Off-price retailer Burlington Stores is getting out of the e-commerce business. As with other off-price retailers, the company wants to focus on the store experience.
In a fourth quarter conference call, Burlington CEO Michael O’Sullivan announced the move and detailed some of the company’s digital thought process, saying: “We made the decision recently to wind down our e-commerce operations. This represented about 0.5% of our total sales. In our business, which is a moderate off-price business, the nature of the treasure hunt and the average price point that we operate at means that brick-and-mortar stores have a significant competitive and economic advantage over e-commerce. We intend to focus our energy and resources on driving profitable sales growth in our brick-and-mortar stores. We will also continue to aggressively expand and upgrade this store network through our new store opening and remodel programs.”
O’Sullivan went on to say that, with Burlington’s average unit retail at $12, the cost of merchandising, processing, shipping and accepting returns has made it difficult or impossible to turn a profit in the e-commerce business. He added that relevant data demonstrates that moderate off-price retail has continued to grow and gain market share without the need for digital commerce. Not only is it a matter of dollars but also e-commerce hasn’t driven traffic into Burlington stores, so the company will develop other kinds of digital outreach that could have a better, more cost effective all-around effect on the operation. In addition, he said Burlington, as the smallest of the three major off-price retailers with 720 stores in operation, has significant potential for store growth.
In the fourth quarter, Burlington total sales gained 10.5% to $2.2 billion while comparable store sales increased 3.9%. Net income advanced 12% to $206 million, or $3.08 per share.