 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 other 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 historical and forward-looking profitability metrics discussed on this call exclude costs associated with bankruptcy acquired leases. These pretax costs amounted to $4 million and $11 million during the fiscal second quarter of 2026 and 2025, respectively, and $16 million and $35 million for the full fiscal year 2026 and 2025, respectively.

Now here's Michael.

Michael O'Sullivan

Thank you, David. Good morning, everyone, and thank you for joining us. I would like to cover 3 topics this morning. Firstly, we'll talk about tariff refunds. Secondly, I will review our second quarter results. And finally, I will discuss our updated guidance. After that, Kristin will walk through the financial details.

Okay. Let's start with tariff refunds. In the second quarter, we received approximately $55 million in tariff refunds. These refunds are included in our reported earnings and provided a $0.64 benefit to our second quarter earnings per share. We intend to fully reinvest these refunds into the business in the back half to deliver even sharper values to our customers. So we expect the direct impact of the tariff refunds to be neutral to full year earnings.

I want to be explicit about the decision that we have made here. Rather than taking a onetime boost to earnings, we are planning to use the refunds to deliver sharper values for our customers. Over the last few years, the rising cost of living has made life difficult for many moderate and low-income families. At Burlington, we already offer great deals. Our plan is to use these tariff refunds to further sharpen values across our assortment.

Okay. Let's move on to our second quarter results. As I mentioned a moment ago, these results include $55 million of tariff refunds. But for the purposes of this morning's discussion, we are going to strip out this impact. The headline is that even after you strip out the favorable impact of tariff refunds, the underlying earnings momentum in our business is extremely robust. In Q2, we delivered yet another quarter of very strong earnings growth. EPS increased 38% in the quarter, and this was on top of 39% growth last year. These very strong results further demonstrate our ability to convert sales growth into margin expansion and strong earnings flow-through.

Let's talk about sales. Total sales grew 11% on top of 10% growth last year. New stores are a major driver of this growth. In Q2, we opened 51 gross new stores. After store relocations and closures, this represents a net increase of 45 new stores. As we mentioned at the start of the year, the strength of our new store pipeline has enabled us to front-load new store openings this year with 2/3 opening in the spring and 1/3 scheduled for the fall. This means that on a trailing 12-month basis, we have opened an extraordinary 178 gross new stores translating to 149 net new stores after relocations and closures.

We are very pleased with the pace quality, productivity and profitability of these new store openings. Let's move on to comp stores. Comp sales increased 2% in Q2 on top of 5% comp growth last year. Our merchant and operating teams executed well in the second quarter and I am pleased with our solid 7% 2-year comp stack. I should add that the relatively higher number of new store openings in the last 12 months means the comp headwind from cannibalization by new stores is slightly elevated. As a reminder, whenever we approve a new store location, we analyze and ed make the potential cannibalization impact on nearby stores, and we build this into our economic modeling.

For the last couple of years, this impact has been running at about 1 percentage point of comp. Given the large number of new store openings in the past 12 months, it was worth about 1.5 percentage points of comp in Q2. We expect this to continue through the rest of this year. Again, to clear, the net sales lift and the overall economics of our new store program are extremely attractive and easily exceed this impact on comp growth.

Okay. Moving on to earnings. As I mentioned a moment ago, we were very pleased with our earnings growth in Q2. To reiterate, the numbers that I am going to quote exclude the favorable impact of tariff refunds. Operating margin expanded 100 basis points well above the high end of our guidance for 60 basis points of expansion. As previously mentioned, adjusted EPS increased 38% on top of 39% for the same period last year. This was a high-quality earnings speed driven by stronger merchandise margin as well as supply chain and SG&A leverage. Once again, these results demonstrate our ability to drive strong margin expansion and earnings growth even on relatively modest comp store sales increases.

Before we move on to the outlook for the rest of the year, I think it is worth taking a moment to put our second quarter results into context. Sometimes it can be misleading to read too much into a single quarter. So let me talk about the last 4 quarters. Over that period, and again, excluding tariff refunds, we have driven EPS growth of 24% on total sales growth of 11% and comp store sales growth of 3%. Going back even further, over the last 8 quarters, we have driven EPS growth of 51% on 19% total sales growth and 6% comp sales growth on a 2-year stack basis. Against any relevant benchmarks, these results are hugely impressive. I could keep going back further, but you get the idea. At Burlington, we have a tremendous track record of driving consistent margin expansion and earnings flow-through on our total and comp store sales growth.

