Ross has opened 700 stores and plans to have all stores open by end of June (Photo by: Don Melinda … [+] Crawford/Education Images/Universal Images Group via Getty Images)
Education Images/Universal Images Group via Getty Images
Ross discussed its Q1 financial results on the earnings call today with sales results 52% below last year as all stores and distribution centers have been closed since March 20 through the end of the first quarter (May 2). Barbara Rentler, CEO of Ross, commented, “Our first quarter results reflect the unprecedented impact the COVID-19 pandemic has had on our business, which led to the closure of all stores and our first quarterly operating loss in more than 30 years.”
In discussing the current inventory position, the company is taking a cautious view and being very prescriptive about purchasing additional inventory for back-to-school and fall. The company stated it ne to understand where consumers are spending money and the main priority is to focus on getting through the liquidation period and current inventory from spring.
When discussing the opportunity to take advantage of the inventory in the market, the company stated it is are being very surgical and its buyers have not made product purchases at this time. The goal is to sell-through the inventory the company has although most of this may be at a loss.
Shoppers coming to stores will see very aggressive markdowns across all categories. While about 700 stores are open now, all stores are expected to be open by the end of June.
The uncertainty of the market demand is the largest challenge for retailers. As the government allows for more stores to reopen, the great unknown is the comfort level of consumers to shop in stores at this time.
Baby Boomer survey conducted by Sezzle.
Chris Bixby, vice-president marketing of Sezzle, says, “This data is super consistent with what we’ve been hearing from our team. It’s been really interesting to hear the anecdotes from our Gen Z team members that even their friends that are unemployed or looking for work are still online shopping, as well as looking forward to shopping in-store, and we are expecting to see a rebound more quickly with this generation.”
Gen Z survey conducted by Sezzle.
Overall spending is downtrending, but according to a McKinsey Company report, more categories are showing positive trends including household, apparel and personal care. Spending will continue to be a concern for consumers as the economy opens and the uncertainty of employment and a possible second wave of the coronavirus loom. Consumers continue to experience a decrease in income driving more value-priced shopping.
As stores reopen, consumers will be looking for bargains and will look to apparel and beauty to give their spirits a lift which will bode well for Ross and other off-price retailers. Erin Foran, media relations lead of Sezzle, stated, “In Minneapolis, small retailers will be opening this coming Monday, and I have heard a ton of interest expressed in going shopping just to get out of the house. It seems to be a pretty common thought among younger people!”
Online categories are an indicator of where customers are spending and the shift, as stores are opening, is heading toward the non-essentials. Signifyd’s COVID-19 weekly data pulse shows an increase in beauty and apparel over the past two weeks for e-commerce businesses.
Signifyd COVID-19 Weekly Pulse Report for Ecommerce
Mike Cassidy, lead storyteller of Signifyd, stated, “One standout category during the week just ended was beauty and cosmetics, which was up 21% for the week. The category has been making an uneven but steady climb since the first week of April, which left the category up 34% over the end of February.”
Ross stores merchandise mix is 26% women’s apparel and 26% home, both of which are currently on a more positive trend which may help the retailer sell-through the current inventory. The company also stated there may be an opportunity in the moderate segment to increase market share with the bankruptcies of competitors like J.C. Penney’s.
The company is on track to open 39 stores in the fall and is very focused on the right metrics coming out of a dismal Q1. The market is uncertain and volatile but the leadership team at Ross has a plan for the safe reopening of stores, concern for customers and employees and an emphasis on keeping the company in a strong financial position post-pandemic.