Burlington Coat hurt by leveraging costs

Burlington, N.J. -- Hobbled by soaring interest expense since its takeover a year ago, and picking up the tab for a sharp jump in stockpiles, Burlington Coat Factory Investments Holdings Inc. recorded a 74.1% slide in second fiscal quarter profits, to $11.7 million from $45.4 million during the same period a year ago.

Sales at the off-price retailer, the parent of Luxury Linens, grew by 4.2%, to $984.8 million from $945.4 million last year. Same-store sales declined by 2.4%, falling progressively during the period, hurt by unseasonably warm weather which stunted sales in its core apparel business. After rising by 5.0% in September, comps began their slide in October, slipping 1.3%, then dropping 8.8% in November.

Interest expense in the quarter jumped to $35.2 million from just $1.5 million last year. For the six months, interest costs climbed to $70.6 million from $3.3 million during the same period a year ago.

Putting the profits under even greater pressure, inventories climbed steeply, rising by 29.0%, and pulling $205.1 million away from the bottom line.

Average gross margin widened substantially during the second quarter, rising by 230 basis points, or 2.3 percentage points, to 39.0% from 37.7 % a year ago, helped by higher initial markups and lower freight costs. But offsetting some of that margin improvement, operating costs climbed higher when measured as a percentage of rising sales, creeping up by 130 basis points, or 1.3 percentage points, to 29.2% from 27.9% last year.

Featured Video

  • Live From New York: Fashion Comes Across the Pond

    Camera Icon More Videos

Subscribe to
Home & Textiles Today eDaily
Receive the news you need to know about the trends in the industry delivered right to your inbox.


HTT Cover October 2017

See the October 2017 issue of Home & Textiles Today. In this issue, we look at the Top 25 Online Retailers.  H&TT's exclusive annual ranking of the biggest online sellers of home textiles finds that while pure play etailers continue to fly, bricks & clicks are digging into omnichannel. See details!