Off-price business model
Burlington Stores (BURL) is taking several initiatives to deliver continued strong sales growth rates in a challenging market. The retail market is transforming with brick-and-mortar players such as Macy’s (M) losing ground to online retailers such as Amazon (AMZN). Burlington Stores, TJX Companies (TJX), and Ross Stores (ROST) are able to perform well in the tough market due to the strength of their off-price business models. They attract consumers by selling merchandise at deep discounts compared to other retailers.
Expanding store presence
At the end of the first six months of fiscal 2017, which ended on July 29, 2017, Burlington Stores operated 599 stores in 45 states and Puerto Rico. During this same period, it opened 11 new stores and closed three stores. For fiscal 2017, it plans to open 48 new stores, including five store relocations. The company plans to close six stores in fiscal 2017. Over the long term, the company sees the opportunity to expand to 1,000 stores.
At the end of the first half of fiscal 2017, Ross Stores operated 1,384 Ross Dress for Less stores and 205 dd’s Discounts stores. TJX Companies operated 3,913 stores in the United States, Canada, the United Kingdom, Ireland, Germany, Poland, Austria, the Netherlands, and Australia at the end of the first half of fiscal 2018.[1. The second half of fiscal 2018 ended on July 29, 2017.]
Burlington Stores is expanding its presence in merchandise categories in which it feels it’s underpenetrated. These include home, beauty, and ladies apparel. Within its home business, the company intends to expand into categories such as housewares and home décor. In the beauty business, it plans to expand the breadth of design and prestige fragrances as well as its merchandise offerings in accessories. In the women’s apparel business, the company sees opportunities in categories such as sportswear and plus size clothes.
We’ll look at the company’s margins in the next part of this series.