Burlington CEO Sees ‘Challenges and Opportunities’ Ahead for Off-Price Retail

Burlington CEO Michael O’Sullivan briefed investors on the state of the consumer and industry during the retailer’s first-quarter conference call Thursday, noting that the off-price retailer’s comparable sales have slowed since the final quarter of 2024, coming in about even with results a year ago.

Burlington’s (BURL) sales data showed a broad slowdown across “trade areas with different demographic characteristics,” O’Sullivan said.

“This is just one quarter, so it is too early to say if the slowdown that we saw in our trend from [the fourth quarter] to [the first quarter] is the start of a broader pullback in consumer spending,” he said, according to a transcript made available by AlphaSense. 

Economists have been eyeing the odds of a recession in 2025 and warning that tariffs may spark inflation, O’Sullivan said. Burlington has experience managing its business “carefully and flexibly,” he said, but is “somewhat concerned about macroeconomic indicators.”

Burlington generally benefits from disruptive events, such as extreme weather, port strikes and financial crises, because they create more of the excess inventory companies like his rely upon, he said. But tariffs of more than 100% nearly froze trade between China and the U.S., he said, which is only starting to recover now that import taxes have come down. More changes may be ahead after a trade court ruled Wednesday that the administration has 10 days to stop collected a number of tariffs.

“This stop/start surge volatility is likely to lead to shortages in some merchandise categories, but it might also create excess supply in others,” O’Sullivan said. “We see both risks and opportunities in the months ahead.”

As trade policy stabilizes, producers will migrate—likely within a year or two—to countries with the least expensive manufacturing costs, inclusive of tariffs, O’Sullivan said, and import taxes will become “just one more thing.”

“They are going to create uncertainty in the short term, which we will navigate,” O’Sullivan said. “But they are not likely to affect the longer-term structural trends in our industry.”

The retailer reported $1.67 in adjusted earnings per share, surpassing analyst expectations for the first quarter. Burlington expects tariffs to put “significant pressure” on its margins, but affirmed the full year outlook it shared last quarter.