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Burlington Stores Shutters E-Commerce Site, Citing Brick-And-Mortar Strength

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Burlington Stores is taking quite an unconventional approach to its modern retail strategy. The retailer revealed in an earnings call that it is shutting down its e-Commerce site. The web site accounted for 0.5% of Burlington’s total sales, a figure that is “not material” to overall sales and earnings, according to CEO Michael O’Sullivan.

Three factors contributed to the decision to shutter the site, according to O’Sullivan. The first was that while the retailer’s average unit price in stores was $12, it was impossible to keep up a “treasure hunt” experience online with those price points while also accounting for merchandising, processing, shipping and return costs.

The second and third points were both related to the success of Burlington’s brick-and-mortar stores. O’Sullivan cited the retailer’s top line growth of 8% per year, driven primarily by the stores, as well as its growing store base of 720 locations.

“At Burlington we’re the smallest of the three major off-price retailers and we have significant potential for further growth in our brick-and-mortar network,” said O’Sullivan. “Our off-price peers each have double or triple that, so our focus is to drive increased sales through our existing brick-and-mortar stores and through our new store opening program and our store relocation program.”

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In fiscal 2020, Burlington expects to open 80 new locations and close or relocate 26 stores.

The off-price retailer had a solid Q4, reporting net income of $206 million, up from $184.4 million one year ago. Adjusted earnings per share increased 15% to $3.25, just ahead of analysts’ estimates of $3.23. Sales jumped 10.5% to $2.2 billion, while same-store sales rose 3.9%. The company continues to manage inventory well even as it boosts sales, cutting comparable store inventory 15%.

Total sales for 2019 rose 9.3%, with a comparable store sales increase of 2.7%.

Burlington expects Q1 2020 sales to rise 8% to 9% and for its adjusted EPS to range from $1.29 to $1.34, below initial analyst forecasts of $1.45.

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