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Ross Stores Inc.’s low-to-moderate income customers are gravitating toward sharper pricing on discretionary goods as inflation continues to impact spending power.
“Cosmetics and children’s were the strongest merchandise areas during the quarter, while geographic performance was broad based,” Barbara Rentler, vice chairman and CEO, said of the Ross Dress for Less banner during a conference call Thursday to investors. She said sales at the DD’s Discounts banner improved as “shoppers responded favorably to the stronger values and fashions offered in stores.”
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For kids, one purchase pattern is buy it and wear it now. She gave as an example denim shorts and long denim, which Rentler said that “they’re actually both performing pretty well.” She explained that parents are buying that “new pair of shorts for my kid to go back to school in,” because they need that one last set.
The CEO also said women’s apparel is a key focus as the off-pricer looks to shift assortments that are more branded as its a key category, one that Rentler described as “critical to the entire business.”
“We keep learning as we’re going, adding a lot of new vendors, trying different values. And so, that’s just going to kind of continue,” she said. In addition, the retailer is also thinking about value in pricing, compared to the out-the-door prices at other retailers. Having more branded products allows Ross to better compare prices and “show really incredible value to the customer, because the value strategy is our market-share strategy,” Rentler said, adding that the retailer will continue with its good, better, best brands because it doesn’t want to alienate any customers.
She also said that availability of product remains favorable and is broad-based. Another plus is the expansion of the retailer’s vendor pool, particularly as some vendors are looking to build out new relationships given their own challenged businesses due to the macro-economic backdrop.
Rentler also said the company is adjusting assortments in new markets as it addresses a more diverse customer base. The company opened 21 new Ross doors and 3 DD’s during the quarter. “We remain on track to open a total of approximately 90 new locations this year, comprised of about 75 Ross and 15 DD’s,” she said.
For the quarter, consolidated inventories were up 8 percent from year-ago levels, with packaway merchandise representing 39 percent of total inventories at quarter end, up from 38 percent last year.