Dive Brief:
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Capping a tough week for apparel retail, Wall Street analysts cut stock price targets for off-price apparel chain Ross after the retailer missed estimates Thursday.
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The retailer's shares tumbled more than 5% Friday, in part because the retailer didn’t articulate its plans for overcoming its current slump.
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Ross reported revenue of $3.09 billion in the first quarter, which missed Reuters' estimate of $3.12 billion, according to CNBC. Q1 same-store sales rose 2%, below FactSet's estimate of 2.5%, according to CNBC.
Dive Insight:
Ross’ quarterly stumble shows that not even the off-price segment is immune to troubles many retailers are facing in trying to motivate shoppers to buy apparel.
As quarterly reports have flowed in, apparel sales have been a sore spot for the likes of Nordstrom, Macy’s, Target, Kohl’s, and Gap, which all reported that moving apparel inventory has been an uphill battle, both in stores and online.
That TJX was one of the few shining exceptions last week seemed to indicate that off-price retailing is somewhat protected. Macy’s and Kohl’s have introduced their own off-price units, and Gap and Nordstrom have expanded their off-price fleets. But Ross’s stumble disrupts that idea, and calls into question whether price cuts and off-price sales will be the saving moves for these retailers, at least in the absence of other strategies.
"Ladies' apparel, which accounts for 29 percent of the company's sales ... was indicated to be an underperforming category," Piper said in a Thursday note, according to CNBC. "On the call held with investors to discuss results, we note that the precise issue, nor the timeline for fixing the problem, was shared on the call."
