Pricing alone does not decide where people buy their clothes. With a number of retail chains competing for the off-price, on-trend fashion crown, it's easy for one brand to fall out of favor. Consumers seem to have an enduring love for Marshalls and TJ Maxx, while the popularity of Ross Dress for Less has grown steadily in recent years.
These brands drive sales by foot traffic, and that's a battle the aforementioned chains have been winning. "Off-price apparel remained on solid footing in Q2 2026, with Ross leading the segment. Visits to Ross Dress for Less rose 16.4% year over year (YoY), while dd's DISCOUNTS grew 8.4%.
TJX's TJ Maxx and Marshalls, meanwhile, saw visits hover around last year's levels — significantly outperforming traditional apparel, which declined 3.5% YoY," according to data from Placer.ai. In the battle for customers looking for deals on trendy, fashionable clothes, Cato has been struggling, and now plans to close about 15% of its retail stores. The 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 Aug. 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 Aug. 2, 2025, primarily due to a 3.7% same-store sales decrease for the quarter compared to 2025. The company blamed its customers for the drop. "Our results in the quarter are in large part due to the continued pressure on our customers' discretionary income, which is being negatively impacted in part by persistent inflation, higher fuel prices and continued elevated interest rates," CEO John Cato said in the earnings release.
It's a situation he does not 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 expenses and inventory as we anticipate the back half of 2026 to be challenging." The chain's rivals, however, tell a different story.
Ross Dress for Less sales for the second quarter of fiscal 2026 increased 13% versus last year, with comparable store sales up 10%, primarily driven by customer traffic. Marshalls and TJ Maxx, which TJX reports on jointly, reported a 1% same-store sales increase and a 3% jump in overall sales. Cato has expanded its plan to close down underperforming stores.
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