Pricing alone does not decide where people buy their clothes.
With multiple retail chains competing for the off-price, on-trend fashion crown, it's easy to favor one brand. Consumers seem to have an undying love for Marshalls and TJ Maxx, while Ross Dress For Less has steadily grown in popularity in recent years.
These brands drive sales through foot traffic, and it's a battle the aforementioned chains are winning.
"Off-price apparel remained on solid footing in Q2 2026, with Ross leading the segment. Ross Dress visits grew 16.4 percent year-over-year (YoY), while dd's discounts grew 8.4 percent. TJX's TJ Maxx and Marshalls saw significant gains over the past year, outperforming traditional apparel, which declined 3.5 percent year-over-year, according to data from happened Placer.ai.
In the battle with consumers looking for deals on trendy, fashionable clothes, Cato is struggling, and now plans to close 15% of its retail stores.
Cato has lost sales.
Cato Corporation reported net income of $1.1 million in the second quarter, compared to net income of $6.8 million for the second quarter, which ended on August 2, 2025.
Sales for the second quarter 2026 were $163.9 million, or a decrease of 6% from sales of $174.7 million for the second quarter ended August 2, 2025, primarily due to a 3.7% same-store sales decline in the quarter compared to 2025.
The company blamed its customers for the shortfall.
"Our results in the quarter were due in large part to continued pressure on our customers' discretionary income, which has been negatively impacted by continued inflation, higher fuel prices and continued high interest rates," CEO John Cato said in the earnings release.
It's a situation he doesn't see improving anytime soon.
"We expect the negative pressure on our customers' discretionary income to continue for the foreseeable future. We will continue to tightly manage our costs and inventory as we expect the latter part of 2026 to be challenging."
However, China's rivals tell a different story.
Ross dress for less sale for Second quarter of fiscal year 2026 Up 13% over last year, with store sales up 10%, primarily driven by customer traffic.
Marshalls and TJ Meekswhich TJX reports jointly.reported a 1% increase in same-store sales and a 3% increase in overall sales.
Cato plans to close more stores.
Cato has expanded its plans to close underperforming stores. That's adding 70 new closures to the list of locations that will close before the end of the company's fourth quarter, bringing the total number of planned shutdowns to 120. Press release.
The chain looks at one-third of its retail base each year to decide whether to exercise available lease options or negotiate an extension based on each store's performance, including store sales trends and current and projected store profitability, noted John Cato.
"In previous years, marginal stores were renewed for an additional year to give the store more time to improve its sales trend and profitability. In light of the current economic environment, particularly with negative pressure on our customers' discretionary income, we do not expect significant improvement in these marginal stores," he said.
Ross stores offer constantly changing merchandise. Shutterstock
Ross may have an edge over his rivals.
Morningstar analysts believe Ross Dress For Less's roughly 2,200 stores give it an advantage over smaller rivals such as Cato, which operated more than 800 stores before the planned closure.
"As the second-largest off-price retailer in the US with nearly 30 percent market share, we believe Ross Stores' unique inventory procurement approach and scale comfortably positions the firm to grow its top line at a mid-single-digit pace and fend off competition from online channels in the future," analysts shared in a note. Research Notes.
Size matters, as Ross has done with its suppliers.
"We suggest that Ross's standing as a reliable sales outlet for product manufacturers and traditional (or full-price) retailers looking to carefully liquidate excess inventory should provide the firm with buying opportunities," Morningstar added.
Cato strives to sell affordable, on-trend women's fashion. Ross and TJX Brands are playing the same value game, but with a much larger purchasing operation and are trying to clear excess inventory with access to goods from manufacturers and full-price retailers.
"As fashion evolves, one thing remains the same - our commitment to putting women's confidence first. For 80 years, Cato has helped women look and feel their best with stylish, affordable fashion for every occasion." Website.
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Off price is increasing.
With many Americans struggling financially, it's easy to see why inexpensive brand name clothing would appeal to more people. Neil Sanders, managing director of Global Data, however, commented on TJX, Ross, and Burlington, which he described as the three biggest players in the space, a year ago. LinkedIn page.
"Since 2019, the three main chains have grown US sales by more than 30%. In contrast, the total market for what they sell — mostly fashion and home — grew by just 21.7% over the period 2019 to 2024. In other words, they all increased their market share," he wrote.
He believes that these three companies have consistently earned the trust of consumers.
"All this is a testament to the expertise of off-price teams. Yes, value for money and bargains are very much in their favour. But meeting these customer needs consistently is not easy. It takes a lot of effort, knowledge and judgement," he added.
The closing Cato stores, the company shared, all have expiring leases, so the rental value of those locations will be off the retailer's books by the end of 2026.
Also read: Kroger pulls Red Bull from every grocery store and gas station.
This story was originally published by The Street on September 19, 2026, where it first appeared. retail Add section TheStreet as a. Preferred Source by clicking here.
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