Burlington Stores, Inc. Q1 FY2025 earnings call

• Discussed first-quarter results: total sales grew 6%, comp sales were flat at the midpoint of guidance, EBIT margin increased 30 basis points, and adjusted EPS was up 18%.
• Forward-looking guidance: Q2 and full-year 2025 comp sales guidance remains flat to up 2%, full-year guidance unchanged from early March.
• Drivers of uncertainty: Impact of tariffs (complex and risky, with potential for shortages/excess supply) and state of the consumer (slowdown from Q4 to Q1, concern about macroeconomic factors).
• Longer-term prospects: Emphasized Merchandising 2.0 capabilities for agility in responding to external changes, and a new store pipeline with 100 net new stores planned for 2025 and 46 acquired from JOANN’s Fabrics for 2026.

Total sales grew by 6% in the first quarter, with comp sales flat, which was at the midpoint of guidance. EBIT margin increased 30 basis points, and adjusted EPS was up 18% despite a flat comp. Gross margin rate for the first quarter was 43.8%, an increase of 30 basis points versus the prior year, driven by a 20 basis point increase in merchandise margin and a 10 basis point decrease in freight expense. Adjusted SG&A costs in Q1 decreased 30 basis points versus last year. The company opened seven net new stores during the quarter, bringing the store count to 1,115 stores.

• Q2 guidance: Total sales expected to increase 5%-7%, comp sales flat to plus 2%, adjusted EBIT margin in the range of down 30 basis points to flat versus Q2 2024. Adjusted EPS outlook $1.20-$1.30.
• Full-year 2025 guidance: Total sales growth 6%-8%, comp sales flat to 2% growth, adjusted EBIT margin flat to up 30 basis points, adjusted EPS $8.70-$9.30. Guidance contingent on tariffs not increasing, modest inflation impact, and ocean freight costs holding at contracted rates.

• Tariffs causing supply chain volatility, potentially leading to shortages or excess supply in merchandise categories.
• Concerns about the state of the consumer, including economic slowdown and inflation impacting discretionary spending.
• Macroeconomic factors and potential increases in ocean freight costs above contracted rates.

Q: Matthew Boss asks about whether the disruption caused by tariffs is good or bad for off-price and reaction to tariffs struck down by Court of International Trade.

A: Michael O’Sullivan says the court decision is unclear, disruption from tariffs can be good but depends, and the company has been working to offset margin impact from tariffs.

Q: Ike Boruchow asks about monthly comp sales trends, including May month-to-date.

A: Kristin Wolfe says February comp sales were down about 2% due to weather and tax refunds, March-April combined comp growth was up 1%, and May MTD is mid-Q2 guidance range.

Q: Lorraine Hutchinson asks about broad-based comp performance and reserve inventory.

A: Michael O’Sullivan says comp slowdown was broad-based across trade areas, and reserve inventory is up 31% due to great deals on non-tariff goods.

Q: John Kernan asks about risks to comp guidance and potential upside.

A: Michael O’Sullivan says macroeconomic and inflation risks exist, but potential upside from price differentiation, bill in Congress, and agency actions.

Q: Alex Straton asks about regional comp performance by region and category performance.

A: Kristin Wolfe says Southeast region outperformed, Midwest trailed due to weather, and beauty category was the strongest in Q1.

Q: Brooke Roach asks about marketing programs and lessons from 2018 tariffs.

A: Michael O’Sullivan talks about marketing focus on value, external and in-store marketing, and lessons from 2018 show off-price flexibility.

Q: Dana Telsey asks about store openings and JOANN's stores.

A: Kristin Wolfe says 2025 stores mostly open in the second half, and JOANN's stores will open in spring 2026.