Okay. Now let's talk about the outlook for the rest of the year. I will start with our full year guidance and then work backwards. We are taking up our earnings guidance to pass along the entire earnings beat from Q2. As described earlier, we received $55 million in tariff refunds in Q2, and we plan to use these to sharpen values in the back half. So for the full year, the direct impact of these refunds is expected to be neutral.

Let's talk specifically about the back half. Excluding the impact of tariff refund investments, our earnings guidance for the back half is unchanged. Our sales guidance for the back half is also unchanged but let me offer some editorial commentary. We continue to feel good about our sales upside potential. We will be lacking weather-related issues in Q3 and tariff-related supply constraints in Q3 and Q4.

Added to that, as discussed, we will be using the favorability from tariff refunds to further sharpen merchandise values. We feel like we are set up for success in the back half. That said, there are external risks. So for now, we have chosen to maintain sales guidance. Our playbook, which has served us well and has contributed to our strong track record of earnings growth is to maintain discipline and to manage our business in a tightly controlled way. As we have done in the past, we will chase the sales trend if it is stronger.

Now I would like to turn the call over to Kristin to provide additional financial details. Kristin?

Kristin Wolfe

Thank you, Michael, and good morning, everyone. I will start with some additional color on the second quarter. Then I will share details on our guidance for Q3 and Q4 and for the full year. The second quarter profitability metrics I will share exclude the benefit of the $55 million in tariff refunds received in the second quarter. These were recognized as a reduction to cost of goods sold and added $0.64 to Q2 earnings per share. .

As Michael just discussed, our guidance for Q3 and Q4 assumes we reinvest all of the $55 million in tariff refunds across both the third and fourth quarters in order to deliver even sharper value.

Now turning back to the second quarter results. Total sales grew 11%, while comp store sales increased 2% which was at the midpoint of our guidance range of 1% to 3% comp growth. The gross margin rate for the second quarter was 44.3% and an increase of 60 basis points versus last year. This was driven by a 70 basis point increase in merchandise margin, which was partially offset by a 10 basis point increase in freight expenses. Product sourcing costs were $226 million versus $209 million in the second quarter of 2025. Product sourcing costs decreased 20 basis points as a percentage of sales versus last year.

Supply chain was the driver of the leverage as we continue to execute on our productivity and cost savings initiatives. We achieved leverage in supply chain despite the start-up of our new state-of-the-art Savannah distribution center.

Adjusted SG&A costs in Q2 decreased 50 basis points versus last year. This was primarily driven by lower store-related costs and leverage on total sales growth. Q2 adjusted EBIT margin was 7%, 100 basis points higher than last year, which was well above our guidance range of an increase of 30 to 60 basis points. Our Q2 adjusted earnings per share was $2.37, which also came in above our guidance range of $2.05 and to $2.20. This represents a 38% increase in earnings per share on top of a 39% increase in Q2 of last year. And demonstrates our continued ability to convert top line growth into even stronger earnings growth.

At the end of the quarter, comparable store inventories increased 11% versus the end of the second quarter of 2025. Our reserve inventory was 43% of our total inventory versus 50% of our inventory last year. We are very happy with the quality of the merchandise and the values we have in reserve. We ended the quarter with approximately $1.6 billion in total liquidity, which consisted of $704 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 $87 million in common stock. We have repurchased $167 million of common stock fiscal year-to-date. And at the end of Q2, we had $218 million remaining on our share repurchase authorization, which expires in May of 2027. In the second quarter, we opened 51 new stores and relocated 6 stores. This resulted in the addition of 45 net new stores in Q2 bringing our store count at the end of the quarter to 1,287 stores.

Now moving to our updated fiscal 2026 full year guidance. This guidance excludes approximately $16 million of costs associated with bankruptcy acquired leases versus $35 million in 2025. For the full year, our guidance includes the benefit of the $55 million in tariff refunds received in Q2 and the corresponding reinvestment of those dollars across Q3 and Q4. Therefore, the net impact tariff refunds on our full year guidance is neutral. For the full year 2026, we are increasing our earnings outlook, passing through the entire second quarter underlying earnings beat to the full year.

