Ross Stores to close 25 money-losing units in Southwest

Ross Stores to Close 25 Money-Losing Units in Southwest

Ross Stores is closing 25 unprofitable outlets, primarily in Texas and Oklahoma, where the generally sluggish economy has weakened the off-price retailer's sales volume.

There company also reported the departure of its president and chief executive officer, Donald Rowlett. Ross said the two developments, however, are unrelated.

Ross elected chairman Stuart Moldaw as ceo, and named Norman Ferber, executive vice president merchandising, marketing and distribution, to the positions of president, chief operating officer and also a member of its board of directors.

Rowlett and Moldaw were two of the key players in an investment group that took over the then-six-store Ross junior chain in August of 1982. Previously, Rowlett had created and run F. W. Woolworth's off-price subsidiary, J. Brannam, which has now been closed. Moldaw had founded the now defunct Pic-A-Dilly off-price chain, Country Casuals (now Foxmoor) and The Athletic Shoe Factory.

Rowlett and Moldaw shifted Ross' emphasis away from its junior base to create an off-price family store that included branded apparel for men, women and children as well as domestics, shoes and accessories. That format already was used at Marshalls, the No. 1 off-pricer, and at T. J. Maxx, the No. 2 chain.

Most of the 25 units set to close are in Texas, where the energy-dependent economy has weakened many retailers' sales. Also closing are units in Oklahoma, Colorado, Georgia and South Carolina. Closings should be complete by May.

Comparable sales for the unprofitable stores showed an 11% decrease in 1986, while the remaining 121 stores in the chain showed a 5% increase in sales for the year. The stores slated for closing produced $70 million in revenues in 1986, an average of $2.8 million per store, compared to the remaining stores' $464 million in sales, or an average of $4.5 million annualized per store.

"There were some underperforming stores that we felt it was good business to close,' explained Richard Oppenheimer, Ross' senior vp and cfo.

The closing of the stores and the discontinuance of certain merchandise will result in a fourth quarter, non-recurring, pre-tax charge of about $40 million. The firm expects to report an after-tax loss of around $42 million for the year ended Jan. 31, 1987. In fiscal 1985, ended Feb. 1, 1986, Ross reported earnings of $7.06 million on sales of $376 million.

Ross also announced it plans to open 10 new stores this year in several existing markets, while restructuring its bank lines and negotiating a private placement of $15 million worth of common stock.

Photo: California-based off-pricer Ross Stores is closing 25 unprofitable stores in the Southwest where consumer spending has slowed. The chain also has named a new chief executive officer, as well as a new president and coo.

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