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Retail Roundup: Five Below to join Burlington in former Toys R Us

Both discounters are expanding rapidly as consumers focus on low prices, an analyst said. 

This fall, discount stores Five Below and Burlington

This fall, discount stores Five Below and Burlington will move into some of the space vacated last year by Toys R Us/Babies R Us in Commack. The former store is shown in a photo taken Jan. 21, 2018. Photo Credit: Newsday/John Paraskevas

Two discount retailers plan to divvy up some of the Commack space that Toys R Us ditched last year after its demise.

Five Below, which targets kids and teens with accessories, gadgets and bedroom decor priced at $5 or less, will open in the fall in 11,525 square feet of the former Toys R Us/Babies R Us space in Veterans Memorial Plaza, said Jennifer Maisch, spokeswoman for Kimco Realty Corp., the New Hyde Park firm that owns the shopping center.

Beside Five Below will be off-price department store Burlington, which I recently reported will open in the fall in 40,000 square feet of the former Toys R Us/Babies R Us space.

Together Five Below and Burlington, boosted by consumers' growing demand for bargain prices, added a total of 168 net new stores nationally over the 12-month period that ended Nov. 3. 

“Commack is a vibrant community that we are excited to continue to be a part of it. At Burlington, we take great pride in opening new stores, bringing jobs and an affordable shopping destination to residents of the local community,” a representative from Burlington, New Jersey-based Burlington Stores Inc. said.

Philadelphia-based Five Below Inc. did not respond to a request for comment.

The combination Toys R Us/Babies R Us, which occupied 63,000 square feet at 108 Veterans Memorial Hwy., had been in the Commack shopping center since it was built about 25 years ago, Maisch said.

The stores’ parent company, Wayne, New Jersey-based Toys R Us Inc., filed for Chapter 11 bankruptcy protection in 2017 and closed all its approximately 700 stores nationwide last year.

With the Burlington and Five Below leases at Veterans Memorial Plaza, there is still 11,300 square feet of space remaining from the former Toys/Babies location, Maisch said.

There are six Burlington stores open on Long Island, including in Massapequa, Garden City, Lawrence and Patchogue.

Five Below has nine stores on Long Island, including in the Commack South Shopping Center, which is 3.4 miles away from the planned Veterans Memorial Plaza location, and in Riverhead, Bay Shore and Valley Stream.

Burlington is one of several discount retailers, including Big Lots and Ocean State Job Lot, that have been making plays for old Toys R Us stores.  Burlington opened three stores in former Toys R Us locations in November outside of Long Island.

“Over time, we view the Toys R Us real estate opportunity as similar to the Sports Authority bankruptcy. To date, we have opened 32 former Sports Authority locations, with a few more stores still on the pipeline,” Thomas Kingsbury, Burlington’s president and chief executive, said during a third-quarter earnings call with analysts in November.

Price beats convenience

Retailers have closed an unprecedented number of stores in recent years amid growing online competition and bankruptcies from heavy debt loads from previous leveraged buyouts (Toys R Us), but discounters in the off-price segment, such as Marshalls and TJ Maxx, and those in the dollar segment, such as Five Below and Dollar General, are faring well, said John Mercer, senior analyst at Coresight Research Inc., a Manhattan-based retail analysis provider.

Major retailers closed a record 8,139 stores in the United States in 2017, according to Coresight Research data.

Part of the reason that discounters are growing is that while consumers are demanding more convenience in shopping, such as with same-day delivery, they are willing to sacrifice convenience if they can save money, Mercer said.

“Shoppers have flocked to stores that seemingly offer the antithesis of convenience, such as off-price stores, grocery discount stores, warehouse clubs and dollar stores. These types of stores typically offer no, or very limited, e-commerce options, and their in-store environments and services are usually more basic than those offered by other types of retailers,” he said.

Over the 12-month period that ended Nov. 3, Five Below opened 120 stores, bringing its total number of locations to 745, while Burlington opened 48 net new stores, for a total of 679 locations.

In the third quarter of fiscal 2018, Five Below’s net sales increased by 21.6 percent to $312.8 million compared to the same period a year earlier, and sales at stores open at least a year grew 4.8 percent.

Burlington’s total sales for the third quarter increased 13.7 percent to $1.63 billion, and sales at stores open at least one year grew 4.4 percent.

Retail Roundup is a column about major retail news on Long Island — store openings, closings, expansions, acquisitions, etc. — that is published online and in the Monday paper. To read more of these columns, click here. If you have news to share, please send an email to Newsday reporter Tory N. Parrish at tory.parrish@newsday.com.

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