2020 was a year loaded with store closures. The pandemic truly did a number on retailers, and many struggled to recover from the revenue hit they took when they were forced to shutter temporarily early on during the outbreak. In fact, some of those temporary closures eventually became permanent ones.
Store closures, however, are bad news for malls and shopping centers, both of which rely on retailers to pay rent. Furthermore, it wasn't just smaller retailers that closed locations. Many department stores shut down stores as well, which is exceptionally problematic, given that these tenants commonly serve as mall and shopping center anchors.
But despite the damage already done, some retailers managed to do fairly well for themselves during the pandemic. And one well-known name is actually making plans to expand its footprint.
Coming off of a decent fourth quarter, Burlington Stores (NYSE: BURL), formerly known as Burlington Coat Factory, is now making plans to open 100 stores in the course of its current fiscal year. Furthermore, the retailer sees an opportunity to expand to 2,000 U.S. locations in the future.
In an age when so many people have taken to online shopping, Burlington still draws in consumers for its offbeat, off-price selection. Combing through Burlington's inventory is much like hunting for gold -- an often arduous process with the potential to yield some very favorable results. For shoppers, snagging a deal at Burlington is something to be celebrated, and it's an experience that simply can't be mimicked online.
Furthermore, Burlington's attractive prices help set it apart from other department stores, which may better appeal to consumers with higher budgets. Burlington is very much a discount shopper's haven, and it's proud of that designation. Often, Burlington's merchandise is available for up to 60% below other retailers' prices.
How does Burlington pull that off? It's simple -- by scooping up excess inventory when designer brands produce too much of a given product and other department stores don't want it. This approach not only allows Burlington to offer customers a steep discount, but it also allows it to continuously update its selection so consumers who come into its stores never get bored.
And while shopping at Burlington is very much a hit-or-miss endeavor, consumers don't seem to mind. Quite the contrary -- off-price retailers have been continuously taking shoppers away from traditional department stores for years, and that trend is apt to continue given the greater economic crisis and the fact more consumers have grown increasingly budget-conscious.
If Burlington is indeed able to make good on its plan to open 100 stores in the near term, it could do a lot of good things for shopping centers, which, given the events of the past year, are very much in need of tenants. And while Burlington has traditionally operated stand-alone stores, it's also looking at a smaller-store format that may actually be a good fit for malls.
All told, the news out of Burlington is positive for real estate investors. At a time when so many stores are shuttering, opening plans should be met with a sigh of relief.