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 520 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 October 2013, and the company raised $229 million. Proceeds from the IPO were to 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 90% of its merchandise, are located in Edgewater Park, New Jersey, and San Bernardino, California.
About 98% 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
In fiscal 2014 (ended January), the retailer spent $83.3 million on advertising, compared with $83.5 million the prior year. Burlington Coat Factory Warehouse relies on print and television advertising to put its brand in front of consumers.
In fiscal 2014 (ended January), the retailer added 21 new Burlington Coat Factory stores. The additions helped boost sales by 7% versus the previous year, to a record $4.46 billion. Same-store sales grew 5%, contributing to the gain.
Despite the gain in sales, Burlington Stores net income declined 36% in fiscal 2014 versus 2013, to $16.2 million, on increased operating expenses.
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.