Key takeout
Burlington CEO Michael O’Sullivan explained to investors about the consumer and industry status during the retailer’s first quarter conference call on Thursday, bringing out the results from a year ago, with comparable sales of off-price retailers slowing since the final quarter of 2024.
Sales data for Burlington (BURL) showed a widespread slowdown across “trade areas with different demographic characteristics,” O’Sullivan said.
“That’s only a quarter, so it’s too early to say whether the slowdown seen in trends from (fourth quarter) to (first quarter) is the start of a wider pullback in consumer spending.”
Economists are keeping an eye on the potential recession in 2025 and warn that tariffs could cause inflation, O’Sullivan said. Burlington has experience in managing the business “carefully and flexibly,” he said, but “is a bit worried about macroeconomic indicators.”
Burlington generally benefits from devastating events such as extreme weather, port strikes and financial crisis. But he said that more than 100% tariffs have almost frozen trade between China and the US. More changes may be ahead after the trade court determined Wednesday that there will be 10 days to stop the administration from collecting many tariffs.
“This volatility of stop/start surges is likely to lead to shortages in some product categories, but it could also create excess supply in other categories,” O’Sullivan said. “We’ll see both risks and opportunities over the next few months.”
As trade policies stabilize, producers will move within a year or two to countries with the lowest manufacturing costs, including tariffs, with import taxes “only one more.”
“They create uncertainty in the short term, but they navigate it,” O’Sullivan said. “However, they are unlikely to affect the long-term structural trends of our industry.”
The retailer reported $1.67 in adjusted earnings per share, exceeding first-quarter analyst expectations. Burlington hopes that tariffs will put “high pressure” on margins, but has reviewed the full-year outlook shared in the last quarter.
