Burlington Stores plans to open 100 new stores this year and sees the chance to reach 2,000 U.S. stores in the future, the company said Thursday. Previously, Burlington (formerly known as Burlington Coat Factory) expected to build 1,000 stores. It currently has more than 750 outlets.
Burlington said in a news release that it was increasing its overall retail target because of the “opportunity offered by the acceleration of retail disruption and the closure of stores in the industry.”
Burlington offers women’s, men’s and children’s clothing, household goods, shoes and says it sells its merchandise up to 60% below other retail prices. Only 25% of transactions are via credit cards, and the company’s core buyers usually earn less than customers who shop at department stores and online competitors, according to the company. And it does not sell products through its website. Instead, the site advises visitors to consider it as a guideline for their next trip to its stores.
Burlington has an “opportunistic buy” approach to securing inventory. When designer brands make too many garments or department stores cancel orders, Burlington steps in to buy the surplus stock. The approach allows it to turn into new styles and fashions to drive shoppers to stores, analysts say, adding to the appeal of ‘treasure hunting’.
Buyers have turned to “non-price” retailers in recent years, such as Burlington (BURL), TJX (TJX), the parent of TJ Maxx, Marshalls and HomeGoods, and Ross Stores (ROST), say analysts. Before the pandemic, online retailers and these chains gained market share over traditional department stores and clothing stores. The pandemic accelerated the shift to online shopping and caused a spate of store closures.
Burlington expects these trends to work in its favor, leading to further consolidation and additional closure of retail stores for bricks and mortars, CEO Michael O’Sullivan said in a call to analysts on Thursday.
As stores close, “many shoppers, especially affluent, time-hungry shoppers, will migrate more of their spending online,” O’Sullivan predicts. “But we expect other buyers, more value-oriented buyers, to find their way to be cheaper.”
Burlington also said it would open smaller stores in the future that carry fewer merchandise and have lower operating costs than traditional stores.
With its new smaller stores, Burlington could move to Pier 1 or Modell’s Sporting Goods locations, said David Ritter, managing director of Alvarez & Marsal Consumer and Retail Group. Both chains applied for bankruptcy protection in 2020 and are closing all their stores.
“Unfortunately, it’s been a tough few years for the brick-and-mortar retail, so Burlington must have a myriad of options available,” Ritter said in an email. Burlington has in the past moved to stores previously occupied by chains that filed for bankruptcy, such as K-Mart, Toys “R” Us, Bon-Ton and Sports Authority, he said.
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