The Right Place for the Space for Peoria, AZ

The Right Place for the Space in Peoria, AZ

Prepared by Karen Vo, PriceRight Consulting
The University of Arizona
December 11th, 2019
 The Right Place for the Space for Peoria, AZ

Introduction to Report
As requested, this report issues conducted research on the four apparel companies that might
occupy a space at the mall in Peoria, AZ. The purpose of this report is to provide distinct
actionable recommendations from the research and findings of each apparel store that would be
best to occupy the space for the mall, and the recommended store is TJX Companies. This report
will assist the key stakeholders in selecting the right store for the space. Attached below, is the
report on the four apparel stores: Abercrombie & Fitch Co., Gap, Inc., Ross Stores, Inc., and TJX
Companies, Inc.

Situation
There is a new available space opened at the mall in Peoria, AZ, and the most compatible apparel
company will fill it. The possible store that will be selected will be based on the weekly sales,
current financials, store space, and overall performance. With the research and report, this will
assist the key stakeholders of the mall to select the best fit for the space. To select the right store
for the new space, the key stakeholders would be the executive board of the mall, the consulting
firm, PriceRight, and the board of the four apparel stores.

Background
Abercrombie & Fitch Co.
Abercrombie & Fitch Co. opened up in 1892 and founded by David Abercrombie and Ezra Fitch.
Since 2017, Abercrombie and Fitch’s current CEO is Fran Horowitz. Abercrombie has a store
just for kids, Abercrombie Kids, and their sister brand, Hollister, who aim to target young to
teenagers in high school to sell their products too. At Abercrombie & Fitch Co., their products
are meant to make you feel “exceptional, and make their global customers feel confident,
comfortable, and face their Fierce.” (Abercrombie and Fitch Co., 2019, Our Company).

Abercrombie & Fitch Co. Financials

Abercrombie & Fitch Co.’s total average assets in the last three years was $2.34 billion. Their
average total liabilities in the last three years was $1.09 billion. Their long-term debt is
approximately $300 million. According to their profitability, Abercrombie & Fitch Co. generates
a net gain during the holiday season. Below, is a table that visually displays their profitability
(net gain/net loss) throughout the quarters and holiday season.

Graph made from Tableau

 The Right Place for the Space for Peoria, AZ

Latest News
An article from Daphne Howland, “Abercrombie & Fitch plans to close up to 40 stores this
year.” has stated that their company is not done closing their stores. Howland says, “…In 2018
the teen apparel retailer had 60 closures planned.” The new CEO, Fran Horowitz, plans to close
most stores and continue to rebuild the ones that are still doing well. Opening new stores might
not be an option in the future. (Abercrombie & Fitch Co., 2019, Latest News).

Analysis of Abercrombie & Fitch Co.

Abercrombie & Fitch Co. is not the “popular, cool brand anymore.” To this day, Abercrombie &
Fitch Co. struggles to reach the sales they used to make due to their past CEO’s actions for the
company. Mike Jefferies, the past CEO of Abercrombie & Fitch Co. was supposed to reestablish
and modernize the brand, but instead he trashed the reputation of the company. He specifically
stated and wanted the brand to only be for the “cool, popular kids, and only allow skinny,
attractive people to work at the stores.” Jefferies refused to sell larger sizes because he didn’t
want the brand to be worn by large women. Jefferies also continued to have shirtless, skinny, and
fit models on their shopping bags up until the new CEO stepped in. “They knew that sex could
sell.” (Abercrombie & Fitch: Crisis Management, 2016, Scandals/Analysis). Due to
Abercrombie’s poor reputation, this leaves them with a lot of work to do, and it would not be
recommended to start Abercrombie & Fitch Co. off as a new store launch.

Gap, Inc.
Gap, Inc. was founded in 1969 by Doris F. Fisher, and is a retail company for family apparel.
They are also the parent brand of the other apparel companies: Banana Republic, Old Navy,
Athleta, Janie and Jack, and more.

Gap Inc. Financials

In the last three years, Gap, Inc. has made $7.9 billion (2017-2019) for their average total assets.
Their average total liabilities for (2017-2019) are $1.09 billion. According to Mergent Online,
Gap, Inc. also has a long-term debt of $1.249 billion, and 5.95% unsecured notes, which is due
by April 2021.

Latest News
According to Nivedita Balu, and Melissa Fares, “Gap commits to Old Navy split; CEO exit
won’t impact holiday shopping season.” Art Peck, who had just step down from CEO for Gap,
Inc. made the company nervous because he stepped down right before Black Friday and the
holiday season is just starting and was worried how sales were going to go.

Analysis of Gap, Inc.

