Ross Stores plans to keep pace with its 2024 expansion by opening 90 stores this year, including a batch this weekend, as the U.S. off-price retail sector maintains its appeal to budget-conscious shoppers and broadens its brick-and-mortar footprint.
Dublin, California-based Ross, the parent of the Ross Dress for Less and dd's Discounts women's apparel and accessory chains, offered its outlook for 2025 growth on Tuesday when it reported its fourth-quarter earnings. This year its new locations will include about 80 Ross Dress for Less and 10 dd's Discounts stores, according to Chief Financial Officer Adam Orvos. That's on par with 2024.
Last year, the retailer added 75 new Ross Dress for Less stores and 14 dd's Discounts for a total of 89 openings. It ended the year with 2,186 stores, including 1,831 Ross Dress for Less and 355 dd's Discounts locations.
Off-price retailers have been a bright spot for the U.S. retail industry the past few years as consumers, battered by inflation and higher prices for necessities like groceries, hunt for bargains for discretionary purchases such as apparel. While there has been a surge in store closings — with Party City and Joann among those liquidating — off-price chains such as Burlington Stores, T.J. Maxx and Marshalls have been rolling out more locations.
Off-price retailers offer name brands, designer clothes and other goods at a lower price than traditional retail stores. They sell off-season stock, irregular clothes, merchandise from canceled orders, surplus and returned goods, unused inventory, and factory seconds from their suppliers.
Executives at some of the off-price chains said they are grabbing market share — and getting access to merchandise — when retailers totally shut down or initiate store closings, like Macy's. Still, Ross Stores expressed caution about shopper spending and the economy.
Burlington's lease buys
In the current first quarter alone, Ross plans to add 19 new stores consisting of 16 Ross and three dd's Discount locations, according to Orvos. This weekend alone, the first Ross store in Connecticut is scheduled to debut at 100 Hawley Lane in Trumball. On Saturday, Ross stores are also slated to open at: 1511 U.S. Highway 22, Watchung, New Jersey; 226675 Rib Mountain Drive, Wausau, Wisconsin; and 3050 Sheridan Drive, Amherst, New York.
New Jersey-based Burlington, slated to report fourth-quarter earnings on Thursday, has 1,103 stores and continues expanding. In part, it's been doing that by acquiring leases for former locations of defunct or downsizing chains. Burlington recently successfully bid on a dozen Big Lots' store leases, and it also acquired a number of leases for former Bed Bath & Beyond stores a few years back.
Ross Stores has taken the same strategy, according to Chief Operating Officer Michael Hartshorn. Ross Dress for Less stores average 23,000 to 25,000 square feet, while dd's Discounts average 18,000 to 20,000 square feet.
"While there's not a high volume of new [retail] development, we continue to see store closures from bankruptcies or downsizing of existing store fleets that we've been able to take advantage of," Hartshorn said.
The off-price giant
TJX Cos. — parent of T.J. Maxx , Marshalls, HomeGoods, HomeSense and Sierra — last week released its fiscal fourth-quarter earnings, reporting that it opened 131 new stores last year to end with 5,085. TJX plans to add about 130 new stores this year, bringing its total to over 5,200, according to Chief Financial Officer John Klinger.
In the U.S., it will mean: 40 new T.J. Maxx and Marshalls stores; 30 HomeGoods stores, including nine HomeSense stores; and roughly 20 Sierra stores. TJX also increased is long-term target for stores to 7,000 locations.
"With more than 2,500 total T.J. Maxx and Marshalls stores today, we still see plenty of opportunities to open new stores, attract more shoppers, and further grow our sales," TJX CEO Ernie Herrman said on the earnings call.
Despite his company's expansion plans, Ross Stores CEO Jim Conroy joined the ranks of retail executives voicing concerns about the macroeconomy's impact on consumer spending.
“We believe it is prudent to take a cautious approach in forecasting our business, especially as we start the year,” Conroy said on his earnings call.
In today’s environment, chains such as Ross Dress for Less and T.J. Maxx have emerged ahead of the pack, according to Neil Saunders, a retail analyst and managing director at analytics firm GlobalData.
“Off-price is winning customers from mainstream retail,” Saunders said in an email to CoStar News on Wednesday. “It has been doing so for some time, but the pace has accelerated over recent years as consumers have become more value conscious. That said, some mainstream stores have done a great job of pushing their customers into the arms of off-price because of poor merchandising and subpar experiences.”
'Transitory' challenges
Ross Stores reported sales for the 13 weeks ended Feb. 1 were $5.9 billion, basically flat, with comparable store sales up 3% on top of a 7% gain in the same period last year.
"We have seen softer business as we transitioned out of the fourth quarter and into the first quarter," Conroy said. "While there are always opportunities for us to improve our execution, we believe the softness we are currently seeing is primarily due to macro pressures impacting consumer confidence, resulting in a pullback in discretionary spending."
But some of those challenges may be transitory in nature, according to the CEO.
"Additionally, we anticipate that the volatile external environment will result in more opportunities for clothes or merchandise and could set us up well to deliver even greater values on branded goods in future quarters," Conroy said.