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Ross delivers dd’s Discounts

PLEASANTON, Calif. — Despite a difficult quarter affected by problems with its new core merchandising system and the resulting limitations on tracking consumer trends, Ross Stores plans to continue rolling out its down-market dd’s Discounts concept, which opened its first three of 10 doors last week.

“These stores are conveniently located in smaller neighborhood shopping centers, in more densely populated urban and suburban areas in the Oakland, Sacramento and Fresno (Northern California) markets,” said Michael Balmuth, vice chairman and CEO.

While the company said it is still too early to gauge customers’ responses to the new concept targeting lower-income families, Ross expects dd’s Discounts to potentially grow to 500 locations with “the ability to significantly enhance our growth prospects over the next five to 10 years,” Balmuth said, speaking to analysts during a quarterly conference call this morning.

Problems with the new merchandising system clobbered profit during the second quarter ended July 31. Net income fell 40 percent to $32.6 million, or 22 cents per share, vs. $54.6 million, or 35 cents per share. The results included an $11 million charge from writing down its former corporate office and a California distribution center, impacting EPS by 7 cents.

Sales ticked up by 4 percent to $1.01 billion, but comps declined 3 percent.

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