Burlington Stores plans to open 100 new stores this year and sees an opportunity to reach 2,000 US stores in the future, the company said Thursday. Previously, Burlington (previously known as Burlington Coat Factory) expected to build 1,000 stores. It currently has more than 750 outlets.
Burlington said in a press release that it raised its overall store target because of the “opportunity presented by accelerating retail disruption and closing stores across the industry.”
Burlington offers women’s, men’s and children’s clothing, homewares and shoes and says it sells its merchandise up to 60% below other retailers’ prices. Only 25% of transactions are made through credit cards, and according to the company, the company’s top shoppers typically earn less than customers who shop at department stores and online competitors. And it does not sell products through its website. Instead, the site tells visitors to take it as a guide to their next visit to the stores.
Burlington has what it calls an “opportunistic purchase” approach to safeguarding supplies. When designer brands over-produce or department stores cancel orders, Burlington steps in to buy the leftover inventory. That approach allows it to rotate into new styles and fashions to drive shoppers to stores, analysts say, and adds to the appeal of “treasure hunting.”
Bargain hunters have switched to “off-price” retailers in recent years, such as BurlingtonBURLTJXTJX, the parent company of TJ Maxx, Marshalls and HomeGoods, and Ross StoresSENSEanalysts say. Before the pandemic, online retailers and these chains gained market share over traditional department and clothing stores. The pandemic has accelerated the shift to online shopping and sparked a wave of store closings.
Burlington expects these trends to work in its favor, “leading to further consolidation and additional full-price physical store closures,” CEO Michael O’Sullivan said during a meeting with analysts Thursday.
As stores close, “many shoppers, especially the more affluent, time-strapped shoppers, will migrate more of their online spending,” O’Sullivan predicts. “But we expect other shoppers, more value-oriented shoppers, to find their way off-price.”
Burlington also said it will open smaller stores in the future that carry fewer goods and have lower operating costs than traditional stores.
With its new smaller stores, Burlington can move to Pier 1 or Modell’s Sporting Goods locations, said David Ritter, general manager at Alvarez & Marsal Consumer and Retail Group. Both chains filed for Chapter 11 bankruptcy protection in 2020 and are closing all their stores.
“Unfortunately, it has been a tough few years for the physical retail business, so Burlington should have a wealth of options available,” Ritter said in an email. Burlington has moved in the past to stores previously occupied by chains that filed for bankruptcy, such as K-Mart, Toys “R” Us, Bon-Ton and Sports Authority, he said.