For the full year, Total sales are now expected to increase 10% to 11%. We expect comp store sales to increase in the range of 3% to 4%. And and our adjusted EBIT margin to expand by 20 basis points to 40 basis points versus last year. Passing through the entire Q2 EPS upside results in adjusted earnings per share guidance in the range of $11.77 to $11.97, up 16% to 18% versus fiscal 2025 and well above our initial FY '26 guidance.

Moving now to our third quarter guidance, which excludes approximately $2 million of expenses associated with bankruptcy acquired leases versus $11 million in Q3 of 2025. Consistent with our prior fall guidance, we are guiding Q3 comp sales to be up 1% to 3% and total sales to increase 9% to 11%. Our quarter-to-date trend is within this comp store sales guidance range. Of course, we are only 3 weeks into the quarter, and the important transitional fall selling season is still ahead of us. As noted, we plan to reinvest approximately 40% of the tariff refunds into better values in Q3 and 60% in Q4.

Excluding these reinvestments, our followed guidance assumptions for EBIT margin improvement and earnings growth are unchanged versus our prior guidance, which called for EBIT margin improvement of 10 to 30 basis points and EPS growth of 7% to 10%. As we noted earlier, we believe it's important to drive an even stronger value offering in fall. Factoring in the reinvestment, we are guiding Q3 operating margin to decrease 80 to 60 basis points versus the third quarter of 2025. This translates to an adjusted earnings per share outlook in the range of $1.60 to $1.70 compared to last year's third quarter EPS of $1.80.

Excluding planned tariff refund reinvestments, we estimate Q3 operating margin would increase modestly versus last year. For the fourth quarter, we expect comp store sales to be up 1% to 3%, and total sales to increase 7% to 9%. We are guiding Q4 operating margin to decrease in the range of down 60 to down 40 basis points driven by the planned reinvestment of tariff refund. This translates to an adjusted EPS outlook in the range of $5.05 and to $5.15 compared to last year's fourth quarter EPS of $4.99.

Operating margin in Q4, excluding those tariff refund reinvestment would be up versus last year. As we noted, the net impact of tariff refunds on our full year guidance is neutral. We plan to reinvest the $0.64 benefit we saw in Q2 into Q3 and Q4. Excluding these reinvestments, our underlying fall guidance of $7.30 to $7.50 and EBIT margin up 10 to 30 basis points is unchanged from the guidance we issued on our Q1 earnings call in May.

I will now turn the call back over to Michael.

Michael O'Sullivan

Thank you, Kristin. Before I hand it back to the operator for your questions, let me summarize 2 key messages from this morning's call. Firstly, we are very pleased with our second quarter results. Total sales increased 11% in the quarter on top of 10% last year. Comp store sales increased 2% on top of 5% last year, resulting in a solid 2-year comps down of 7%. And most importantly, even after stripping out the favorable impact of tariff refunds, our operating margin expanded 100 basis points and our adjusted EPS increased 38% on top of 39% last year. Our results in Q2 add to an already impressive and consistent track record of strong operating margin expansion and earnings flow-through. .

Secondly, we believe that we are set up for success in the back half of the year. We think that there may be potential sales upside as we lap specific issues in Q3 and Q4 of last year. And as we deploy tariff refunds to deliver even sharper values to our customers. That said, we recognize that there are risks. So we are going to stay disciplined and execute the off-price playbook. We are maintaining our sales guidance for Q3 and Q4, and we will be ready to chase if the sales trend turns out to be stronger.

Now I would like to turn the call over for your questions.

Operator

[Operator Instructions] And our first question comes from the line of Matthew Boss with JPMorgan. Matthew, please go ahead.

質疑応答

Matthew Boss

So Michael, on tariff refunds, could you elaborate on your decision to use the refunds to sharpen your prices and values, particularly relative to some retailers that are using them for favorability to earnings and others that are using them to offset expense pressures.

Michael O'Sullivan

Matt, thank you for the question. It's a good question. For us, this was actually an easy decision. And there were, I would say, 2 main drivers that led us there. Number one, it feels like the right thing to do for our customers. Over the last few years, many households, especially moderate to lower-income families have struggled with the higher cost of living, higher prices on essentials like groceries, rent, gas prices, et cetera. So our goal is to use the tariff refunds to give our customers a break. We already offer great value at Burlington.