In the 2018, an article from James-Hitchings-Hales, talks about how the H&M and Gap Factory
Workers are abused daily in Asia. Sexual assault is involved as well. Since these are huge
fashion companies, and with Gap’s other scandal, they have to act immediately to shut down the
abuse at the factories. (Hitching-Hales, 2018). In 2007, Gap, Inc. has had a scandal that hurt their
reputation, and that was the child labor scandal in India. (Hitching-Hales, 2018). According to
Mary Hanbury article from Business Insider, “Gap plans on closing 230 stores and dozens more
are doomed the next few years.” Art Peck stated, in earnings call shortly after the announcement,
the company would close up to 50% of its specialty sleet over the next few years. (Hanbury,
 The Right Place for the Space for Peoria, AZ

2019). With Gap’s recent CEO backing out, their recent scandal, and multiple stores closing, it
would not be recommended to have Gap, Inc. be the option for the space.

Ross Stores, Inc.

Ross Stores, Inc. was founded in 1957, by Stuart Moldaw, Morris Ross, and Bill Isackson. They
are the parent company of Ross Dress for Less, and DD’s Discounts chains. Ross Stores sells
“off-price retail apparel, home fashion stores, designer apparel, accessories, sports apparel, and
more.” (Ross Stores, 2019, Company Details).

Ross Stores, Inc. Financials

For years 2017-2019, their average total assets for Ross Stores, Inc. was $5.7 billion. For the
same years, their total average liabilities were $2.2 billion. According to Mergent Online, their
long-term debt currently is $312.44 million. By 2021, they owe $64.94 million. (Ross Stores,
Inc., 2019, Long term debt, Financials). According to IBISWorld, Ross Stores’ 2018-2019
revenue is $15.4 billion. (Ross Stores Inc., 2019, Financial Performance).

Latest News
Instead of closing their stores, Ross Stores, Inc. are opening more. According to PR Newswire,
they state, “Ross Stores announces the recent opening of 30 Ross Dress for Less, and 12 dd’s
Discounts... they plan to add 98 new stores for fiscal 2019.” (Ross Stores, Inc. 2019, PR
Newswire). They want to continue to expand and proceed with their growth plans.

Analysis of Ross Stores, Inc.

The most recent scandal for Ross Stores, Inc. is in 2018, when Ross had to settle a $4.9M lawsuit
over ‘deceptive’ price tags. Ross Stores sell “off-price apparel” and customers tend to “compare”
regular prices to Ross’ prices and those were mainly on brands or merchandise. Customers
believe the prices to be “misleading.” This may cause problems for future customers if they
continue to have prices that are “misleading.”

TJX Companies, Inc.

TJX Companies was founded in 1976, and by Bernard Cammarata. TJX Companies “is a
worldwide retailer of off-price apparel and home fashions.” (TJX Companies Inc., 2019,
IBISWorld). They are also the parent brand of Marshalls, HomeGoods, and Homesense.

TJX Companies, Inc. Financials

For the years 2017-2019, TJX Companies’ average total assets is $1.38 billion. For the same
years, their average total liabilities are $1.92 billion. (TJX Companies, Inc., 2019, Company
Financials). TJX has the second highest sales per square footage, at $9.51. Below, shows TJX
Companies Inc. in teal.
 The Right Place for the Space for Peoria, AZ

Pie Graph from Tableau

Below, is a dot map that displays the weekly sales, and which retail company has the most
average weekly sales, and average size of the store(darker shade and bigger dot size).

Dot Map from Tableau

Above, TJX Companies has the darkest and bigger dot size, and it displays that their location in
Phoenix, that makes the most average weekly sales and size of store. TJX also has an outstanding
quarterly average weekly sale. Below, is a line graph of their average weekly sales per quarter.

Line Graph from Tableau

 The Right Place for the Space for Peoria, AZ

Above, TJX is the teal colored line, and has the highest average weekly sales out of the four
companies. Their revenue for 2018-2019 was $28.992 billion. (TJX Companies, 2019, Financial
Performance).

Latest News
“TJX Companies Project Robust Growth during the Rest of 2019”
This year, the company’s management is doing very well. Walter Loeb, the author of this article,
states, “TJX indicated in their conference call that there is a phenomenal supply of fashion
merchandise available.” He adds that sales will only increase, and they will be successful. TJX
now has 1,257 stores in the United States, and more from their sister brand, Marshalls, and
international locations. (Loeb, 2019).

Analysis of TJX Companies, Inc.

According to Mary Hanbury, from Business Insider (2019), TJX could be a threat to Amazon?
Hanbury’s article, “TJ Maxx beats many of its rivals on price, and it reveals how it’s perfectly
poised to fend off Amazon and the retail apocalypse” states how “their few legacy brick-and
mortar stores are able to withstand the threats of Amazon and e-commerce…” TJ Maxx offered a
treasure hunt experience online and says that “it’s hard to replicate.” This treasure hunt attracts
consumers who are really specific with their prices, and if it’s lower, the consumer will buy it.

