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- [00:04]
Ben Walter
Every small business owner has that one moment that could have broken them. But remarkably, it didn't. Hi, I'm Ben Walter, CEO of Chase for Business. And on season three of the Unshakeables, my co host Kathleen Griffith and I are bringing you more incredible stories of overcoming the impossible. We're really proud to share that the Unshakeables is nominated for best branded podcast at the 2026 iHeart Podcast Awards. Listen to the Unshakeables wherever you get your podcasts and lear more at chase.com/podcast JP Morgan Chase bank and a member FDIC Copyright 20 and 26 JP Morgan Chase Co.
- [00:42]
Michael O'Sullivan
Bloomberg Audio Studios Podcasts Radio
- [00:46]
Interviewer
news data just out this hour showing that consumer sentiment hit a three month low as concerns about rising gas prices tied to the war in Iran mounted. For more we're joined by Michael o', Sullivan, CEO of Burlington Stores. Michael, thank you so much for joining us. And I should just point out that earnings out yester day were really strong for Burlington. I wonder what behavior 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?
- [01:18]
Michael O'Sullivan
Well, let me start by saying good morning. Thank you for having me on the show. It's great to, 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, 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, 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. You know, 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 and more recently tariffs. So, so just add gas prices to that list. You know, as a retailer, we recognize that the key thing across all of these events and issues is to be nimble and flex. 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.
- [02:47]
Interviewer
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, you know, 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?
- [03:21]
Michael O'Sullivan
Well, certainly. If I, if I look at our results in Q4, we had very strong performance in the fourth quarter. Our, 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, you know 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, 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. 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.
- [04:38]
Interviewer
I find that really interesting. Then last week on the earnings, you mentioned that it would, that you would likely raise prices. You tested increases on some items and encountered little pushback. Why do you think that is? Those feel a little bit contrasting that people are looking for value but can also maybe pay a little bit more.
- [04:56]
Michael O'Sullivan
Yeah, let me clear that up. It's a great question. We, what we saw throughout last year is we were very successful at trading the customer up to higher price points. Now that does not mean that we raised prices on the same item. What we did was we have, we have a good, better best assortment, so we have lower price points. Opening price points. Maybe the brand is less recognizable, but a higher price points, the brand would be more recognizable, the quality might be better, the fashion might be more up to date. What we were very successful in doing last year was actually trading the customer up. The customer could see the, yeah, it was worth paying an extra dollar to get that particular brand or that better quality or that more up to date fashion. And that's caused our average retail to rise last year rather than we took prices up, we were very careful on like items not to take prices up.
- [05:46]
Interviewer
So have you not been increasing prices on. Even if something that I buy at Burlington is less expensive than something I would buy from, you know, a retailer like a, I don't know, Bergdorf Goodman or Barneys. Have you not taken price at all all? Because as you mentioned, you've got tariffs coming into effect. We've got inflation coming through from now, the oil spike. Aren't you going to have to, to protect margins, move prices at some point?
- [06:19]
Michael O'Sullivan
Well, we really try going back to your earlier question about the consumer looking for value. That's our focus. We're really trying to make sure we're offering terrific value. We know if we offer great value to the customer, whatever happens in the external environment, we're going to, things are going to work out for us if we're offering terrific value. Now let me take tariffs because that was part of your question. I think tariffs were a terrific example of what we do when we're faced with a sudden unexpected event. Last April we were, we were basically faced with tariffs at levels that no one had expected. And those tariffs throughout the summer remained uncertain and very volatile. So what we did in response to that, rather than taking prices up, which we knew our customer wouldn't react well to, was we went back and we looked at our assortment and said, well, let's understand which, which categories we sell are the most impacted by tariffs, whether the margin pressure is the greatest from tariffs and let's actually plan those business down. Businesses down. And then there are other businesses that maybe are sourced in lower tariff countries or sourced domestically that we can plan up. Now that kind of sort of remixing mid year is very complex for a retailer and only certain retailers who are very nimble, very flexible and actually I think the off price retailers in particular have that kind of ability and it's a, it's a, it's a capacity, it's a strength that we've been investing in over for several years now. So in 2025 we really put that, that muscle to work. We remixed our assortment. Now it did mean that when we got into the back half of the year there were some categories that we planned down where we could have done more sales but those sales would have been unprofitable because of the tariff impact. But we still ended up, based upon the remixing of our business, driving total sales by 9% for the full year last year and more importantly driving earnings per share by 22%. So what we did, what we did was basically pivot away from the, from the impact of tariffs rather than saying oh tariffs are here, let's take up prices because we know our customer would not react well to that.
- [08:20]
Interviewer
So Michael, you had strong sales growth and you're boosting earnings as well in the fourth quarter. But if I look at the stock over five years, it's relatively little changed, actually down 4% whereas TJ Max is up 133%. And I would put you in a similar category. What are they doing that you are not or why do you think there's that massive difference?
- [08:48]
Michael O'Sullivan
No, I think it's a great question. I think there are two, there are two aspects of, of that question I'd like to get at. The first is that we set. We share similar characteristics to the other major off price retailers but there are also some differences and I would say our core customer base is somewhat different to the other off price retailers. Our core customer base which actually over, over the long term has been a source of strength. Our core customer base tends to be younger, tends to have a larger family size, tends to be more ethnically diverse, tends to be low to moderate. Inc. That particular customer really struggled in 2022 as the cost of living spiked. It was a really difficult time for them and we saw that in our business. We offered better value to try and support our sales. But, but it was hard. Our core customer was really under pressure. Now in the last few years, I think if you looked at our stock price over the last two or three years, you'd see a different story. In the last two or three years, that core customer has really been fairly resilient. We've seen pretty good strength and that's continued through the fourth quarter of last. Now I think you've heard, you've heard other retailers recently talk about how they're seeing some pullback at the low end. We're not seeing that now. Pivot to the second part of my answer which is compared with the other off price retailers. There's something that's particularly unique about Burlington from an investment point of view and that's that we're much smaller. We have 1200 stores, about half, less than half of what our off price peers have. So we have huge growth potential ahead of us. We're opening many more stores than they are. And we also, I would say, have some catch up in terms of operational and execution capability that's also driving our operating margin.
- [10:37]
Interviewer
Michael, I got it. I got to cut you off there. Unfortunately, we're running up against a hard break. Michael o', Sullivan, the CEO of Burlington
- [10:43]
Narrator/Promoter
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- [10:50]
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- [10:59]
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- [11:01]
Interviewer
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- [11:03]
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