But by reinvesting the tariff refunds into lower prices, we should be able to sharpen those values further and to offer the customer an even better deal. The second thing that I would say and this one is a bit more technical. So let me try and explain we think it makes sense that different retailers have made different choices on this. Our tariff refunds are worth $55 million. Now in dollar terms and as a percentage of sales, that is much lower than many of our retail peers and competitors. And one of the reasons for that is because in the back half of last year, we pivoted away from categories where the impact of tariffs was very high. Now as you'll remember, that hurt our sales trend in the back half of last year, but it meant that we were still able to drive very strong earnings growth because we suffered less impact from tariffs.

Now there were other retailers who made a different decision. They stayed in those tariff-impacted categories, that meant they saw stronger sales than us, but weaker earnings. Anyway, scroll forward to the back half of this year. Now relative to our peers, we're sitting on a higher base of earnings from last year. And our current earnings momentum is also very strong. So we're confident that we can hit our earnings targets even without the assistance of tariff refunds. Now for some other retailers, that calculus may be different for them. The refunds may be an opportunity to catch back up on earnings that they missed out on in the second half of last year.

Anyway, I guess I would sum up my answer by reiterating that for us, this was an easy decision, reinvesting the refunds into sharper values feels like the right thing to do for our customers. And at the same time, we're confident that we can hit our targets without flowing these refunds to earnings.

Matthew Boss

That's great color. And Kristin, to Michael's point, 100 basis points of second quarter margin expansion and 38% earnings growth that's impressive flow-through on only a 2% comp. Could you elaborate on the drivers of the margin upside?

Kristin Wolfe

Matt, yes, we feel very good about our ability to continue to drive operating margins higher, drive strong EPS growth even on the 2% comp, as you said in your question, that 38% EPS growth we saw in Q2 was on top of 39% EPS growth in Q2 of last year. So we think this consistent earnings growth is worth calling attention to.

On the Q2 margin expansion, specifically, I'd call it a few key drivers. First, our merch margin was up 70 basis points. This was better than we planned. It was primarily driven by better markup with less tariff pressure compared to last year. The timing of markdowns from Q1 as well as a lower shortage rate also drove some additional leverage in merch margin in the quarter. The second area is our inland supply chain. We saw 20 basis points of leverage driven by productivity and cost savings initiatives in DCs. And this was despite the headwind of the Savannah startup in the quarter.

And finally, we drove 50 basis points of SG&A leverage, primarily due to lower store-related costs, including lower occupancy and leverage on that 11% total sales growth. These drivers more than offset some pressure we had in freight from higher fuel as well as some higher depreciation in the second quarter.

Operator

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

Irwin Boruchow

Michael, first question is on the sales guidance for the back half. Given that you're making this investment via the tariff refund the sharper the values this fall, just curious, why not be a little bit more aggressive on the sales guidance, doesn't look you're assuming much benefit from those sharper prices. Could you elaborate there?

Michael O'Sullivan

Sure. Thank you for the question. Let me start by saying that when we set guidance, it is not an exact science. We try to balance numerous competing factors and considerations. As we said in the prepared remarks, we feel very good about our sales guidance for the back half. In fact, we think there may be upside. We're going to be lapping weather-related issues in Q3 and tariff-related supply constraints in Q3 and Q4. And as you mentioned in your question, the fact that we are reinvesting tariff refunds into sharper values should provide an additional tailwind to the sales trend. So all of those factors are causing us to be optimistic about the back half but there are also some reasons to be a little cautious.

From a macroeconomic perspective, gas prices rose in the first quarter, and that increase has not gone away. And as we look at the full range of retailer results that have been reported over the last couple of weeks, there are some exceptions, but overall, the comp results have been weak. At all the commentary that we see and hear right now suggest that shoppers are under a lot of pressure. So that gives us some concern about the back half.

One other point to make. We believe that reinvesting the tariff refunds into shopping values will help drive our sales momentum. But we also recognize that we are not the only retailer in America. There are other retailers who will be doing the same thing, and some of them much larger than us. So that further reinforces our decision to reinvest the tariff-free plans in sharper values, but it may mean that any impact on our sales trend is somewhat muted.

I guess let me wrap up my answer by saying that we are -- we're an off-price retailer. We believe in the discipline of the off-price model. That discipline has served us well and it has certainly helped drive our earnings outperformance over the last few years. And the way that the model works is that we manage our sales and inventories conservatively and then we chase. So if our sales guidance turns out to be conservative, then you can be sure we'll be ready to chase the upside.

Irwin Boruchow

Got it. Makes sense. And then a follow-up for Kristin, maybe just more color on the Q3 and Q4 margin guide. Just would be helpful to understand how exactly you're going to reinvest those dollars.

