Burlington’s strategic priorities
Burlington Stores (BURL) has been focusing on three strategic priorities to improve its profitability and boost its future sales. These three strategic priorities are as follows:
- to improve same-store sales growth
- to expand the retail store base
- to improve operating margins
Improving same-store sales
In fiscal 2014, which for Burlington ended January 31, 2015, the company reported same-store sales growth of 4.9%, compared to 4.7% in fiscal 2013. By comparison, TJX Companies (TJX) and Ross Stores (ROST) reported same-store sales growth of 2% and 3% in fiscal 2014.
By contrast, Nordstrom’s (JWN) off-price Rack stores posted same-store sales growth of 3.8% in fiscal 2014, while the overall company experienced same-store sales growth of 4%. Burlington Stores and Nordstrom together account for 2.2% of the holdings of the SPDR S&P Retail ETF (XRT).
Burlington’s improvement initiatives
To drive its same-store sales growth, Burlington Stores is focusing on the following initiatives:
- to continue to enhance the execution of its off-price model and drive comparable store sales by focusing on product freshness as well as better inventory management
- to sharpen its focus on core female consumers by improving its product offering of ready-to-wear apparel and accessories, and become a destination for these consumers across all categories
- to improve customer experience by offering more brands and styles and simplifying store navigation
- to increase e-commerce sales
- to enhance existing product categories such as ladies’ apparel and kids’ products and to introduce new categories such as pet-related merchandise
Expanding retail store base
The company’s goal is to open approximately 25 new stores annually and to continue to do so for the foreseeable future. The company’s long-term goal is to have 1,000 stores. Also, Burlington Stores continues to enhance its retail stores by investing in store remodelling. The company is also looking for growth in smaller store formats, as we discuss in Part 7 of this series.
Burlington Stores’ third strategic priority is to enhance its operating margins in three ways:
- by optimizing its markdowns
- by realizing economies in purchasing activities
- by driving operating leverage on growing sales
We’ll discuss the company’s operating margins in Part 9 of this series, but first let’s look at Burlington’s core growth categories in the next part.