Ross Stores is cancelling all orders for merchandise through June as it battles to survive its current COVID-19 inflicted reality.
In a memo sent to vendors and obtained by Reuters, Ross reportedly said it would nix all purchase orders made through June 18.
“This is the first time in our history that we are unable to deliver exceptional merchandise to our customers,” the memo read. The discounter also said it would give a 90-day extension on payment terms for all existing merchandise payables.
Ross Stores could not be immediately reached for comment.
The news comes on the heels of a company announcement just 17 days prior outlining plans to open 100 new locations—75 Ross Dress for Less and 25 dd’s DISCOUNTS—in 2020. In February and March this year, the company opened 19 Ross and seven dd’s DISCOUNTS stores.
“These recent openings reflect our ongoing plans to continue building our presence in both existing and newer markets, including the Midwest for Ross, and expansion of dd’s DISCOUNTS into Indiana,” Ross Stores group executive vice president for property development Gregg McGillis, said at the time. “As we look out over the long-term, we remain confident that Ross can grow to 2,400 locations and dd’s DISCOUNTS can become a chain of 600 stores given consumers’ ongoing focus on value.”
Now, with all of its 1,831 brick-and-mortar stores closed at least through April 3 due to the spreading coronavirus pandemic, expansion plans may have to be put off for the Dublin, California based company that saw $16 billion in revenues last year. Having consistently opted out of the e-commerce game, there’s no backup for business online either. What’s more, with the United States surpassing every country in the world in terms of its coronavirus cases—which reached 63,570, according to World Health Organization (WHO) counts Thursday, including 11,656 new cases reported in 24 hours—chances are slim that Ross Stores, or any other retail stores will be able to open in a week’s time.
Other discounters have faced a similar fate in recent weeks, TJX Companies included.
On March 19, the company, which operates the TJ Maxx, Marshalls and Sierra stores, said it would close all of its 4,529 brick-and-mortar locations as well as its e-commerce platforms. Now a visit to any of the sites yields a message that reads: “Our site is currently unavailable.” The closures were outlined to last for two weeks, which would mean reopening on Thursday.
In a follow-up to the closure announcement, TJX CEO and president Ernie Herrman, said, “TJX is a great company with a great retail model. I want to reiterate that TJX entered 2020 in a very strong financial position. We consider the actions that we announced today as just prudent steps we are taking to further strengthen our financial liquidity and flexibility during this uncertain environment.”
Discounters had been among the leaders in fashion retail as consumers opted for more value-based buys.
In its State of Fashion 2020 report, McKinsey & Company, with Business of Fashion said, “For some years now, the polarization of the market has progressed, with both luxury and value and discount players gaining share with an increasing number of consumers choosing to make major ‘investment’ purchases while otherwise opting for value.” In looking at total return to shareholders to get a sense of each segment’s economic profit, McKinsey said luxury led with 22 percent total return to shareholders, with value behind at 14 percent. Both categories significantly outperformed the 1 percent premium/bridge brought in and the mid-market category’s 2 percent decline. “The bifurcation across price segments is evident.”
At a time when uncertainty quells consumer spending, growth in the category could have been expected to climb. But with discount stores shuttered and orders cancelled, the outlook for the category is also cloudy.