Burlington Coat Factory posts strong earnings

The laggard economy has proved a bonanza for discount chains such as Burlington Coat Factory, which yesterday reported strong earnings by selling designer duds from higher-end retailers that canceled orders to match declining demand.

The off-price retailer, based in Burlington, said it had been able to buy up excess coats, clothing, and other merchandise from factories and suppliers as part of a quarter in which its adjusted earnings increased $15.6 million.

Cost reductions also were credited for the company's posting $136.5 million in earnings for the three-month period that ended Feb. 28, excluding interest, taxes, and accounting expenses.

Net income was actually in negative territory - the company recorded a $150.9 million loss - but officials attributed that to an impairment charge rather than poor business.

"Our business model, of everyday low prices, is, I think, helping in this recession," said vice president and treasurer Robert L. LaPenta Jr., a 25-year veteran with the company, who added that Burlington Coat Factory Holdings Inc. had snapped up "an abundance of merchandise."

The $3.5 billion chain, like value-oriented retailers T.J. Maxx and Marshall's (both owned by TJX Cos. Inc.) and Boscov's Department Store L.L.C., has been able to stock its racks with cut-rate designer labels over the last six months.

That is because when Wall Street crashed and consumers stopped spending suddenly last fall, retailers such as Macy's Inc., Bloomingdale's Inc., and others rushed to slash shipments ordered up to six months in advance.

Such excess finds its way, at discount prices, to stores like Burlington Coat Factory and Boscov's, said retail analyst Holly Guthrie, with Boenning & Scattergood Inc., of West Conshohocken. And it has been in great supply.

"There is a lot of product floating out there," Guthrie said. "What you're hearing from Burlington Coat is absolutely true."

But those days may be coming to an end, she warned, as retailers have had plenty of time to trim their orders for summer and fall. That may make it harder to find the same killer deals.

"You probably won't have that type of supply-and-demand scenario again for a while," Guthrie said.

Quarterly net sales at Burlington Coat Factory were just over $1 billion - a 3.4 percent increase over the same period a year earlier, because of 31 stores that opened. The chain has 427 stores in 44 states and Puerto Rico.