George S. May Business Blog

Burlington Coat Factory: Busted!

Burlington Coat Factory: Busted!

According to reports from a Connecticut TV station, Burlington Coat Factory has been passing off cheap Wal-Mart coats to its customers as Perry Ellis and Joseph Abboud attire. As sstonishing as it is, that they could get away with it in the first place, (I mean, one would think the look and feel of the coats would be telltale signs in themselves) their method for disguising the jackets was even more ridiculous: just slap a Perry Ellis tag over the Wal-Mart marker. Apparently a patron of the store, annoyed with the itchiness of the coat, stumbled upon the coat-connive when he ripped off the label only to find the Wal-Mart-brand label smiling back at him.

For those not in the know, a regular Perry Ellis jacket at full price is generally in the neighborhood of $200. Burlington Coat Factory sold their version of the coat at $70. The actual price of the Wal-Mart coat, before that pasted label, is about $30.

“Burlington Coat Factory has backed away from responsibility for this one, blaming instead the Levy Group, a supplier it uses. The Levy Group, which has legitimate rights to Perry Ellis and Joseph Abboud labels and doesn’t need to be counterfeiting them tried to distance itself from the dirty play by blaming an employee, whom it claims was acting of his or her own accord. Everyone’s saying they knew nothing about it, and the lone-gun culprit they claim to have identified has not been named, nor his motives explained.” (source)

In response, Burlington Coat Factory has nonetheless yanked the shipment from its stores nationwide. Plus, Consumerist reports that if you bought one of the knock-offs, you are entitled to your money back plus a 20% off coupon.

I have to believe that Burlington’s supplier, The Levy Group, was the one messing with the labels. Why would they blame somebody internally otherwise? If they truly did not do it, or even if they were unaware that it was going on, their first move would obviously be to point he finger right back. Plus, what would Burlington Coat Factory have to gain by tricking the public? Think about it from a profit perspective. They set their price to the public ridiculously low because they were still able to make 100% profit. If, in fact, they were buying the coats for more, because they were actually name brand coats, they would likely set the price of the coat according to the same margin, right? The only way they would increase profit is from extra sales driven in by the ridiculously low price, but in times of a recession I can’t see a company taking such a risk as sales will be down regardless.

In the end, when it comes to the public eye, whether they took part in the scam or not, Burlington will be taking a major hit from this incident.

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