Dress for Less, Profit 45% More

Discount retailer Ross increases profits despite the bad economy by decreasing inventory

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    TK
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    Both the economy and a decrease in inventory have boosted Ross's profits.

    Ross's slogan is "dress for less," but maybe it should be "profit with less."

    The Pleasanton-based discount retailer announced a 45% profit increase in the quarter ending August 1. The company earned $103.4 million, up from $71.3 million at the same time a year prior.

    When asked about the story behind the profit jump, Bobbi Chaville, Ross's senior director of investor relations, cited a two-year-old decision to decrease inventory.

    "With less inventory, we can make sure that visiting the store is always a fresh and exciting experience," said Chaville. "Plus, we don't need mark products down over and over again in order to sell them."

    In August 2007, the company decided to cut inventory by about 20% after not meeting their markdown targets-- the benchmarks the company uses that indicate how many times products are discounted before they are sold.

    Chaville also noted that the challenging economic climate has actually benefited Ross. The recession has driven some competing retailers out of business, and customers are more interested in bargain hunting.