Kristin Wolfe

Thanks for the question. We've said a couple of times today, we're reinvesting the tariff refunds Q2 into fall to offer even stronger value to our customers. So we expect these incremental investments to result in lower gross margins versus last year in both Q3 and in Q4. Again, that reinvestment approximately 40% into Q3 and 50% into Q4. These tariff refund reinvestments are the sole reason we're adjusting our Q3 and Q4 guidance, and this whole reason we're guiding lower EBIT margins in both of those quarters.

Excluding these reinvestments, our underlying fall guidance assumptions for EBIT margin expansion are unchanged versus our prior guidance where we called for EBIT margin improvement of 10 to 30 basis points. So underneath that, drivers of that underlying EBIT margin expansion in fall includes continued savings in supply chain as well as some additional leverage in SG&A partially offset by the higher -- by some higher freight cost due to fuel. And these are all embedded in our guidance for Q3 and Q4.

Operator

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

Lorraine Maikis

Results across retail in the second quarter have been pretty mixed. Does this make you a little cautious today about the consumer than you were on last quarter's call? And where do you think the consumer is and what impact that may have on demand for the rest of the year.

Michael O'Sullivan

Lorraine, thank you for the question. My direct answer to your question is yes. We are a little more cautious on the consumer I would say there are a few reasons for that. Number one, as I mentioned earlier, there was a big spike in gas prices back in March because of the situation in the Middle East. First, I think many observers thought that would be temporary, but it hasn't turned out to be temporary. And I think that sort of adds to the general concern consumers, especially moderate to low-income households are feeling stretched right now.

Number two, and again, I mentioned this earlier, as we look at the full range of retailer results that have been reported in the last 2 weeks. There are a couple of notable exceptions, but in general, I would describe the Q2 comp results across the sector as having been underwhelming, even at large value-oriented retailers.

And then number three, let me talk about our own comp trend. In Q2, I think that our merchant and operating teams executed well. There are always opportunities for improvement, but I thought that our values and assortments were good. But we still only ran 2% comp growth. Of course, on a 2-year basis, that's fine. It's a solid 7% 2-year stack, even more if you adjust for new store cannibalization. Bbut candidly, I was hoping for more than a 2% comp in the second quarter.

Anyway, again, the direct answer to your question is, yes, we are a little more cost on the customer. But let me pivot and talk about what the action implications of that are for us. I would say that despite that caution, we still feel good about our sales guidance for the back half, and we still feel good about potential upside. But as an off-price retailer, it makes sense to be cautious. We know that we can do well even in a difficult retail environment, if we stay disciplined. So we plan to appropriately manage our open to buy our receipts and our inventory levels and then be ready to chase if the trend turns out to be stronger.

Lorraine Maikis

And then, Kristen, comp store inventory levels were higher than we expected exiting the quarter. Can you walk through what drove that increase and why you're comfortable with that higher inventory level?

Kristin Wolfe

It's a great question. At the end of Q2, our comp store inventory was up 11%. And this increase was a bit higher than what we typically see, and there were a few drivers. Let me walk through. First, we exited the quarter with higher home inventory versus last year's purposeful pullback in home due to the higher tariffs. And in addition, we felt we had opportunity last year in the leader back-to-school market. So we pulled forward some back school receipts into late July to ensure we were well positioned there. There were also some tax-free shopping shifts that modestly influence our back-to-school inventory levels at the end of the quarter.

And the last thing was we mentioned this on last quarter's call, we have very selectively steps up our investments in strong performing fast-turning categories like those in beauty and accessories. So overall, for those 3 drivers that's stepping back, we're comfortable with our inventory levels and how we exited the quarter.

Operator

Your next question comes from the line of Brooke Roach with Goldman Sachs. Brooke, please go ahead.

Brooke Roach

Kristen, you finished the quarter at the midpoint of your comp guidance. Can you talk about how sales trended within the quarter and whether there were any meaningful changes in the business as the quarter progressed? What are you seeing in terms of the comp trend on an August month-to-date basis?

Kristin Wolfe

Brooke, thanks for the question. You may recall in our last earnings call in May, we shared that we were at the high end of our 1% to 3% comp guidance range. And as we progress through the quarter, the trend in June was similar to that of May and then it moderated in July. July represented our toughest comparison. And it's important to call out on a 2-year stack basis, July was our strongest month in the quarter. .

