Burlington CEO Michael O'Sullivan Talks Growth, Consumer Sentiment
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What is the main topic discussed in this episode?
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Michael, thank you so much for joining us. And I should just point out that earnings out yesterday were really strong for Burlington. I wonder what behavior of at your stores has been like over the past two weeks as the war in Iran broke out. Michael, have you seen any change in consumer behavior? Well, let me start by saying good morning. Thank you for having me on the show. It's great to be here. Now, of course, gas prices are a concern. But, you know, it's too early for it to really have had much of an impact on retailers or consumers. I suspect many consumers haven't filled their gas tanks recently. So it's going to take a little while before any impact really starts to be felt. Now, the long-term impact of higher gas prices, I think, depends upon how long the situation in the Middle East lasts.
For sure, if the situation lasts for a long time, then consumers, if they're spending more on gas, they're going to spend less on other categories. And that's not good for retail. But, you know, let me step back and say, look, higher gas prices, they're just one more thing. Over the last several years, there have been numerous headwinds. Coming out of COVID, we had increases in freight costs. We had higher wage rates. We had port issues and delays. We had cost of living inflation. We had, more recently, tariffs. So just add gas prices to that list. As a retailer, we recognize that the key thing across all of these events and issues is to be nimble and flexible. We can't predict or control what's going to happen externally.
But what we can do, what we have been doing, is making sure that our business, our operations, our buyers are well positioned to react to whatever happens.
What recent trends in consumer sentiment are impacting retail?
Well, you also have in Burlington, in your brand, a product that maybe consumers will flock to when gas prices do rise, right? If I'm paying more at the pump and then I go shopping, I'm more likely to choose the white label store brand or try and... buy more efficiently by maybe going to Burlington instead of, I don't know, some other, you know, fancier mall department store. Are you seeing that effect? Well, certainly if I look at our results in Q4, we had very strong performance in the fourth quarter. Our total sales growth in Q4 was 11%, and that was on top of 10% growth the prior year. Our comp store growth was 4%, and that was on top of 6% the prior year. Now, we didn't just grow earnings. We didn't just grow sales.
We also drove earnings. In the fourth quarter, we saw EPS up 21%. And for the full year, EPS was up 22%. Now, coming back to your point, what's driving that? One of the things that's driving that is that over the last few years, we focused heavily on value. And the one thing I would correct in your question is that we don't sell private label. What we're doing, what we're What we're selling is for the most part, we're selling well-known recognizable brands. We're selling the latest fashions. Our proposition to the customer is it's the same item, the same brand, the same great fashion, but we're selling it at a retail price that's up to 60% lower than traditional retailers. So that focus on value has really helped to drive our business over the last few years.
How has Burlington responded to changes in consumer behavior during crises?
And certainly, as you said, if gas prices remain high or if they get worse and the consumer is really looking for value, we think we could be a beneficiary of that.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–2:36
2
What recent trends in consumer sentiment are impacting retail?
2:36–4:17
3
How has Burlington responded to changes in consumer behavior during crises?
4:17–5:31
4
What strategies has Burlington implemented to cope with rising gas prices?
5:31–11:04
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