During the vibrant months of September and October, Ross Stores made a significant leap in its retail journey. They unveiled an impressive 28 new Ross Dress for Less locations and 12 dd’s DISCOUNTS stores across 21 different states. This expansion surpassed their initial goal for the fiscal year 2022, which spans from January 28, 2022, to February 28, 2024. With these latest openings, Ross has now established a strong presence with 2,019 stores, including both Ross Dress for Less and dd’s DISCOUNTS, spreading their retail wings across 40 states, the District of Columbia, and even reaching Guam.
Marking a significant milestone, Ross celebrated the opening of their 2000th store this fall. This expansion not only solidified their presence in newer states but also strengthened their foothold in markets where they’ve already been well-established. Gregg McGillis, the Group Executive Vice President of Property Development at Ross Stores, expressed his enthusiasm in a statement. “We’re thrilled about the growth of Ross and dd’s footprints, both in our relatively new and long-standing markets,” he said.
The expansion strategy saw Ross extending its reach particularly in Ohio, while dd’s DISCOUNTS made notable strides in Illinois. Additionally, both brands marked their presence with new openings in key states like California, Florida, and Texas. This ambitious growth reflects Ross Stores’ optimism about their future expansion. They are confident about the potential to further expand, aiming to eventually operate at least 2,900 Ross Dress for Less and 700 dd’s DISCOUNTS stores.
This expansion not only showcases Ross Stores’ resilience and adaptability in the dynamic retail landscape but also highlights their commitment to bringing value and variety to more customers across the United States. With a keen eye on future growth, Ross Stores continues to navigate the retail space with strategic expansion and customer-focused offerings.
How Is Ross Doing Financially?
Ross Stores faced some financial headwinds in the early part of 2022. In the first quarter, their sales dipped from $4.5 billion in Q1 of 2021 to $4.3 billion in the same period of 2022. This decline led to a revision in their financial outlook for the remainder of the year. The second quarter also saw a downward trend, with sales falling from $4.8 billion in Q2 of 2021 to $4.6 billion in Q2 of 2022.
Wells Fargo’s Vote of Confidence
Despite these challenges, Ross Stores received a significant vote of confidence from Wells Fargo on October 25. The financial services company upgraded the retailer’s stock, raising the short-term price target from $90 to $110 per share. But what sparked this optimism? According to insights from NASDAQ, analysts believe that Ross, as an off-price retailer, is well-positioned to perform strongly through 2024. This belief is rooted in the expectation that consumers, grappling with inflation, will continue to seek out the value offered by off-price stores.
The Trend Among Discount and Off-Price Retailers
Ross Stores isn’t alone in its expansion efforts in the off-price retail sector. Many discount and off-price retailers are doubling down on investments, particularly in new store openings. For instance, Burlington, another off-price retailer, is steadfast in its goal to open 90 new stores in the fiscal year 2022, which runs until January 28, 2024. Additionally, in the second quarter of 2022, Dollar General advanced its strategy by opening 227 new stores, remodeling 533, and relocating 30 others.
These trends indicate a broader pattern in the retail industry, where discount and off-price retailers are actively expanding their physical presence. This expansion reflects their adaptation to changing market dynamics and consumer preferences, especially in an economic environment marked by inflation and budget-conscious shopping.
As Its Footprint Approaches 2,000 Locations, Ross Adds 40 More Stores
Ross Stores has made a significant stride in its retail expansion, opening 40 new locations, including 12 under the dd’s DISCOUNTS brand and 28 under the Ross Dress for Less banner. This growth has propelled the retailer past the 2,000 store mark, a notable achievement in the retail industry. These new stores have been strategically opened in key states including California, Florida, Texas, Ohio, and Illinois, broadening Ross’s geographical reach.
Continued Growth and Future Plans
Throughout the fiscal year, Ross added close to 100 new stores, indicating a strong commitment to expanding its retail footprint. Gregg McGillis, Group Executive Vice President for Property Development at Ross, announced in a news release the company’s optimistic outlook. He highlighted the potential for further growth, aiming to increase the number of stores to 2,900 Ross Dress for Less and 700 dd’s DISCOUNTS locations.
Competitive Landscape in the Retail Sector
Ross Stores’ main competitor, TJX Companies, operates a significant number of stores in the United States, with 1,157 Marshalls and 1,290 T.J. Maxx locations as of July 30. Despite this competition, Ross remains committed to its store opening schedule for the year. Michael Hartshorn, Ross’s Chief Operating Officer, expressed confidence in May about capturing more market share.
Value-Oriented Strategy Amidst Inflation Challenges
Hartshorn emphasized the growing importance of value to customers, especially in the current economic climate marked by inflation. According to a Seeking Alpha transcript, he sees a tremendous opportunity for Ross in the years ahead and intends to continue the store opening strategy.
However, Ross’s primary customer base has been impacted by inflation. Earlier in the year, when Ross attempted to implement strategic price increases on its products, the response from customers was not favorable, as noted by analysts from Telsey Advisory Group in September. This highlights the sensitivity of Ross’s customer base to price changes and underscores the importance of maintaining a value-focused approach in their business strategy.
Barbara Rentler, the CEO of Ross Stores, candidly addressed the company’s recent sales challenges. “We are disappointed with our sales figures,” she stated, acknowledging the impact of increasing inflationary pressures on consumers and a more competitive retail environment. Despite these hurdles, the company’s earnings surpassed expectations, mainly due to reduced incentive expenditures resulting from the below-plan top-line performance.
Ms. Rentler also highlighted the company’s strategic financial maneuvers in the second quarter, where Ross Stores invested $235 million to repurchase 2.9 million shares of common stock. This action is part of a broader strategy, as she explained: “As previously stated, we anticipate repurchasing $950 million of common stock in fiscal 2022.” This buyback is a segment of a larger $1.9 billion, two-year repurchase program that Ross Stores has planned to run through fiscal 2024.
Despite the current challenges, Ross Stores’ actions reflect a resilience and forward-thinking approach. The company is not only navigating through a tough economic landscape but also making strategic decisions to strengthen its financial standing and shareholder value. With a clear plan for stock repurchases and a commitment to expanding its retail footprint, Ross Stores is poised to continue as a key player in the off-price retail sector, adapting and evolving in response to market conditions and consumer needs.