Off-price retailer Burlington Stores beat expectations for Q4 2023 (the 14 weeks ended Feb. 3, 2024), with total sales increasing 10% and comparable store sales growing 2% year over year.
The quarter closed out a steady year for the chain, with comp store sales up 4% in fiscal 2023, although on an earnings call discussing the results CEO Michael O’Sullivan expressed disappointment that the company hadn’t performed better, identifying several opportunities for improvement in 2024.
“We are happy that we beat guidance, but more importantly we see some clear opportunities to drive even stronger performance,” O’Sullivan said on the call after outlining one such area: “We continue to see strong selling at our opening price points. The lower-income customer, the need-a-deal shopper, is responding well to these values, and this is a very important customer for us. But what really drove our incremental comp growth in Q4 was the success of our strategies and businesses targeting trade-downs or slightly higher-income shoppers. Frankly though, looking at the results of our peers, I am disappointed that we didn’t drive stronger comp growth with these shoppers. There is clearly a bigger opportunity.”
Another growth area O’Sullivan identified is ramping up store expansion. He pointed to the company’s ongoing goal of opening 100 net-new stores each year, which will continue into 2024, and highlighted the fact that Burlington missed that target in 2023 with its opening of 80 net-new stores. “We have rigorous standards for the quality of new store locations, and over the last couple of years this has made it difficult to hit this 100-store run rate,” he said.
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Still, O’Sullivan said he believes the 100-store target is achievable in 2024, with Burlington planning to open approximately 140 stores this year. After accounting for relocations and closures of other locations, this should allow the company to hit that 100-store mark. Approximately one-third of these new stores will open this spring, aided by the acquisition of a “large number of very attractive new store locations” out of the Bed Bath & Beyond bankruptcy, O’Sullivan shared. The remaining two-thirds of the new locations planned for 2024 will open in the fall.
Overall, O’Sullivan said he believes the company is still positioned to grow total sales to $16 billion and operating income to $1.6 billion over the next five years. “We think the external environment over the next few years is likely to be favorable for off price, and we are excited about the initiatives we have been pursuing to improve our own execution of the model,” he said.
