Off-price retailers strike gold from West Coast slowdown

Tue May 19, 2015 3:36pm EDT
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By Ramkumar Iyer

(Reuters) - Not every U.S. retailer has cause to complain about the West Coast port disruptions. For those focused more on price than the latest fashion, the delivery backlog caused by the slowdown could be a treasure trove.

Off-price retailers such as TJX Cos Inc (TJX.N: Quote), which sell high-quality merchandise at low prices, are snapping up orders canceled by traditional stores in the congestion that follows a months-long labor dispute.

The fallout from the port strikes was a bright spot in TJX's better-than-expected quarterly results and augurs well for off-price rivals Ross Stores Inc (ROST.O: Quote) and Burlington Stores Inc (BURL.N: Quote) as they prepare to report results.

"It created an opportunity for off-price retailers to capitalize on the plethora of merchandise available in the market place at very favorable prices," said Stifel analyst Richard Jaffe.

Off-price retailers thrive by offering labels such as Dolce and Gabbana or Juicy Couture at low prices. Often, this is off-season merchandise sourced from manufacturers or department store operators.

They also take advantage of forecasting mistakes, canceled orders and inventory overruns to offer shoppers a good deal.

TJX, owner of the TJ Maxx and Marshalls chains, raised its full-year profit and comparable sales forecast, mainly because more bargain-hungry shoppers are visiting its stores.

The company said it was hard to pinpoint the extent to which the West Coast slowdown had helped its first-quarter results.   Continued...

The sign outside a Ross store is seen in Broomfield, Colorado February 27, 2014.  Ross Stores, Inc. will announce their quarterly results on Thursday. REUTERS/Rick Wilking