Ross has some of the most disastrous stores in retail — and it's great for business

Ross Stores is breaking all the rules of traditional retail, and it has become an unstoppable force as a result.

Many of the retailer's stores are messy and disorganized, with aisles of empty shelves and bare walls.

In some stores, the fitting rooms are "dirty," the service is "horrible," and merchandise is mislabeled, ink-stained, broken, or damaged, according to an analysis of dozens of customer reviews on Yelp.

But in those same reviews, customers complaining about the state of the stores admit they love shopping in them for the "insane" deals.

"I LOVE SHOPPING AT ROSS!" one customer wrote on Yelp, adding that she feels like she's "robbing the bank" when she finds deals there.

Another wrote: "I love this place for cheap clothes. It's just always so dirty, dank and full of screaming children."

The company's most recent quarter far outshined the rest of the industry, with overall sales gains of 8% to $3.4 billion, and same-store sales gains of 4%, on top of 4% growth last year.

RELATED: Check out these dying fashion retailers:

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Payless

Stores closing: 1,000

The discount shoe retailer said Tuesday that it had filed for Chapter 11 bankruptcy protection and would immediately close 400 stores in the US and Puerto Rico. Additional store closures are likely.

Payless has been in talks with its lenders for months over a restructuring plan that at one point included closing as many as 1,000 stores, or a quarter of the company's locations. Currently, Payless has about 4,400 locations worldwide, including 3,600 in North America.

The Chapter 11 filing reports less than $1 billion in assets and $10 billion in liabilities. 

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The Limited

Stores closing: 250

The women's clothing retailer shut down all 250 of its stores in early January. 

"We're sad to say that all The Limited stores nationwide have officially closed their doors," the company said in an online statement. "But this isn't goodbye. The styles you love are still available online — we're just a quick click away 24 hours a day."

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Wet Seal

Stores closing: 171

The struggling teen retailer is closing all of its stores, the company announced in late January. 

The closures come two years after Wet Seal closed 338 of its then-511 stores in January 2015, shortly before the company filed for bankruptcy protection. At the time, Wall Street analysts said that falling foot traffic at shopping malls played a major role in Wet Seal's death spiral.

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BCBG

Stores Closing: 120

Currently, BCBG has 570 locations worldwide, and 175 in the US. Most of the 120 stores being shuttered are in the US. 

In January, BCBG told Bloomberg that it would shift its focus away from brick-and-mortar stores, and instead double down on e-commerce and selling the BCBG brand through other retailers. 

In February, Women's Wear Daily reported that the retailer is considering filing for bankruptcy, with a source telling the publication BCBG is "shopping for bankruptcy attorneys."

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Bebe

Stores closing: 170

In March, Bloomberg reported Bebe planned to close all 170 stores, in an effort to focus on online sales. The retailer previously announced in early February that it planned to shutter up to 25 locations in 2017.

Bebe's sales have been slumping in recent years. In the most recent quarter, the company reported that same-store sales dropped 10.5% compared to the same period a year ago, in which sales declined 2.5%.

Reuters

Guess

Store closures: 60

The retail announced in mid-March that it planned to close 60 stores by the end of the year. Guess has already closed 62 stores in the last two years, including 10 in the last quarter alone. 

"I am laser-focused on improving the profitability of the Americas business," CEO Victor Herrero said on a call with analysts in March.

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Abercrombie & Fitch

Stores closing: 60

The teen retailer announced in March that it was closing another 60 stores. Abercrombie's store count has dropped 20% since 2013, with the latest wave of closures bringing the brand's total number of stores down to roughly 674. 

"The competitive environment resulted in more promotional activity and a lower gross margin rate than planned," Abercrombie CEO Fran Horowitz said in a statement. "The Abercrombie brand renewal continues, although it is a work in progress."

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American Apparel

Stores closing: 110

The future of American Apparel's stores hasn't been formally announced following the retailer's acquisition by Gildan Activewear Inc.

Gildan did not acquire the chain's 110 locations when it bought the American Apparel brand. If American Apparel doesn't find a buyer, these stores will likely be shut down. 

While rumors circulated that the brand would be shuttering all locations immediately, the retailer has denied these reports. Stores will not close for at least a few more months due to a 100-day license with Gildan, American Apparel spokeswoman Arielle Patrick told Business Insider in mid-January.

American Apparel declined to comment on what would happen after that point. 

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Sears

Stores closing: 42

Sears plans to shutter 42 stores by April.

Sears' downward spiral has analysts speculating that the company will file for bankruptcy, and some of the brand's suppliers are already cutting back on shipments. 

Reuters

Kmart

Stores closing: 108

Parent company Sears Holdings Corp. is shuttering 108 Kmart stores by April. 

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Macy's

Stores closing: 68

Macy's is closing 68 stores and laying off nearly 4,000 employees beginning in early 2017. Ultimately, the retailer plans to shut down about 100 stores, or 15% of its store base, over the next couple of years.

The retailer has struggled to keep up with the rise of e-commerce. In early February, the Wall Street Journal reported that Macy's had received a takeover offer from Canadian retailer Hudson's Bay.

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Crocs

Stores closing: 158

The retailer plans to go from 558 stores to roughly 400 locations by the end of 2018, Crocs announced in March. 

"Over the past several months, as we continued to focus on removing unnecessary complexity from our business, we conducted a comprehensive review of our cost structure," Crocs president Andrew Rees said during a call with analysts. 

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JCPenney

Stores closing: 138

In March, JCPenney released the list of the 138 locations — about 14% of its stores — that would shut down in the next couple months. Most of the stores will begin liquidation sales in mid-April and close their doors for good by June. 

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The company's shares soared more than 10% on the news Friday.

Ross owns more than 1,500 stores in 37 states under the banners "Ross Dress For Less" and "dd's DISCOUNTS," and it's opening more than 80 stores annually at a time when department stores are losing sales and shutting down hundreds of stores.

Ross has generated a loyal following with its steep discounts on designer brands and its constantly revolving selection of merchandise. This keeps shoppers coming back again and again.

"Their customers are of an older demographic who have been loyal for years and will not be easily taken over by Amazon," said Eric Ervin, CEO of Reality Shares, an ETF issuer and research firm whose funds own holdings in Ross Stores. "Even nine years after the financial crisis, the American consumer still wants to shop with an attention toward saving money while purchasing high-quality products."

The chaotic store environment, which would be scorned at a traditional department store, adds to the excitement of the treasure hunt at Ross.

For many customers, scoring a good deal is made all the more satisfying when they spent time sorting through messy piles of clothes for a specific size or hunting down the only version of a specific table that has no nicks or scratches.

For this unique experience, Ross has become "unAmazonable," — in other words, immune to the rise of Amazon, says Oliver Chen, an analyst for Cowen & Co.

In a research note, Chen said the company's quarterly performance "adds to our conviction that the business model has un-Amazonable characteristics given a focus on offering exceptionally low prices, a treasure hunt bricks-and-mortar experience, and agility and speed to respond to up-trending and down-trending categories."

Not only is Ross opening stores while department stores are shedding them, but the company is also opting to stay offline when most retailers are pouring money into their ecommerce operations.

Investors and analysts are encouraging this strategy for Ross. For most other retailers, it would be seen as a death wish.

"We believe Ross is a secular winner in the battle between moderate department stores and off-price retail," Morgan Stanley analysts wrote in a note published Friday. "Consumers increasingly prefer the off-price 'better brands at lower prices' value proposition over moderate department stores' private label merchandise despite the easier shopping experience."

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