Analyst: Macy's Loss Is Burlington's Gains

Macy's Inc (NYSE: M)'s plans to close dozens of stores has been well communicated to investors, but what's less clear is who will scoop up Macy's lost business.

According to CNBC, BMO Capital Markets analyst John Morris believes that the little known off-price retailer Burlington Stores Inc (NYSE: BURL) could see its earnings per share rise by $0.15 since it's geographically best situated to more than 60 Macy's stores that are set to close.

Burlington sells a selection of merchandise it acquired directly from manufacturers and other supplies at prices that are typically lower than traditional retail and department stores.

Morris further noted that Burlington counts 47 locations within a five-mile radius of Macy's store closures. While this does fall short of TJX Companies Inc (NYSE: TJX)'s 100 overlapping stores, Burlington holds a key advantage that should be attractive to retail investors.

Burlington's 47 overlapping stores accounts for around 8 percent of its entire domestic square footage versus less than 5 percent for TJX. As such, the opportunity for Burlington to benefit from Macy's store closures is "more pronounced" based on its "relative small size."

Morris also suggested that off-price retailers like Burlington and others can benefit even further if Macy's store closures trigger co-tenancy clauses that allow other retailers to break their own leases.