Ross Closes 25 Unprofitable Stores, Most in Energy Belt

Ross Stores said Friday that it will close 25 money-losing Ross Dress for Less stores, primarily in Texas and Oklahoma, and record a loss of about $42-million for 1986. It will also open 10 of the off-price stores in more profitable areas, including two in Southern California.

In addition, Ross announced that Donald E. Rowlett, who has led the Newark, Calif., chain’s explosive expansion in the last 4 1/2 years, has resigned as president, chief executive and a director.

The resignation of Rowlett, 55, is unrelated to the company’s problems, said Richard Oppenheimer, senior vice president and chief financial officer.

“I think it’s a coincidence” that Rowlett’s resignation was announced at the same time as the store closings and projected 1986 loss, Oppenheimer said. “Don went off in pursuit of other interests.”

Two Executives Named

Chairman Stuart G. Moldaw, 59, has been elected chief executive officer of the 146-store chain, the company stated. Norman A. Ferber, 37-year-old executive vice president of merchandising, marketing and distribution, was elected president, chief operating officer and a director.

The areas of Texas and Oklahoma where most of the store closings are to take place have been hit hard by the collapse of oil and other energy prices, Oppenheimer said. Those stores employ an average of 35 people each.

The 25 stores had revenue of about $70 million in 1986, or an average of $2.8 million per store, Oppenheimer said. In contrast, the remaining stores produced 1986 revenue estimated at $464 million, an average of $4.5 million per store.

As a result of the closings, Ross Stores for the fourth quarter will record a non-recurring pretax charge of about $40 million. Because of that charge, the company said it expects to report an after-tax loss of about $42 million for the fiscal year ended Jan. 31. Ross estimated a pretax loss before the non-recurring charge of about $6 million. Sales for the year totaled $534 million.

‘Would Have Been Profitable’

“Without the 25 stores, we would have been profitable this year (fiscal 1986),” Oppenheimer said.

Of the 10 stores Ross plans to open this year, one will open in Arcadia in the spring, he said. A second Southern California store is planned for the fall.

Ross Stores has grown rapidly since a new management team that included Rowlett and Ferber took over the six-store junior department store chain in August, 1982.

A $70,000 loss on revenue of $14 million that year was transformed by fiscal 1985 into net income of $7.06 million on revenue of $376 million at 107 stores.

“Ross Stores has succeeded in building a solid and growing off-price retailing business in a relatively short period of time,” Moldaw said in a statement. “Other members of management and I are optimistic about these changes and their positive effect on earnings and cash flow in 1987 and future years.”

The company said it is negotiating a private placement of $15 million of common stock and a restructuring of its bank lines, which should be concluded in the next few weeks.