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Burlington Stores to shut down e-commerce site, focus solely on physical stores

Burlington store exterior

Burlington Stores is getting out of the e-commerce business.

After reporting fourth-quarter sales and earnings that beat Street estimates, the off-price retailer dropped a bombshell on its quarterly call with analysts. Company executives said that Burlington is winding down its e-commerce operations, which account for about 0.5% of total sales, and focus on growing its bricks-and-mortar business. The company currently operates 720 stores in 45 states and Puerto Rico. 

“In our business, which is a moderate off-price business, the nature of the treasure hunt and the average price point that we operate at mean that bricks-and-mortar stores have a significant competitive and economic advantage over e-commerce,” CEO Michael O’Sullivan told analysts. “We intend to focus our energy and resources on driving profitable sales growth in our bricks-and-mortar stores. We will also continue to aggressively expand and upgrade this store network through our new store opening and remodel programs.”

In fiscal 2020, Burlington expects to open 80 new locations and close or relocate 26 stores. Its average new store size in fiscal 2020 will be 39,700 sq. ft., the first time the average will be less than 40,000 square feet, noted Burlington CFO John Crimmins. 

The retailer reported net income of $206 million, or $3.08 a share, in the quarter ended Feb.1, up from $184.4 million, or $2.70 a share, in the year-ago period. Adjusted per-share earnings came to $3.25, just ahead of analysts’ estimates of $3.23. 

Sales rose 10.5% to $2.201 billion, in line with estimates. Same-store sales rose 3.9%.
“Overall we generated a 10.5% sales increase, which resulted in a 40 basis point increase in adjusted EBIT margin, and a 15% increase in adjusted EPS, ahead of both our original and recently updated guidance” stated O’Sullivan.” In addition, our inventory management made further progress during the fourth quarter, as our comparable store inventory decreased 15%, putting us in a very opportunistic inventory position as we enter fiscal 2020.”

For the first quarter, the retailer expects sales to rise 8% to 9% and for adjusted EPS to range from $1.29 to $1.34, below the $1.45 analysts had forecast.

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