From J.C. Penney to Sears to Wet Seal to BCBG, store closures are becoming more frequent for more retailers, but not Ross Stores.
The off-pricer since February has opened 23 new Ross locations and five Dd’s Discounts stores as part of a larger goal to open up 90 new locations in 2017. The openings have been mainly in the Midwest, but also included locations in California, Florida and Texas.
Ross first entered the Midwest in 2011 and now has 133 stores total in Illinois, Indiana, Kansas, Kentucky, Missouri, Iowa, North and South Dakota, and Wisconsin.
By adding about 70 Ross stores and 20 Dd’s stores this year, the company is well on its way to achieving long-term plans for 2,000 Ross locations throughout the U.S. and 500 dd’s Discounts.
Ross president and chief development officer Jim Fassio said the company “remain[s] confident” in its ability to grow at such a rate “over time.” There are currently 1,561 Ross and Dd’s stores in operation in 37 states.
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While Ross is expanding, not to mention posting annual earnings growth in the double digits, department stores and specialty retailers are dealing with slipping sales, sluggish traffic and an unsustainable brick-and-mortar presence.
J.C.Penney Co. plans to close up to 140 stores this year, Macy’s closed 66 in 2016 and is set to shutter another 34 in 2017 and Sears is continuing with plans to close dozens of locations while Wet Seal and BCBG, along with other brands, have turned to bankruptcy in an effort to realign their business with changing shopping habits.
A decline in foot traffic is often cited by retailers as reason for underperformance, with sales purportedly moving online, and 2017 appears to be moving along the same path with an estimated 11 percent dip in traffic for February alone.
The continued rise of e-commerce sales “doesn’t explain everything” though, according to a research note from Roxanne Meyer, a managing partner with equity research firm MKM Partners.
“Off-price continues to demonstrate it is largely resilient vs. Amazon and is the channel of choice vs. the mall,” Meyer said. “Despite a cautious outlook and lowered expectations for many in [the first quarter of 2017], the tone at off-price remains positive, with ‘plentiful goods in the marketplace.’”
She added in an interview that off-price retailers like Ross are also benefiting from store closures in retail, because they now have access to “really good real estate at really attractive pricing,” along with the competitive space to be more thoughtful in where they choose to open up new stores.
“Profitability may turn out to be even better [for off-price stores] with such attractive lease pricing on top of growing sales,” Meyer said.