Burlington Stores Inc. CEO Michael B. O’Sullivan likes the progress the off-pricer is making on its long-range business model that should help it grow to $16 billion in total sales by 2028.
O’Sullivan said during the company post-earnings call that one of most important drivers of the long-range model is the retailer’s new store opening program. “We are making rapid progress in transforming our chain,” he said. “On average, we expect new stores to run at about $7 million in sales volume in their first full year. It is early, but our 2024 new stores are running well ahead of this expectation.”
The retailer opened 147 new stores this year—116 new stores and 31 relocations—and will end the year with 101 net new stores after closing 15 doors. “Almost all of the stores that we have opened this year are our 25,000-square-foot prototype, and most of these stores are in busy strip malls with national tenants,” he said. “We are making rapid progress in transforming our chain.”
The CEO said it identifies potential stores and then works with the landlords on lease terms. And while that is Burlington’s primary approach, O’Sullivan said that in recent years the company has added to its store pipeline by “selectively acquiring existing leases from retailers that are going through a bankruptcy process,” adding that the approach allowed it to “move into centers that we might not have otherwise been able to access.”
Burlington picked up 64 former Bed Bath & Beyond locations in 2023. “And this year, we have picked up or are working on a few dozen locations from other trouble retailers,” he said. The company plans to open 100 net new stores in 2025, which could possibly help it exceed its 500 net new store opening goal for 2024 through 2028.
As for the outlook, O’Sullivan said there is a lot of uncertainty in the year ahead. “It is difficult to forecast what will happen with the economy and with consumer spending. And add to that the potential impact of tariffs, changes in the tax code and other factors,” he said, adding that in general both “uncertainty and disruption tend to be good for off price versus other forms of retail.”
As for the business, O’Sullivan Burlington has done best when it plans “conservatively and be ready to chase. That is what we have found this year. This playbook has worked well for us, so I anticipate that our 2025 outlook will be for total sales growth of up high single digits, driven by 100 net new stores and comp sales growth of flat to 2 percent.”
He also spoke about uncertainties. Some pluses could be lower taxes on overtime pay or tips or higher child tax credits that could help consumers. And lower corporate taxes could help retailer such as Burlington, where its earnings “are all in the U.S.,” the CEO said. But there are also headwinds that include higher inflation, as well as higher tariffs or tighter immigration controls. “On tariffs, we don’t know how significant those will be, what categories they’ll apply to or even which countries. I think we just have to wait and see the details before we make an assessment,” he said.
In addition, with a number of CEO changes on the retail front, O’Sullivan said he wasn’t going anywhere and that “I’m not thinking of retirement.” He also spoke about the long-range goals targeted for 2028, adding: “I intend to be around to hit those financial targets. And I should add that those growth numbers are just the beginning for Burlington. We have potential well beyond 2028. Leaving aside the numbers, though, on a personal level, I feel really vested in driving our business to its full potential.”
CFO Kristin Wolfe reiterated the company’s longer-term supply chain strategy, which is to own rather than lease new, distribution centers. “This will enable us to design these facilities to support the flexibility and efficiency that our off-price model requires,” she said. A new 2-million-square-foot facility that’s under construction in Savannah, Georgia and slated open in 2026 is one that Burlington intends to own, Wolfe said. She added that the company is looking to take ownership of an existing distribution center under lease, but only if the terms make financial sense.
Net income for the quarter ended Nov. 2 jumped 86.6 percent to $90.6 million, or $1.40 a diluted share, from $48.6 million, or 75 cents, in the year-ago quarter. Adjusted diluted earnings per share (EPS) was $1.55. Total revenues rose 10.5 percent to $$2.53 billion from $2.29 billion, which included a net sales increase of 10.6 percent to $2.53 billion from $2.28 billion. Comparable store sales growth for the quarter grew 1 percent on top of the 6 percent gain last year.
For the nine months, net income more than doubled to $242.9 million, or $3.77 a diluted share, from $112.2 million, or $1.73, in the same year-ago period. Total revenues were up 11.5 percent to $7.36 billion from $6.60 billion, which included an 11.5 percent net sales gain to $7.34 billion from $6.59 billion.
For the fourth quarter, the company guided total sales to between 5 percent to 7 percent. It forecasted adjusted EPS to the range of $3.55 to $3.75, versus $3.69 a year ago. But that EPS estimate missed Wall Street’s fourth quarter expectations of adjusted diluted earnings per share of $3.79. The miss sent Burlington shares down 2.4 percent to $284.62 in afternoon trading on Tuesday.
