Third-quarter results show growth, but retailer expects increasing pressure from omni-channel retailers this holiday season
Ross Stores saw sales and comps growth in the third quarter, reporting an increase of 6 percent in sales and a 2 percent rise in comparable store sales. Year-to-date, the company’s sales reached $7.5 billion, an increase of 8 percent, and saw comps rise 3 percent on top of a 7 percent gain for the same period in 2012.
The third quarter was also important for the company in terms of expansions. Throughout the quarter, the company completed its expansion program, adding 88 Ross and dd’s Discounts locations combined year-to-date. A large number of these expansions took place in mid-Oct when the company opened 24 new locations in IL, MO, IN, TX, GA, and HI, among other locations. This brought the total number of stores in operation to 1,154, and, as CDO Jim Fassio says, “completes the Ross Dress for Less expansion plans for 2013 as we continue to focus on increasing our presence in both our newer and existing markets.”
While the company saw growth in the third quarter in both sales and store number, CEO Michael Balmuth says the company remains cautious about the fourth quarter. As he discusses in a conference call, many retailers are opening on Thanksgiving Day this holiday season in order to increase sales in what is predicted to be a lack-luster and six-day-shorter holiday retail season. As Balmuth says, “We believe all these factors combined will create the most intensely competitive and promotional holiday selling period in recent years. To compete in this tougher climate, our merchants have acquired a wide array of exciting and sharply priced name brand fashions and gifts to appeal to today’s value-focused holiday shoppers.”
Whether or not these discounts will aid the retailer in this competitive holiday season remains to be seen. Not only does the retailer face a large amount of competition from other retailers looking to secure sales this holiday, but with the growth and importance of e-commerce today for a retailer, Ross Stores could face more pressures. According to a CNBC article, while many retailers have jumped on the omni-channel bandwagon and are attempting to reach customers in as many ways as possible, discount retailers, including Ross, are lagging behind in their digital presence. In fact, according to the article, Ross Stores does not currently have an e-commerce platform, saying it doesn’t wish to enter the digital realm because of “prohibitive shipping costs.” To some analysts, this argument is sound, saying it is difficult for discount stores to make a profit when saddled with high shipping costs for low-price items. However, as an increasing number of retailers, including discount retailers, begin investing in online initiatives, analysts do say that an online presence is important in order to achieve further growth. According to Forrester Research analyst Sucharita Mulpuru, “When you have whole new competitors coming in and the industry is growing at maybe 10, 15 percent a year, there’s room for everybody to grow.”
What the future holds for Ross as far as online investments are concerned is still unknown. However, regardless, the company remains dedicated to investing in and improving its merchandise to continue drawing in customers this holiday season.
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