ROSS STORES INC. /Newark, California Sometimes "Dressing For Less' Can Go Too Far.(THE NEW AMERICA)

Byline: Marilyn Alva

Ross Stores Inc.'s motto is "Dress for less." But execs at the off-price chain say they took that mantra too far -- and suffered for it.

Ross climbed too far down the fashion ladder last year in both price and quality of its brands. Merchandise buys shifted to more regional department store brands at more steeply discounted prices than usual.

Company officials figured it was a good way to compete with heavy department-store promotions. But the strategy backfired. Customers in California, where about 40% of its stores are located, didn't recognize brands from the Midwest, and snubbed them.

Same-store sales growth started slowing last summer. So did the company's sterling earnings record, which by the October quarter had hit negative ground.

"We lost a bit of focus on our value equation," said Chief Financial Officer John Call.

Making matters worse was that lower-priced goods bought last year still were being racked this year. Sales continued to suffer. But the company also blamed it on the cold winter and slow economy.