And for August, our quarter-to-date trend is within our 1% to 3% Q3 comp guidance range. August does represent our toughest monthly compare in the third quarter, and those comparisons ease in September and October. The last point I'd make here is that it's difficult to reliably extrapolate Q3 sales trends based on the first few weeks of August. August is typically driven by back-to-school demand, while September and October are much more seasonal shopping periods. We see the largest sales opportunity in the latter months of the third quarter, particularly as we anniversary those tariff-related assortment gaps from last year.

Brooke Roach

That's great. And then maybe a follow-up for Michael, given those opportunities that you have this quarter, can you provide an update on the home business? What progress are you seeing? And how confident are you in the opportunity for home as the category becomes more important into the back half of the year?

Michael O'Sullivan

Yes. This is an important question. The headline is that we feel very good about the progress of our home business. As a reminder, going back a year ago, our home business was significantly impacted by tariffs, especially in Q3 and Q4. But when tariffs were first introduced in April of 2025, we moved very fast to remix our assortment and to take down sales [indiscernible] plans in categories that were the most heavily impacted by tariffs. Now that turned out to be the right thing to do from a margin and earnings perspective, but it had a very significant impact on sales, especially in our home business in the back half of the year.

Now in late Q2 of this year, in other words, over the last couple of months, we've started to lap that impact, and we are very happy with what we are seeing. In July, our home business outcomped the chain and that trend has continued into August. And as I said, that's very important because as you mentioned in your question, home becomes a larger proportion of our business later in the year, especially as we get into the fourth quarter.

Now just to add a little more color on space. Right now, we are seeing a lot of strength in categories like home furnishings, kitchen essentials and toys. And as we look forward, we are very happy with our on-order position in -- and our reserve positions in gifting, toys and holiday categories. So overall, I feel like we are set up for success in home in the back half of the year.

Operator

Your next question comes from the line of Dana Telsey with Telsey Group. Dana, please go ahead.

Dana Telsey

Kristin, it sounds like you opened a record number of new stores over the last 12 months. Can you provide some more color on these openings? And then I have a follow-up.

Kristin Wolfe

Thanks for the question. Yes, over the last 12 months, we've opened 178 growth new stores. This is the highest level of new store growth in Berlin's history for that time period. With the strength of our pipeline, we were able to front-load 2026 new stores more into the spring season. And this in contrast, in 2025, when new stores were more back weighted, more openings in fall. So these gross new store openings after closures and relocations resulted in 149 net new stores opened in the last 12 months, a 13% growth in store count over the period.

And I'll provide just a little bit more detail on these stores. We've really been pleased with the quality of these stores, the pace and the consistency of our execution. They average -- these stores average about 27,000 gross square feet. They're located in highly productive strip centers. We estimate these stores will be over $7 million in annual sales while delivering really great economic returns. We estimate a payback period of less than 2 years.

And from an operational standpoint, we're opening these stores on time and staffing them with experienced Burlington leadership teams. So it's great. We're pleased with this execution. For full year 2026, we continue to expect 135 gross store openings or about 115 net new stores this year.

And last point I'll make here is on the pipeline. We feel very, very good about our '27 pipeline, '28 pipeline is continuing to build really nicely, and we remain confident in our ability to open at least 110 net new stores annually and believe we're well positioned to reach and likely exceed the 1,500-store target by the end of 2028.

Dana Telsey

Great. And then the follow-up, can you talk a little bit about the cannibalization impact of new stores on comp growth?

Kristin Wolfe

Sure. As Michael discussed some of this in the prepared remarks, but let me provide a little bit more color. We, of course, expect some level of cannibalization of nearby stores when we open a new store. That impact is incorporated into our site selection and our underwriting processes before we ever approve a new location. So this level of cannibalization is not a surprise to us. And typically, over the years, we've seen cannibalization generally be about a 1% headwind to comp sales but given that extraordinary pace we talked about just in the prior question, that headwind is now higher, running about 1.5 points in the second quarter. .

This, of course, is an impact we're happy to accept and absorb a new store may create a small cannibalization headwind in nearby locations, but the overall incremental sales generated by the new store, obviously significantly greater and the overall economics to Burlington are very attractive. So last point I'll make on the cannibalization is we can -- we're seeing today due to that unusual concentration I talked about in your first question, so we expect this will continue through the rest of this year. And as that timing normalizes, we'll expect the cannibalization impact to moderate accordingly.

