Shoppers are heading to Burlington for gifts, home goods and beauty products — but staying away from the women’s section.
The off-price company released quarterly earnings Thursday, revealing a glaring weak spot: women’s apparel.
“Frankly, we’ve been talking about ladies apparel now for too many quarters,” said Tom Kingsbury, chief executive officer of Burlington said on the conference call with analysts.
Kingsbury added that one category in the women’s heritage collection was “clearly off-trend, that we just need to fix — period,” but he would not elaborate as to which one.
To turn things around, the off-price retailer plans to rev up its women’s activewear assortment, a category that has been performing well across the industry.
“Misses’ sportswear, driven by better and active, once again outpaced our overall trend, but candidly, also fell short of our expectations,” Kingsbury said. “So we’ve decided to really go after the misses’ sportswear business much more aggressively and plan the heritage business more conservatively.”
And now would be a good time to do it. Activewear, driven by the strength of the ath-leisure trend, isn’t slowing down anytime soon.
From yoga to skiing to boxing, shoppers are working up a sweat and buying looks that fit the occasion. Brands like Adidas, Under Armour, Fabletics and Sweaty Betty are just some of the names reaping the benefits, along with a string of smaller start-ups.
Earlier this year, Lululemon released a collaboration with SoulCycle. Department store Kohl’s recently revealed a plus-size collaboration with Nike, along with plans to open at least 10 Planet Fitness locations adjacent to Kohl’s stores, giving shoppers even more reason to engage in some retail therapy after a good workout. Over the winter, niche categories like boxing and skiwear have also grown, according to retail analytics company Edited, with Walmart, North Face and Asos dominating the field. Online inventory in boxing apparel surged more than 320 percent between Nov. 1 and Jan. 22. And socks company Bombas is capitalizing off socks designed for specific sports.
“As consumers increasingly shape their identities around fitness, they prioritize their spending on athletic activities and ensure they have the proper clothing and equipment, growing sales of performance apparel and footwear,” said Ayako Homma, fashion and luxury consultant at Euromonitor International in a recent report.
And U.S. consumers are leading the trend, spending more money on activewear, which includes both active apparel and footwear, than anywhere else in the world, according to Euromonitor. The U.S. activewear industry is expected to gain roughly $21 billion in the next four years, reaching a total more than $138 billion. Internationally, that number jumps to around $413 billion.
Even if Burlington hasn’t been able to capitalize off this trend quite as well as its competitors, the retailer isn’t out of the game.
“We’ve taken a step back and re-evaluated our approach,” Kingsbury said. “There’s an opportunity for further distorting growth in misses’ sportswear business to offset heritage business.”
Kingsbury said the plans include having two people in leadership dedicated exclusively to growing the women’s activewear business.
Still, Kingsbury cautioned analysts on the conference call that this is no small task.
“We believe this process will take multiple quarters to get the results we think, candidly, we’re owed,” he said.
But it might not be fast enough for investors. The stock fell 11.9 percent to $147.28 Thursday after disappointing income figures during the fourth quarter. Net income fell to $184 million, down from $241 million a year earlier.
“It’s going to take some time. It’s not going to be immediate,” Kingsbury said. “Most of the things that have occurred have been really self-inflicted and strategically we haven’t been going at it the way we think we need to go after it in the future. Hopefully, we can get it turned around.”