Burlington Stores (dba Burlington Coat Factory) has two de facto mottos: "not affiliated with Burlington Industries" (thanks to a 1981 trademark-infringement lawsuit settlement) and "We sell more than coats." The company operates more than 500 no-frills retail stores (averaging 80,000 square feet) offering off-price current, brand-name clothing in about 45 states and Puerto Rico. Although it is one of the nation's largest coat sellers, the stores also offer children's apparel, bath items, furniture, gifts, jewelry, linens, and shoes. Sister chains include a pair of higher-priced Cohoes Fashions shops and about a dozen MJM Designer Shoe stores. Founded in 1972, Burlington Coat Factory went public in 2013.
Owner Bain Capital put Burlington up for a public offering in 2013, and the company raised $229 million. Proceeds from the IPO will be used to retire debt and pay fees to Bain. Burlington Coat Factory was a public company until 2006, when it was taken private by affiliates of Bain Capital in 2006 for about $2.1 billion.
The off-price retail chain has stores in 44 states and Puerto Rico. Its two primarily distribution centers, which ship about 89% of its merchandise, are located in Edgewater Park, New Jersey, and San Bernardino, California.
More than 99% of the company's sales are rung up at its Burlington Coat Factory Warehouse stores. Cohoes Fashions (off-price designer apparel), MJM Designer Shoe, and a pair of Super Baby Depot stores account for the rest. As its name suggests, Super Baby Depot sells baby clothing, accessories, furniture, and everything else a baby might need in the middle to higher price range. The company's MJM Designer Shoe chain has stores in New Jersey and New York and several other states. Like its larger sister chain, MJM Designer Shoes sells brand names at significant discounts. The company also sells merchandise online at burlingtoncoatfactory.com and babydepot.com.
Sales and Marketing
As its store count has grown so have advertising expenditures. In fiscal 2013 (ended January) the retailer spent $83.5 million compared with $77.6 million in 2012. Burlington Coat Factory Warehouse relies on print and television advertising to put its brand in front of consumers.
In fiscal 2013 (ended January) the company added 25 Burlington Coat Factory stores. The new stores helped boost sales by 7% versus the previous year. Same-store-sales increased 1%. The retailer attributed the rise to improved merchandise and its customer experience initiatives, partially offset by unseasonably warm temperatures during the holidays, which depressed coat sales. The rise in same-store-sales, while small, is an improvement over recent years during which the company struggled with negative same-store-sales comparisons due to weather and weak consumer demand.
Fiscal 2013 marked the third consecutive year of increasing sales for the retailer. Net income totaled $25.3 million compared with a net loss of $6.3 million in fiscal 2012. (The loss in fiscal 2013, which came on the heels of two profitable years, was blamed primarily on costs associated with debt refinancing.)
Burlington Coat Factory's off-price niche has resonated with consumers looking for bargains, both during the recession and continuing during the recovery. The company offers merchandise using an Every Day Low Price (EDLP) model at up to 60% to 70% off department and specialty store prices. To grow, the company is focusing on its core female customer: a 25-49-year-old brand conscious, fashion enthusiast. Still, BCF is locked in a competitive battle with TJX Companies (T.J. Maxx and Marshalls) and Ross Stores, both of which are larger than it is. To steal market share from its rivals, BCF is focusing on offering superior customer service and opening stores in high-traffic locations. It has added an average of 23 new stores per year since 2006. (Its new stores have an average payback period of less than three years.) Going forward, the chain plans to open approximately 25 new stores annually. It's also looking to increase online sales.
The chain is known for its year-round selection of about 10,000 to 20,000 discounted coats (compared to about 1,500 to 2,000 coats at department stores). BCF takes less of a markup than its department store competition and has lower profit margins than other clothing retailers. It buys the coats early in the season (up to five months before department stores) to lock in lower prices. Unlike other off-price chains, BCF buys directly from manufacturers and does not rely on leftovers or closeouts.