Burlington, N.J. – Burlington Stores was anticipating a tough first quarter, and it got one.
Up against 20% comp growth from 2021, the off-pricer had planned for a mid-teens comp decline. Actual results fell short of that, with comp down 18%.
“The biggest driver of this sales miss was that inventories were too low and unbalanced in February and March,” said CEO Michael O’Sullivan. “We raised inventory levels during the quarter, in-line with last year, and this drove an improvement in our comp trend.”
The company’s three-year geometric comp stack was -6% in February, -2% in March, and +5% in April.
Despite sequential improvement over the course of the quarter, Burlington’s sales trend remains weak. Comps in May have been similar to those April.
“We had anticipated that 2022 would be a difficult year in retail, but the economic environment, especially the impact of inflation on lower income shoppers, is having a greater impact than we had expected,” he said. “We have lowered our outlook for sales.”
O’Sullivan noted that economic slowdowns historically have benefitted off-price retailers as consumers trade down in search of value. Burlington is already seeing a significantly increased supply of off-price merchandise availability, “and we feel that our conservative sales plan and strong liquidity position us well to take advantage of this opportunity.”
Merchandise inventories were $1,257 billion vs. $768 million at the end of last year’s first quarter, up 64%. Comparable store inventories increased 2%. Reserve inventory was 50% of total inventory at the end of the first quarter compared to 35% at the end last year’s Q1.
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May 27, 2022 at 01:24AM
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