Popular TJ Maxx rival stumbles as customer behavior shifts

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There's nothing better than flipping through the racks and finding the perfect style at the perfect price. It's one of the best feelings to find a brand-name bargain, and that's why off-price stores like TJMaxx, Marshalls, and rival Burlington Stores are my favorite stops when I'm looking to refresh my closet or just out running errands and have a few minutes to spare.

I'm not alone.

Off-price retailers have seen a surge in foot traffic this year as consumers seek better deals amid stretched budgets and higher apparel prices. The shift has reduced customer visits to department stores like Macy's, while boosting the fortunes of TJMaxx, Marshalls, and Burlington Stores.

Burlington Stores at a glance:

• Founded: Burlington Coat Factory was founded in 1972 by Monroe Milstein, in Burlington, New Jersey. Source: Burlington Stores

• Store count: 1,211 Source: Burlington Stores Q3 earnings report

• Annual revenue: $10.6 billion Source: Burlington Stores SEC filings

• Employees: 77,532 Source: Macrotrends

However, some off-price stores are performing better than others. For example, the latest numbers show that TJX Companies, the parent company of TJMaxx, has a major advantage over Burlington Stores, driving more customers to its stores recently.

Foot traffic surges at off-price retailers

Sales at off-price stores clearly show how they're benefiting from changing customer behavior towards value.

Cracks have appeared in the jobs market that are taking a toll on consumer sentiment and discretionary spending. Unemployment is rising, pay raises are shrinking, and inflation has returned in the wake of stiff tariffs enacted this year, especially on clothing, most of which is imported from China, Vietnam, and Mexico.

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The U.S. unemployment rate was 4.4% in September, up from 3.4% in 2023, and the highest level since 2021, according to the Bureau of Labor Statistics. Meanwhile, employers laid off 1.1 million workers through October, a 65% increase from the same period last year, according to Challenger, Gray, & Christmas.

Even worse, Bank of America reports that wages only increased by 2% and 1%, respectively, for middle- and lower-income workers, trailing inflation, which was 3% in September, according to CPI. Inflation was 2.3% in April before most tariffs took effect.

“Over 98% of clothing sold in the U.S. is imported from abroad. U.S. fashion apparel companies are likely to be among the hardest hit by the tariff increase, particularly since Mexico and China are two of the leading apparel-sourcing destinations for the country,” according to the United States Fashion Industry Association.

Harvard’s Pricing Lab reports that clothing prices are 8.9% higher this year than they’d be without tariffs.

The dynamic has created retail winners and losers. Winners include stores are traditionally viewed as low-priced leaders, including Walmart, as well as discount stores like Dollar General and Dollar Tree. Off-price retailers have also landed in the winners' column, as customers shift from department stores to them in a bid to stretch their dollars.

Off-price retailers' third-quarter customer visits growth (YoY):

• TJMaxx/Marshalls/Sierra (Marmaxx): 8.1%

• Ross Dress for Less: 9.4%

• Burlington Stores: 6.6% Source: Placer.ai

In the third quarter, customer visits to TJMaxx and Marshalls rose 8.1% from the same period last year, according to Placer.ai, and Burlington Stores' foot traffic increased 6.6%. Meanwhile, foot traffic at Kohl's and Macy's declined by 2.4% and 10.9%, respectively, and visits to Target, which relies heavily on discretionary sales such as clothing, fell 2.7%.

Burlington Stores has a storied history

Burlington Stores has witnessed apparel trends come and go since opening its first Burlington Coat Factory store in New Jersey in 1972. Over the years, it has reinvented itself to continue winning over shoppers.

Monroe Milstein founded Burlington Coat Factory with a specific goal: Sell manufacturers' overstocked outerwear to consumers at stores as large as 80,000 square feet.

Milstein was so successful that department store chains, including Federated Department Stores (owner of Bloomingdale's and Jordan Marsh at the time), attempted to prevent major brands, such as Esprit and London Fog, from selling to them, prompting lawsuits from Burlington Coat, which ended the behavior and protected the off-price industry.

In 2006, Bain Capital acquired Burlington Coat Factory for approximately $2 billion, appointing Thomas Kingsbury as its CEO. Under Kingsbury, the company reduced massive purchases that they would stockpile for future seasons and diversified its product lineup to target women's clothing, home, and beauty products.

