BURLINGTON COAT: FISCALLY ‘STRONGER’
NEW YORK — Despite continuing negative same-store sales trends through the holiday season, Burlington Coat Factory Warehouse Corp. said last week it is in a “stronger financial position” than it was a year ago.
The off-price chain, based in Burlington, N.J., reported a 7.7 percent same-store sales decline in the second quarter ended Dec. 30. Total sales nudged up 0.5 percent to $659 million from $656 million.
Burlington’s same-store sales declined 12.3 percent in the first quarter and 5.3 percent in the most recent fiscal year.
However, Burlington Coat said its financial position has improved through a combination of inventory and cost-reduction efforts. The off-pricer said inventories have been trimmed by more than 25 percent at comparable stores.
The off-price sector has been under pressure for several quarters from heavier-than-usual promotions at department stores, lackluster demand for apparel and an overstored market.
Retail analysts have predicted that the off-price industry is due for a wave of consolidation, with some of the weaker players either merging or cutting back. The first sign of consolidation appeared last October when TJX Cos., which operates the T.J. Maxx chain, acquired struggling Marshalls from Melville Corp. TJX expects to close about 200 of the combined company’s 1,065 units.
Last month, Clothestime Inc. filed Chapter 11 and said it expected to close 137 of its 537 stores.
Burlington Coat operates 211 off-price stores in 41 states. It had volume of $1.6 billion in the fiscal year ended last June.
In a recent report on the off-price industry, analyst Barry Bryant of Rodman & Renshaw Inc. rated Burlington Coat shares “neutral.”
Bryant said in the report that the chain “dominates the coat market as no other retailer dominates any other segment of the apparel industry.” However, because of the heavy inventory of coats, warm weather hurts the chain’s business “more severely” than other retailers.
“If you think it will be a cold winter, buy Burlington,” he said.
Among Burlington Coat’s negatives, Bryant said, are weak inventory controls and a lack of strategic focus. In addition to its core off-price business, Burlington Coat operates six other store concepts, Bryant said.
Despite its lackluster sales trends and weakness in the overall retail industry, however, Burlington Coat said its financial position has improved over the last year. At the end of the second quarter, the off-pricer said, cash and short-term investments of $124.6 million were earning interest with no borrowings outstanding on the company’s lines of credit.
That represents a positive swing in liquidity of $149.1 million, given that the company had drawn down $24.5 million on its short-term lines of credit at the end of 1994’s second quarter.
Burlington Coat widened its first-quarter loss to $11.2 million from $7.5 million a year ago. In the year ended July 1, earnings tumbled 67.2 percent to $14.9 million, or 37 cents a share. — Fairchild News Service