BURLINGTON COAT STEPPING UP EXPANSION PLANS
Byline: Valerie Seckler
NEW YORK — Burlington Coat Factory plans to open 12 to 20 stores in fiscal 1998, doubling or tripling its growth pace this year and capitalizing on its momentum in the red-hot off-price sector.
The Burlington, N.J.-based firm, which runs 250 stores in 41 states, will open just six units in fiscal 1997, which ends June 28.
“We hope to reaccelerate our growth now that we’ve seen five straight quarters of improvement in our financial performance,” said Monroe Milstein, chairman, president and chief executive officer. “The registers are ringing again, and we’re making more money, so the momentum seems to be in place.”
Milstein and other store executives presented their plans to about 100 financial analysts and press Thursday, sponsored by Bloomberg L.P. at its offices here.
Although Burlington has never had a money-losing year since its founding in 1924 as a coat wholesaler, according to Milstein, it stumbled badly along with numerous other retailers over the past two years and reined in its growth. Profits plummeted 67.2 percent to $14.9 million, or 0.9 percent of sales, in fiscal 1995, from $45.4 million, or 3.1 percent of sales in fiscal ’94. Last year, earnings climbed back 94.6 percent to $29 million, or 1.8 percent of sales, but comparable-store sales plunged 7.2 percent.
The picture has been brightening. In the first six months of the current fiscal year, earnings have run up to 5.2 percent of sales as comps leaped 10 percent, said Robert LaPenta Jr., corporate controller and chief accounting officer. Sales in the third quarter ended March 29 grew 18.8 percent to $384 million, as comps rose 15 percent, but earnings have not yet been reported.
For its growth plan, Burlington will probably eyeball about 100 locations, noted Mark Nesci, vice president and chief operating officer. So far, eight leases have been signed for stores set to open between August and October in Erie, Pa.; Virginia Beach, Va.; Atlanta; Dallas; Phoenix, and Los Angeles.
“We like cosmopolitan markets like New York, San Francisco and Los Angeles, where consumers are really tuned into shopping,” Nesci added. “Consumers in these markets are more likely to shop a wide array of store formats, and we’re more likely to get multiple purchases in these areas.”
Most of the company’s mall stores are in centers anchored by value-driven chains such as TJX and Steinbach’s, but Burlington’s lease for the Erie, Pa., store will place it in a mall with Sears, Penney’s and Kaufmann’s.
“One of our Ohio stores has seen its sales grow by more than 60 percent after it was relocated from a strip center to a shopping mall, so we’re obviously looking to do more of these deals,” Nesci said. Three of the eight leases inked for 1998 openings are for mall sites, but the company didn’t specify their locations.