Major volume discount store Ross has proven that the American people’s love of high-quality goods from last season or as rejected loads runs deep. Even as they struggle to keep up with their bills and, in many cases, even maintain proper employment, they want to get the best bang for their buck. Given the steep discounts Ross provides on name-brand items, as well as hard-to-find sizes and designs, they are being sought out more in 2023 than almost ever before.
In after-hours trading on November 16th, shares of the store rose 4% as news of their better-than-expected quarterly earnings broke. They also announced a dramatically improved forecast for the fiscal year. Posting a profit of $447 million, or $1.33 per share, this was a tremendous improvement from the $342 or $1 per share reported the year prior. Overall sales went from $4.6 billion to $4.9 billion, a chunk more than the already stellar 5% overall from comparable sale-store figures.
Ross Chief Executive Barbara Rentler issued a statement following the release. “We are pleased that both sales and earnings outperformed our expectations for the quarter as customers responded favorably to the terrific values we offered throughout our stores.”
The earning per share forecast for the fourth quarter is expected to remain between $1.56 and $1.62, marking a tremendous surge from $1.33 the year before. For the year, earnings per share went from an estimate of $5.15-$5.26 up to $5.30-$5.36.
Rentler seems incredibly confident in these figures, as well as the continued growth of Ross in the months to come. “Despite the current macroeconomic and geopolitical uncertainties, we remain confident in the resilience of the off-price sector and our ability to operate successfully within it. Our business model offers shoppers both value and convenience, and we believe consumers’ heightened focus on these important factors bodes well for us for the foreseeable future.”
While Ross has been leading the way for some time, and they have a lot of that to owe to their decision to limit where they operate. Avoiding the black-hole taxation in places like New York and northern New Jersey, as well as high transport cost locations like Puerto Rico and Alaska, they are making smart decisions. Other major competitors, Burlington Coat Factory and TJX Corp. (Marshalls, TJ Maxx, etc), have also been reporting great gains, but by making those mistakes, they aren’t having a “Ross” level year.
Higher bidding on major lots of goods, improved transportation contracts, clear-cut customer demographics, and an impeccable reputation have kept Ross’ growth heads and shoulders over their competitors. This lean-based management has ensured they have a substantially lower percentage of stock that stays on the racks long enough to make it to the discount racks. Once there, a $100 retail pair of jeans can go from $35 on the “normal” rack down to as low as $12.99 on the final clearance racks.
Ensuring they predominantly buy what their customers want and not just what they can get their hands on, Ross has thrived since the Pandemic. For many who suddenly needed interview clothing but couldn’t put out a lot of money, discount stores became the go-to location. Especially during lockdowns. Ross’ lean decision-making flourished under these conditions.
Discount retailers like these have each carved out their niche since COVID.
HomeGoods (a brand under TJX) has been the lifeblood of the TJX stock as of late. Known as one of the most prolific discount places for interior designer Rae Dunn, her brand of “hand writer” simplistic interior design goods has swept the country over the last three years. With people looking to decorate their homes, and make them as nice as they can, lest we have another lockdown, discount retailers are the premier choice.
When people discovered discount brand retailers as a part of the American economy over 30 years ago, many worried about being accused of wearing old or “cheap” clothing. Now, thanks in large part to Bidenomics, many have forgotten about those days and are instead anxious to save money and get better quality than they can get from low-quality major retailers like Wal*Mart.