After the pandemic is over, Burlington Stores Inc. /zigman2/quotes/203203718/composite BURL +0.34% thinks the consumer will still want a good deal.
And while shoppers will continue to migrate to e-commerce, that will only siphon business from full-price bricks-and-mortar retailers.
“[W]e anticipate that other shoppers, value-oriented shoppers, will find their way to off-price,” said Michael O’Sullivan, Burlington’s chief executive, on the fiscal third-quarter earnings call.
“This is consistent with what has actually been happening over the last several years. E-commerce has been growing rapidly and bricks-and-mortar off-price retail has been growing in parallel. In the categories where we compete and at the low price points that we offer, e-commerce is much less effective or competitive in meeting the needs of value-oriented shoppers.”
Moreover, as the smallest of the off-price retailers, Burlington is looking ahead to continued physical growth. The company opened 30 new stores and moved seven locations during the third quarter. The company expects to open 62 new stores in fiscal 2020, bringing the store total to 761.
The company expects to add 18 stores in fiscal 2021.
Burlington announced in March that it would shutter its e-commerce operation , citing a $12 average unit retail (AUR) that O’Sullivan said makes it impossible to be successful online.
Though Burlington is upbeat about the future, the company said the fourth quarter “has gotten off to a weak start,” with comparable sales for much of November down in the low double digits.
Cowen analysts remain optimistic.
“All else being equal, Burlington’s Q4 strategy is poised for upside if all goes right (admittedly a big ask) given conservative planning, managing liquidity to chase goods, tight control of inventory and spending, and an on-trend assortment with an improved value proposition supported by anew and possibly more effective marketing campaign,” wrote analysts led by Oliver Chen.
Cowen rates Burlington stock outperform with a $250 price target.
“The third quarter marked the first quarter this year that nearly all of our stores were open,” TJX Cos. /zigman2/quotes/203136811/composite TJX +0.65% Chief Executive Ernie Herrman said on the earnings call, according to FactSet.
TJX, whose portfolio includes TJMaxx and HomeGoods, reported third-quarter earnings and sales that beat expectations and said it expects to declare a dividend this month.
The home has been a strong category throughout the pandemic, and TJX says it plans to launch an e-commerce platform for HomeGoods next year.