ROSS STORES, INC. Annual Report Summary

I’ve put together this guide to help you understand how Ross Stores performed this year. My goal is to turn complex financial filings into plain English so you can decide if this company fits your investment strategy.

1. The Big Picture

Ross Stores is a leader in "off-price" retail, operating two brands: Ross Dress for Less and dd’s DISCOUNTS. They function as "treasure hunters," buying excess inventory from other brands and passing the savings to customers. As of February 1, 2025, they operated 2,267 stores across 43 states, D.C., and Guam, up from 2,186 the year before. Total revenue reached $21.9 billion, a 9% increase over the $20.4 billion reported in 2023.

2. How They Make Money

Ross’s business model is straightforward:

• The Strategy: They buy goods cheaper than department stores and mark them up less, allowing them to sell items 20% to 70% below regular retail prices. Their profit margin stood at 12.1% last year, demonstrating their ability to remain profitable even during inflationary periods.
• The "Packaway" Advantage: By buying in bulk and storing items in warehouses to sell later, they ensure a consistent supply of name-brand goods. At year-end, the company held about $2.8 billion in inventory, much of it in "packaway" to smooth out seasonal supply swings.

3. Leadership & Growth

Ross is a major company with a market value exceeding $50 billion.

• New Leadership: CEO James G. Conroy took over in February 2025, succeeding Barbara Rentler.
• Expansion: The company opened 93 net new stores in 2024, with a focus on growth in California, Texas, and Florida. They utilize 10 massive distribution centers—totaling over 12 million square feet—to keep products moving to shelves efficiently.

4. The Risks

Retail is a competitive industry. Ross manages several specific hurdles:

• Supply Chain & Tariffs: About 55% of their goods are sourced from China. Changes in trade policy or shipping logistics could impact costs, which currently account for approximately 72% of their revenue.
• Geographic Concentration: Nearly 50% of their stores are located in California, Texas, and Florida. Economic shifts or regional challenges in these states have a disproportionate impact on the company’s overall performance.
• Operational Challenges: The company manages ongoing legal matters, including employment-related litigation in California, and maintains dedicated teams to monitor and mitigate cybersecurity threats.

5. Investing in Ross

Ross is shareholder-friendly and maintains a consistent capital allocation strategy:

• Dividends: They increased their cash dividend from $0.3675 per share in 2024 to $0.4050 in 2025—a 10.2% increase.
• Stock Buybacks: The company actively repurchases shares to return value to investors and recently approved a new $2.55 billion buyback program running through 2028.

6. The Bottom Line

Ross operates as a high-volume, cost-conscious machine. With $2.2 billion in profit last year, the company generates significant cash flow to support its expansion, dividend payments, and share buybacks. As you evaluate this investment, consider whether their off-price model remains resilient against potential tariff-related cost increases, rising labor expenses, and the ongoing need for infrastructure and technology investment.