In 2013, Burlington Coat Factory went public again under its new name, Burlington Stores, raising capital to continue competing with the likes of TJMaxx and Marshalls (which merged under the TJX umbrella in 1995).

The company's push to win market share away from its rivals accelerated in 2019 when Michael O'Sullivan, former chief operating officer of Ross Stores, joined as CEO.

Under Sullivan, Burlington Stores has pivoted to smaller stores ranging from 25,000 to 35,000 square feet and reduced inventory to increase turns and foster a "treasure hunt" style shopping experience like TJMaxx.

Burlington Stores' sales fall short as warm weather drags on results

TJX Companies makes a lot of money from TJMaxx and Marshalls stores, but it also benefits from off-price sales of furniture and housewares at its popular HomeGoods and Homesense stores. In the third quarter, customer visits to HomeGoods and Homesense increased by 9.6% on the heels of 12% growth in the second quarter.

Related: T.J. Maxx, Marshalls buck major customer problem

As with apparel, customers have increasingly embraced value-based retailers in furnishings and housewares because most of those goods are sourced overseas. Furniture and furnishings prices are running 6.54% higher than they'd be absent tariffs this year, according to Harvard Pricing Lab.

Unlike TJX Companies, Burlington Stores' product mix is more heavily tilted toward clothing, and due to its roots as Burlington Coat Factory, it generates a significant amount of business when the weather is colder than usual, rather than warmer.

In the past, coats accounted for as much as two-thirds of Burlington Stores' sales, so its business was closely tied to seasonal weather patterns. Coats represent less than 10% of sales nowadays, yet traffic is still heavily influenced by weather that is warmer or colder than expected.

Unfortunately, as evidenced by Burlington Stores' third-quarter visits relative to TJX brands, the weather didn't cooperate last quarter, causing Burlington Stores' financial results to miss Wall Street analysts' estimates.

Burlington Stores' foot traffic growth by month (2025):

• October: 5.5%

• September: 1.4%

• August: 9%

• July: 8.7% Source: Placer.ai

In Q3, Burlington Stores' revenue rose 7.1% to $2.71 billion — solid, but $40 million shy of analysts' estimates. The company reported third-quarter sales at stores open at least one year (comparable store sales growth) of 1%, which is well below the estimated 2.5% growth.

O'Sullivan offered more detail in the earnings report.

Burlington Stores also provided a relatively downbeat outlook. It expects same-store sales growth for the year ending January 31 to be 1% to 2%, and fourth-quarter comp sales growth of flat to 2% year over year — hardly inspiring.

For comparison, TJX Companies' same-store sales grew 5% in the third quarter, and it's guiding for 2% to 3% comp sales growth in the holiday season quarter and 4% growth for its full year.

Burlington Stores' investors reacted to the disappointing performance by selling shares, causing them to drop by 10%.

What's next for Burlington Stores?

While the weather dinged third-quarter results, Burlington Stores remains nicely profitable and is opening new stores. Its sales are growing, and recent trends for October customer visits have improved. The weather may have slowed traffic, but colder weather is coming, and that could provide a lift this quarter, reassuring shareholders.

"Our comp trend then picked up to mid-single-digits in mid-October once the weather cooled, and that strong trend has continued through the first three weeks of November," said O'Sullivan.

Related: Beloved retailer makes comeback after 100s of stores close

Burlington Stores reported earnings per share, or EPS, of $1.80, 16 cents higher than Wall Street expected. Heading into the company's earnings call, analysts are targeting an EPS of $9.58 for the full fiscal year, which is below the company's guidance of $9.69.

The profit strength is impressive, given tariff headwinds. Gross margins improved to 44.2% from 43.9% last year.

The company's solid earnings provide plenty of financial firepower to continue opening new stores, with plans to add 104 new locations this year.

"We are very pleased with our new store opening program and performance, our weather-adjusted comp growth, and the rapid progress we are making in expanding our margin. As discussed previously, we expect our operating income to grow to approximately $1.6B by 2028," added O'Sullivan.

Given the CEO's comments, Burlington Stores' recent performance is likely due to short-term optimism getting a little ahead of itself, rather than a long-term problem.

Related: Fast-fashion chain closing 200 stores, ending physical brand

This story was originally published by TheStreet on Nov 26, 2025, where it first appeared in the Retail section. Add TheStreet as a Preferred Source by clicking here.