Ross wants to let you dress (and lots more) for less. A leading off-price apparel retailer (behind TJX Cos. and Kohl's), Ross operates about 1,125 Ross Dress for Less and dd's DISCOUNTS stores that sell mostly closeout merchandise, including men's, women's, and children's clothing, at prices well below those of department and specialty stores. While apparel accounts for about 50% of sales, Ross also sells small furnishings, toys and games, luggage, and jewelry. Featuring the Ross "Dress for Less" trademark, the chain targets 18- to 54-year-old white-collar shoppers from primarily middle-income households. Ross and dd's stores are located in strip malls in some 30 states, mostly in the western US, and Guam.
dd's DISCOUNTS (launched in 2004) serves one of the fastest-growing demographic markets in the US. The ultra-low-price spinoff, which offers brand-name apparel at a 20%-70% discount, has grown to number about 90 locations in seven states, including big ones such as California, Florida, and Texas. The stores, which average 22,700 square feet, are located in strip shopping centers in urban and suburban neighborhoods.
More than a quarter of Ross Stores are in California, where discount department store operator Kohl's is expanding rapidly after acquiring about 30 stores that once belonged to defunct discount retailer Mervyn's. On the East Coast, Ross opened a new 1.3-million-sq.-ft. distribution center in South Carolina to support its growth in the southeastern US.
The fast-growing chain saw its fiscal 2012 (ends January) sales increase more than 9% vs. the prior year, while net income grew by 18% over the same period. Same-store sales increased 5%, following 5% and 6% increases in fiscal 2011 and 2010, respectively. Ross has seen its sales jump a robust 44% to $8.6 billion in fiscal 2012 from $5.9 billion in fiscal 2008.
Ross Stores' off-price business model appears to be just the right fit for both during and after the recession. Amid strong sales the retailer is adding stores. Over the past four years, the company has added about 235 new locations, including many dd's DISCOUNTS shops. New markets for the retailer include Illinois and the District of Columbia. Indeed, it entered Illinois in a big way in October 2011 with 12 stores in the Chicago area. Going forward the company plans to continue adding stores in existing markets, while opening Ross and dd's stores in new markets. To boost its relationships with suppliers, Ross does not require them to provide markdown/promotional allowances or return privileges. This, combined with opportunistic purchases (closeouts such as manufacturer overruns and canceled orders), allows the company to obtain large discounts on merchandise. As a result, Ross Stores' customers typically pay 20% to 60% less than department and specialty store prices. Ross holds down costs by offering minimal service and few frills inside its stores.
The investment firm FMR LLC owns about 14% of the company's shares. – less