Operator

Your next question comes from the line of Alex Straton with Morgan Stanley. Alex, please go ahead.

Alexandra Straton

Great. I've got 1 for Michael and then 1 for Kristin. So maybe starting with Michael, can you just give us some updated color on any trends you're seeing by demographic segment?

Michael O'Sullivan

Sure. Well, Alex, welcome back. So demographics, yes, I guess I would say that the only important headline to share is that our stores that are in lower income trade areas continued to outperform the rest of the chain. Now as you'd expect, given my comments earlier about the macroeconomic environment, that metric is something we're watching very closely. And what the data says is that in the second quarter, our stores in trade areas with lower median household income continue to have comp growth above pecan average.

So in other words, I'm very happy to say it, we continue to see strong resilience among lower-income shoppers. As for other demographic factors, there isn't much to call out. Maybe the only other thing to share is on Hispanic shoppers. In Q2, our stores that are in high Hispanic areas performed in line with the chain. So again, we continue to feel good about that important demographic.

Alexandra Straton

Great. And maybe for Kristin, do you expect to receive additional tariff refunds in the back half of the year beyond what you already received in the second quarter?

Kristin Wolfe

Alex, yes, thanks for the question. And to answer it directly, we do not expect to receive any material additional tariff refunds beyond what we've already recognized. There may be some additional amounts received as various claims are finalized, but we expect those amounts to be relatively small and not meaningful to our financial results. And it's worth reiterating what Michael said earlier, both the dollar amount of our refund and the benefit as a percentage of sales were lower than what many retailers experience. And that's really a reflection of the actions we took last year as tariffs increased in the back half of 2025, we deliberately pivoted away from some of the more heavily tariff exposed categories, particularly in home. And that decision created pressure on sales, but it reduced our exposure to higher tariff costs and ultimately contributed to the strong earnings performance we delivered last year.

Operator

Your next question comes from the line of Adrienne Yih with Barclays.

Adrienne Yih-Tennant

Michael, I'll start with you. So the investments that you're making for the tariffs they sound like they're almost exclusively going back into pricing. I'm wondering if there's any opportunity or anything thought about from the marketing standpoint, just to highlight the values. And what metrics are you watching to prove that these investments in price aren't onetime in nature and will result in loyalty and long-term customer value. .

And then a follow-up for Kristin. I'll just do it now. Can you talk about the ability to leverage your supply chain expenses, pretty nice ability to do that? And then an update on your Savannah DC and when we can see productivity and efficiencies, how much of that is in the guidance in the back half?

Michael O'Sullivan

Well, Adrienne, first question on marketing. Yes, we -- at Burlington, we've known for some time that we have a particular challenge or rather an opportunity in marketing. We don't have the same awareness levels. as other retailers. And when shoppers have heard of us, more often than not, they think of the coat factory. So we need to raise our awareness levels and change perception at the same time. And I would say that's a particular and unique challenge to us. So we have been looking over the past, I would say, 6 to 12 months, we've been looking at ways to really sort of step up our marketing and go after those opportunities. And I would say we're still experimenting. We're still trying some different things. But I would expect over the next few quarters, we'll roll out some of those programs.

Now in terms of your -- the second part of your question around how will we know if the tariff investments are paying off. Once we get it if see a benefit to sales, that will obviously be the main driver in terms of -- or the main indicator in terms of whether or not the customer is responding to the sharper values.

Kristin Wolfe

And then -- this is Kris, and I'll take the supply chains, Savannah question. So as we've noted, supply chain levered 20 basis points in the quarter. This was really driven by DC productivity and cost savings initiatives. But I've said that a couple of times. So let me give -- a little more color on that. In DCs, we're highly focused on improving processes, increasing throughput and maximizing our most efficient facilities. We're using better predictive tools and routing capabilities, better integrating more seamlessly with allocation to make smarter, more efficient decisions across the network. This reduces handling loss, reduces touches, and ultimately drives efficiency and improve the merchandise flow.

And what's particularly encouraging, I mentioned earlier, is that in supply chain, we were able to leverage in Q2 despite the cost of starting up Savannah, which I think leads to the kind of second part of your question, Savannah is just coming online. This is our largest, most automated distribution center. We're very pleased with the progress. The facility began receiving inbound product in April and has started supporting outbound flow as well. And the start-up has gone really largely as planned, even though our largest and most automated relatedly, and it sort of gets to the productivity point, we're encouraged by what we're seeing at our Logan distribution center. This distribution center starting at third year or it's junior year, as we've been calling it, and it's really becoming a meaningful contributor to strong productivity gains we're seeing.

