Burlington Stores plans to open 100 new stores this year and sees an opportunity to reach 2,000 stores in the United States in the future, the company said on Thursday. Previously, Burlington (formerly known as Burlington Coat Factory) hoped to build 1,000 stores. Currently, it has more than 750 points of sale.
Burlington said in a press release that it was increasing its total store target because of “the opportunity presented by the accelerated retail disruption and the closure of stores across the industry”.
Burlington offers women’s, men’s and children’s clothing, household items, shoes and says it sells its goods at prices up to 60% lower than other retailers. Only 25% of its transactions are through credit cards, and the company’s main customers generally earn less than customers who shop at department stores and online competitors, according to the company. And it doesn’t sell products on the website. Instead, the site tells visitors to think of it as a guide for their next trip to the stores.
Burlington has what he calls the “opportunistic buying” approach to securing inventory. When designer brands produce a lot of clothing or department stores cancel orders, Burlington steps in to buy the remaining stock. This approach allows it to change into new styles and fashions to take customers to stores, analysts say, and contributes to its “treasure hunt” appeal.
Bargain hunters in recent years have turned to “off-price” retailers, such as Burlington (BURL), TJX (TJX), the father of TJ Maxx, Marshalls and HomeGoods, and Ross Stores (ROST)say analysts. Before the pandemic, online vendors and these networks were gaining market share over department stores and traditional clothing stores. The pandemic accelerated the shift to online shopping and caused a wave of store closings.
Burlington expects these trends to work in his favor, “leading to further consolidation and additional closings of brick and mortar retail stores,” said CEO Michael O’Sullivan in a call with analysts on Thursday.
As stores close, “many shoppers, especially the wealthier and time-hungry, will shift more of their spending to the Internet,” predicts O’Sullivan. “But we anticipate that other, more value-oriented buyers will find the way to lower the price.”
Burlington also said it will open smaller stores in the future, with less merchandise and lower operating costs than traditional stores.
With its new smaller stores, Burlington can move to Pier 1 or Modell’s sporting goods stores, said David Ritter, managing director at Alvarez & Marsal Consumer and Retail Group. Both chains filed for Chapter 11 bankruptcy protection in 2020 and are closing all of their stores.
“Unfortunately, it has been a rough few years for brick and mortar retailing, so Burlington should have a variety of options available,” said Ritter by email. In the past, Burlington has moved to stores previously occupied by chains that have filed for bankruptcy, such as K-Mart, Toys “R” Us, Bon-Ton and Sports Authority, he said.
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