Pricing alone doesn’t resolve the place folks purchase their garments.
With quite a few retail chains competing for the off-price, on-trend style crown, it is easy for one model to fall out of favor. Consumers appear to have a permanent love for Marshalls and TJ Maxx, whereas the recognition of Ross Dress for Less has grown steadily in recent times.
These manufacturers drive gross sales by foot visitors, and that is a battle the aforementioned chains have been successful.
“Off-price attire remained on strong footing in Q2 2026, with Ross main the section. Visits to Ross Dress for Less rose 16.4% 12 months over 12 months (YoY), whereas dd’s DISCOUNTS grew 8.4%. TJX’s TJ Maxx and Marshalls, in the meantime, noticed visits hover round final 12 months’s ranges — considerably outperforming conventional attire, which declined 3.5% YoY,” based on information from Placer.ai.
In the battle for purchasers on the lookout for offers on fashionable, trendy garments, Cato has been struggling, and now plans to shut about 15% of its retail shops.
Cato has misplaced gross sales
The Cato Corporation reported internet revenue of $1.1 million within the second quarter, in comparison with internet revenue of $6.8 million for the second quarter, which ended Aug. 2, 2025.
Sales for the second quarter 2026 had been $163.9 million, or a lower of 6% from gross sales of $174.7 million for the second quarter ended Aug. 2, 2025, primarily on account of a 3.7% same-store gross sales lower for the quarter in comparison with 2025.
The firm blamed its prospects for the drop.
“Our ends in the quarter are largely as a result of continued stress on our prospects’ discretionary revenue, which is being negatively impacted partly by persistent inflation, larger gasoline costs and continued elevated rates of interest,” CEO John Cato stated within the earnings launch.
It’s a scenario he doesn’t see enhancing anytime quickly.
“We count on the adverse stress on our prospects’ discretionary revenue to proceed for the foreseeable future. We will proceed to tightly handle our bills and stock as we anticipate the again half of 2026 to be difficult.”
The chain’s rivals, nonetheless, inform a unique story.
Ross Dress for Less gross sales for the second quarter of fiscal 2026 elevated 13% versus final 12 months, with comparable retailer gross sales up 10%, primarily pushed by buyer visitors.
Marshalls and TJ Maxx, which TJX reports on jointly, reported a 1% same-store gross sales improve and a 3% leap in total gross sales.
Cato plans extra retailer closures
Cato has expanded its plan to shut down underperforming shops. It’s including 70 new closures to the record of places that can shut earlier than the tip of the corporate’s fourth quarter, bringing the full deliberate shutdowns to 120, based on a press release.
The chain, John Cato famous, appears at a 3rd of its retail base yearly to resolve whether or not to train out there lease choices or negotiate an extension primarily based on every retailer’s efficiency, together with retailer gross sales traits and present and projected retailer profitability.
“In years previous, marginal shops had been renewed for an extra 12 months to offer the shop extra time to enhance its gross sales pattern and profitability. In mild of the present financial setting, particularly with the adverse stress on our prospects’ discretionary revenue, we don’t count on these marginal shops to enhance appreciably,” he stated.
Ross shops provide frequently altering merchandise.Shutterstock
Ross could have an edge over its rivals
Morningstar analysts consider Ross Dress for Less’ roughly 2,200 shops give it a bonus over smaller rivals equivalent to Cato, which operated greater than 800 shops earlier than the deliberate closures.
“As the second-largest off-price retailer within the U.S. with about 30% market share, we predict Ross Stores’ distinctive stock procurement technique and scale positions the agency to comfortably broaden its prime line at a mid-single-digit tempo whereas keeping off competitors from on-line channels sooner or later,” the analysts shared in a research note.
Size issues, as does the connection Ross has constructed with its suppliers.
“We counsel that Ross’ standing as a dependable gross sales outlet for product producers and conventional (or full-price) retailers seeking to discreetly liquidate extra stock ought to present the agency with a plethora of shopping for alternatives,” Morningstar added.
Cato is attempting to promote inexpensive, on-trend girls’s style. Ross and the TJX manufacturers are taking part in the identical worth sport, however with a a lot bigger shopping for operation and entry to merchandise from producers and full-price retailers seeking to clear extra stock.
“As style evolves, one factor stays the identical — our dedication to placing girls’s confidence first. For 80 years, Cato has helped girls feel and look their finest with fashionable, inexpensive style for each event,” the chain shared on its website.
With many Americans struggling financially, it is easy to see why off-price identify model clothes would enchantment to extra folks. GlobalData Managing Director Neil Saunders, nonetheless, commented on TJX, Ross, and Burlington, which he known as the three greatest gamers within the area, a 12 months in the past on his LinkedIn page.
“Since 2019, the three predominant chains all delivered US gross sales progress in extra of 30%. By distinction, the full marketplace for the issues they promote — largely style and residential — grew by simply 21.7% over the 2019 to 2024 interval. In different phrases, they’ve all expanded their market share,” he wrote.
He thinks that these three firms have steadily earned client belief.
“All of it is a testomony to the ability of the off-price groups. Yes, issues like worth for cash and discount searching are very a lot of their favor. But persistently delivering on these client necessities is much from simple. The effort, information, and judgment concerned are immense,” he added.
The closing Cato shops, the corporate shared, all have expiring leases, so the price of hire for these places will come off the retailer’s books by the tip of 2026.
