Off-price apparel booming in a recovery year - Discount Store News Annual Discount Industry Report; Part 1: Chain Analysis - Industry Overview

Discount Store News, July 5, 1993

Stellar sales performances by some Southern-based off-pricers boosted the 1992 annual results of apparel chains by 13.2% to $11.7 billion. [TABULAR DATA OMITTED]

In what for many in the retailing industry was a recovery year, most of the off-pricers managed not just a recovery in 1992, but a boon, with most showing double-digit increases.

This year, two chains, Ross Stores and Burlington Coat Factory, reached the $1 billion sales milestone. That helped Ross Stores inch its way up the DSN census chart to the No. 3 position.

The southern-based chains that produced more than a 20% sales increase included Goody's Family Clothing, Stores and 50-Off. Two California chains, Clothestime and Men's Wearhouse--newly added to the list--also managed the same feat with 21.6% and 27.8% sales increases, respectively.

Men's Wearhouse is a men's tailored clothing retailer operating primarily in the West and South.

Meanwhile, the two off-price giants, Marshalls and T.J. Maxx, continued to battle it out at the top. T.J. Maxx has been edging closer to the number one spot for the past three years, and is now within shooting distance of the top berth.

For T.J. Maxx, better merchandising and more aggressive store growth have been the keys to its success.

During 1992, while Marshalls concentrated on controlling spending and developing a better merchandise strategy, T.J. Maxx also got aggressive with store openings.

T.J. Maxx opened 37 stores, while Marshalls netted only about eight after some closings and relocations.

Marshalls 1992 receipts accounted for about a quarter of the annual sales for its parent Melville Corp., which has corporately been cleaning house over the past year. Melville sold its most troubled division, Chess King, to Merry-Go-Round Enterprises earlier this year and announced it would concentrate more on its core business, including Marshalls and CVS Drug Stores.

Improvements in its corporate systems and logistics are also being put in place, which should help keep it competitive in the off-price category.

In addition to fueling T.J. Maxx's success, parent TJX Cos. also managed to turn Hit or Miss around. After closing 75 unprofitable stores, the company began rebuilding the chain. Though Hit or Miss will close additional unprofitable stores during 1993, new units will be open in targeted markets such as the Northeast and Florida, the company reported.

The Hit or Miss turnaround was also evident in the chain's estimated earnings. Hit or Miss reported a loss of $26 million in 1991, but narrowed that to only a $5.5 million loss for 1992.

Analysts at Lehman Brothers, as well as other firms, speculate that once stabilized, TJX may sell off the Hit or Miss chain to concentrate on its stronger divisions. According to TJX, it has no immediate plans to sell the division.

Ross Stores, now in the third spot with just over $1 billion in sales, is now also positioned to compete with the big two in off-price retailing.

The chain expanded its gift and housewares sections in a number of stores this year, which are strong points for both Marshalls and T.J. Maxx. In addition, Ross Stores reorganized its merchandising staff. It appointed specific merchandise managers for the home area as well as for children's and juniors.

The only public off-pricer to show a drop in earnings was 50-Off. Its rise from sales of $77 million in 1990 to $181 million in 1992 has begun to level off. Earnings for the retailer went from $9.8 million in 1991 to $7.2 million in 1992.

The only chain to show a sales decrease was NBO. In response, the company has already initiated a new marketing campaign and has closed a number of stores.