Recommendations
The final recommendation will be TJX Companies, Inc. Why? Well, at the end of the day, it is
all about who brings in the income. In 2018-2019, their revenue was $28.992 billion. In addition,
TJX Companies would be best because they are the parent brands of Marshalls and HomeGoods,
and Homesense, therefore, that leaves more options for the stakeholders to decide for future
launches. Their company is the best choice because they retail to everyone and not just
teenagers, or family based. Therefore, TJX will be prime for the mall in Peoria, AZ. The next
steps are to meet with TJX team on Thursday, December 19h, and there will be a launch party on
January 17th, 2020. New launch for the New Year!

Conclusion
This report has conducted research on four apparel stores: Abercrombie & Fitch Co., Gap, Inc.,
Ross Stores, Inc., and TJX Companies. Marta Inez from PriceRight, had asked to conduct
research on which of the four apparel stores would be best fit for the space in Peoria, AZ, and
recommend which apparel store is the best. The recommended selection out of the four apparel
stores is TJX Companies. Their financial success and outstanding strategies for the company is
the reason why they are recommended. The next step will be to attend the meeting on Thursday,
December 19th, with all the key stakeholders involved to discuss further actions in selecting the
best apparel store, and RSVP for the launch party on January 17th, 2020. For further questions
and concerns, please contact karenvo@email.arizona.edu.
 The Right Place for the Space for Peoria, AZ

Reference Page
Abercrombie & Fitch Co. (2019). Company Details. Retrieved from Mergent Online
database.

Abercrombie & Fitch Co. (2019, October). Corporate, Our Company. Retrieved from
Abercrombie & Fitch Corporate Site

Abercrombie & Fitch Co. (2019). Major Companies. Retrieved from IBISWorld database

Balu, Fares, Nivedita, Melissa. (2019, November 8). “Gap commits to Old Navy split; CEO exit
won’t impact holiday shopping” Retrieved by Reuters,
https://www.reuters.com/article/us-gap-stocks/gap-commits-to-old-navy-split-ceo-exit-
wont-impact-holiday-shopping-season-idUSKBN1XI1FO

Chen, Lillian. (2016, April 12). Abercrombie & Fitch: Crisis Management. Retrieved from
Medium, https://medium.com/15-s10-smm/abercrombie-fitch-crisis-management-
f42926673c4

Gap, Inc. (2019). Long-Term Debt. Retrieved from Mergent Online.

Gentleman, Amelia. (2007, November 15). “Gap moves to recover child labor scandal.”
Retrieved from NYTimes,
https://www.nytimes.com/2007/11/15/business/worldbusiness/15iht-gap.1.8349422.html

Hanbury, Mary. (2019, March 1). “Gap just announced it’s closing 230 stores and says dozens
more are doomed in the next few years” Retrieved from Business Insider,
https://www.businessinsider.com/gap-plans-to-close-up-to-half-of-its-stores-in-next-few-
years-2019-3

Hanbury, Mary. (2019, October 15). ““TJ Maxx beats many of its rivals on price, and it reveals
how it’s perfectly poised to fend off Amazon and the retail apocalypse.” Retrieved by Business
Insider, https://www.businessinsider.com/tj-maxx-prices-experience-amazon-
retail- apocalypse- 2019-10

Hitching-Hales, James. (2018, June 5).”Hundreds of H&M and Gap factory workers abused
daily, Report Says” Retrieved from Global Citizen,
https://www.globalcitizen.org/en/content/hm-gap-factory-abuse-fast-fashion-workers/
Howland, Daphne. (2019, March 8).“Abercrombie & Fitch plans to close up to 40 stores this
year” Retrieved by Retail Dive, https://www.retaildive.com/news/abercrombie-fitch-
plans-to-close-40-stores-this-year/550072/

Howland, Daphne. (2018, October 3). “Ross to settle $4.9M lawsuit over ‘deceptive’ price tags.”
Retrieved by Retail Dive. https://www.retaildive.com/news/ross-to-settle-49m-lawsuit-
over-deceptive-price-tags/538768/
 The Right Place for the Space for Peoria, AZ

Loeb, Walter. (2019, August 21). “TJX Companies Project Robust Growth During the Rest of
2019.” Retrieved by Forbes, https://www.forbes.com/sites/walterloeb/2019/08/21/tjx-
companies-project-robust-growth-during-the-rest-of-2019/#631b11fc10b3

Ross Stores, Inc. (2019). Company Financials. Retrieved by Mergent Online database

Ross Stores, Inc, (2019). Long term debt. Retrieved by Mergent Online database

Ross Stores, Inc, (2019). Financial Performance. Retrieved by IBISWorld database

Ross Stores, Inc, (2019). Ross Stores Opens 42 New Locations. Retrieved by Cision PR
Newswire, https://www.prnewswire.com/news-releases/ross-stores-opens-42-new-
locations-300937412.html

TJX Companies Inc., (2019). Company Overview. Retrieved by IBISWorld database

TJX Companies Inc., (2019). Financial Performance. Retrieved by IBISWorld database