Ross: Company Analysis

Most days in class we seem to choose a company and analyze their current state, such as their revenues, costs, beta, risk management activities, etc. Well, we had done a variety of different types of businesses, but one we had not yet done was something discount clothing related. Given rough financial times, it seems as though people are moving away from expensive retail stores, to stores where they can purchase items much cheaper.

I think one great example of this is Ross clothing stores. Rather than going to more expensive regular department stores at the mall, such as Dillards, Macys, or Sears, it seems like people are making the switch over to companies which offer items at discounted prices. For example, Ross sells mostly closeout merchandise, including men's, women's, and children's clothing, at prices far below those of department stores, traditionally seen at the mall. Apparel does account for a lot of the sales for Ross (over 50%), but they also sell a wide variety of other things including some furniture, toys, kitchen items and accessories, and miscellaneous office supplies, among other things. Their motto is "Dress for Less," and "the chain targets 18- to 54-year-old white-collar shoppers from primarily middle-income households."

Like we discussed in class, the Beta of a company says a lot about it. For Ross, the beta is .77 according to Yahoo finance. So, according to what we talked about in class, this means that Ross' stock is less sensitive to market changes, since its beta is less than 1. Therefore, even though the market is doing very poorly recently, Ross is not doing quite as bad. A lot of this probably does have to do with the fact that Ross is a discount store, so people are switching over to shopping there, since it is still something they can afford even with decreases in their income.

Ross' main competitors include Kohls, Gottschalks, and TJX Corporations. Ross and its competitors are expected to have "medium growth" in coming years. This is due to the fact that these companies to have good merchandising, and are discount stores, the slowing economy still affects them. That is, the economy limits spending on non-essentials, like many of the products in these stores are.

Ross does face some risks, such as foreign exchange rate risk, since some of their clothing items, toys, and other products are from foreign countries. They also have pure risk of their buildings being damaged and their goods being destroyed. And they also have a large risk of theft from their stores. All these risks can be managed using effective risk management procedures - such as insurance, security personnel, etc. By reducing the cost of their risks, Ross will be able to stay above their competitors and be successful within their market.

ROSS Profile/Overview
Hoovers: Ross