To connect beams and bracings with storage rack uprights, closely spaced perforations are provided along the web, flanges, and rear flanges of uprights. These perforations can significantly lower the ultimate capacity of such compression members with the possible influence of its natural buckling modes. This capacity reduction can depend on various parameters such as (a) geometrical shape, proportioning of cross-section, and stiffeners; (b) perforation shape, size, spacing, and location; (b) slenderness of member, cross-section, and elements of cross-section; and (d) material properties. A thorough understanding of the influence of the above-mentioned factors is necessary for the accurate strength prediction of perforated Cold-formed steel (CFS) compression members. Even though the current design standards are updated for the accurate strength prediction of unperforated CFS compression members, they do not collectively account for the influence of all the aforementioned factors on the load-carrying capacity of the perforated CFS members, particularly for the local buckling capacity. Though the Direct Strength Method (DSM) of design is the most accepted method for accurate strength prediction of CFS members even for complex cross-sectional shapes, recent research on the strength evaluation of perforated CFS members using DSM has emphasized the need for refinement in DSM. The Modified Direct Strength Method (MDSM), which accounts for the simultaneous buckling of flanges and web, includes the cross-section aspect ratio and cross-section slenderness to predict more accurately the local buckling design strength. However, it was developed only for unperforated specimens. Hence, a systematic experimental and numerical investigation was done to understand the influence of the perforation in the local buckling behavior of the lipped channel section. In total, 14 specimens, including 2 unperforated and 12 web perforated CFS lipped channel stub columns were physically tested with fixed support conditions. The Finite Element Analysis using ABAQUS software was used to conduct an extensive parametric numerical study. The results were used to compare the strength curves of DSM and MDSM and the modification in the design curves has been proposed by considering the erosion in strength due to the presence of perforation.