And this gives us confidence in the long-term opportunity ahead for Savannah While, of course, new DCs carry start-up costs and the ramp, we believe Savannah's scale and automation position it to be a critical driver of capacity, productivity and supply chain leverage over time.

Operator

And your next question comes from the line of Mark Altschwager with Baird. Mark, please go ahead.

Mark Altschwager

Michael, the forecast calling for a super El Nino imply warmer than normal fall weather and winter weather across much of the country. How is that changing the way you're planning cold weather receipts for the back half? And is any of that risk built into the guidance?.

Michael O'Sullivan

Wow, I can't believe we made it this far in the call, we are talking about the weather. So Mark, thank you. Thank you for the question. Seriously, though, it's an important question. And let me take a bit of time in answering this. I think it's widely understood that at Burlington, formerly known as the Co factory, we are more sensitive than most retailers to seasonal weather variations, especially in the third quarter. .

Now as you mentioned in your question, there are predictions that this could be a super El Nino year, which would mean [ Warmuth ] and average conditions in the back half. Now that would not be helpful for cells in our outerwear businesses, especially from late September through November. Now of course, those kinds of longer-term forecasts are not necessarily reliable, but it does represent a risk. And it's another reason to be cautious and not raise sales guidance for the back half of the year. Now with that said, I would like to talk about several actions that we've taken this year that I think should help to reduce the sales risk even if the weather turns out to be unfavorable.

Let me start with -- in the back half of last year, in addition to softness in our outerwear business, driven by warmer temperatures, we also faced significant tariff-related assortment gaps in our home business, and we've referred to that a few times on this call and scroll forward to this year, we've really strengthened our home assortment. So even if the weather is not favorable, those improvements should still help drive our overall sales trend as we anniversary those tariff-related assortment gaps.

Secondly, over the last couple of years, we've been investing in our localization capabilities. Now those capabilities should enable us to do a better job of customizing the mix of inventory across merchandise categories based on regional weather patterns. Now for example, that might mean increasing the mix of fleet and lightweight jackets and reducing the flow of medium and heavy weight coats in regions where it's warmer. Again, those capabilities should help support our trend, no matter the weather.

The other -- the last thing I'll call out is that this year, when we developed our overall sales plan for the back half, we deliberately planned down our outerwear businesses and plan up our weather neutral businesses. Now historically, we would not have been comfortable planning down such important category. But with our merchandising 2.0 systems and tools, we're confident that we can start with a more conservative plan for these businesses and then react more rapidly if the weather does turn out to be cooler. So that means that our overall sales plan for the fall is less exposed to our outerwear businesses. That does not completely eliminate the risk in our overall sales plan, but it does reduce it.

So anyway, let me sum up, this is a long answer. Let me sum up. The weather pattern from late September onwards is a very important driver of our comp, especially in Q3 for good or for bad. But this year, we've taken numerous actions that should help reduce the risk and support our sales trend even if the weather is not favorable. And we also believe that we have the ability to chase the trend if it's stronger and if the weather actually does turn out to be cooler than last year.

Mark Altschwager

A quick follow-up for Kristin. Can you speak to what stood out by region and by category in the quarter? And then on the composition of the comp, I'm not sure if you heard it, but can you speak to how much came from transactions versus basket?

Kristin Wolfe

Great. Thanks, Mark. In terms of regional performance, it was pretty broad-based. The Northeast and the Midwest were the top-performing regions. They outperformed the chain. The Southwest region trailed the chain. Our category trends were strongest in beauty and accessories, and our home business has started to outperform the chain as we build that business back. And finally, to your last question, in terms of comp metrics or components of comp, our second quarter comp was driven primarily by a higher basket size. Transactions were relatively flat compared to last year. Thanks. .

Operator

That concludes our question-and-answer session. I will now turn the call back over to Michael O'Sullivan for closing remarks. Michael?

Michael O'Sullivan

Let me close by thanking everyone for your interest in Burlington Stores. We look forward to talking to you again in November to discuss our third quarter 2026 results. We appreciate your questions and your time today. Thank you.

Operator

This concludes today's call. You may now disconnect.