Ross Stores, Inc. (ROST) Stock Analysis and Metrics

Ross Stores

NASDAQ: ROST

$239.04 ▲ +6.65 (+2.86%)

At close: Jul 24, 2026 · 3:59 PM UTC

Financial Ratios

Market Cap74.91 Bn

P/E34.91

P/S3.29

Div. Yield0.01

ROIC (Qtr)0.01

Total Debt (Qtr)1.52 Bn

Revenue Growth (1y) (Qtr)12.23

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About

Ross Stores Inc operates two brands of off-price retail apparel and home fashion stores Ross Dress for Less and dd s DISCOUNTS The company sells first quality in season brand name and designer apparel accessories footwear and home fashions for the entire family at significant discounts compared to regular prices at department and specialty stores Ross Stores Inc functions within the off-price retail sector focusing on value driven customers through a treasure hunt shopping experience in organized store environments

Ross Stores Inc generates revenue through the sale of merchandise at its Ross and dd s DISCOUNTS stores Revenue comes from offering a wide assortment of brand name merchandise at discounts ranging from 20% to 60% below department and specialty store regular prices for Ross and 20% to 70% below moderate department and discount store regular prices for dd s DISCOUNTS The company serves middle income households for Ross and lower to moderate income households for dd s DISCOUNTS targeting value driven customers across both brands

The company operates through the following segments: Ross Dress for Less and dd s DISCOUNTS

• Ross Dress for Less offers first quality in season brand name and designer apparel accessories footwear and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day Ross Dress for Less is the largest off-price apparel and home fashion chain in the United States with 1,904 locations in 44 states the District of Columbia Guam and Puerto Rico as of January 31, 2026.

• dd s DISCOUNTS features more moderately priced first quality in season apparel accessories footwear and home fashions for the entire family at savings of 20% to 70% off moderate department and discount store regular prices every day dd s DISCOUNTS operates 363 stores in 22 states as of January 31, 2026 and targets customers from households with lower to more moderate incomes.

Ross Stores Inc holds a leading position in the off-price retail apparel and home fashion industry as the largest off-price apparel and home fashion chain in the United States The company competes with online retailers department stores specialty stores discount stores warehouse stores other off-price retailers and manufacturer owned outlet stores Its competitive advantages stem from offering significant discounts on brand name merchandise maintaining a well balanced assortment appealing to target customers and providing convenient easy to shop store environments

Ross Stores Inc serves middle income households through its Ross Dress for Less brand and lower to moderate income households through its dd s DISCOUNTS brand Both brands target value driven customers seeking brand name merchandise at compelling discounts across apparel footwear home fashions accessories and related categories

Investment Thesis

▲ Bull case

The company reported a double digit increase in customer count across all income levels ethnicities and age groups with particular strength among younger shoppers aged 18 to 24. This surge in new customers was identified as the primary driver of transaction growth which accounted for the bulk of the 17% comparable store sales increase in the first quarter. Management emphasized that the growth is underpinned by a flywheel where marketing initiatives bring more traffic improved in store experience converts visitors into buyers and generates more hours for labor investment. Because the initiative is still in early stages there is room for continued acceleration as the company refines its creative messaging media mix and event strategies. The breadth of the demographic gains suggests that the appeal is not limited to a niche segment but extends to a wide base of shoppers providing a stable foundation for future comp growth. Early indicators show that the customer acquisition trend has persisted into the second quarter supporting the view that the momentum is not a one time spike. Investors who focus only on the headline comp number may be missing the structural shift in the customer base that could sustain higher growth rates over multiple years.
New store productivity is tracking above the guided range of 70 to 75% of mature store sales with early results indicating potential to exceed that target especially in the Northeast where stores opened in New York have surpassed underwriting pro forma expectations. The company paused its store remodel program after completing half the chain to measure impact and observed improved sales and customer satisfaction in refreshed locations suggesting that a full rollout could deliver additional upside. With approximately 110 new stores planned for the year representing about 5% unit growth the pipeline into next year looks robust to sustain expansion. The combination of higher productivity new stores and the upside from remodels provides a structural tailwind to same store sales growth beyond the guided 6 to 7% range. In addition the firm has begun to experiment with updated store formats including signage and cosmetic changes that have produced better survey responses and higher sales per square foot. These format tests are being evaluated for broader deployment which could further lift productivity of both new and existing stores. The Northeast market is proving to be a fertile ground for expansion due to its high population density and strong consumer response to the off price offering.
The cosmetics category emerged as a standout segment with exploding brands and rising sales productivity per square foot despite no material change in space allocation indicating genuine operating leverage. Management noted that the team has secured priority access to new high growth brands and capitalized on underlying consumer trends such as Korean beauty products which have contributed to strong performance. Because the category is generating higher margin sales without additional square footage the improvement flows directly to merchandise margin and overall profitability. Continued success in cosmetics could provide a persistent source of margin expansion as the company leverages its buying relationships to introduce more exclusive labels. The strong performance in cosmetics also highlights the effectiveness of the merchant team in identifying and securing trend right merchandise before it becomes widely available. This ability to capture early stage trends gives Ross a competitive edge in attracting fashion conscious shoppers who seek novelty at value prices. The category’s success may encourage further investment in similar high growth segments such as active wear or beauty accessories amplifying the overall margin profile.
Ross merchants have cultivated strong relationships with vendors that give them priority calls on opportunistic closeouts allowing the company to secure desirable inventory at favorable prices even as the market tightens. This access to off price goods has not been fully reflected in forward guidance which excludes potential tariff refunds due to timing and amount uncertainties. Should those refunds materialize they would represent an additional source of earnings that could boost net income beyond current projections. Furthermore the ability to quickly turn closeouts into floor ready merchandise supports sustained sales momentum and mitigates risk from inventory shortages. The merchant team’s reputation for being easy to work with has encouraged vendors to allocate first look opportunities to Ross which improves the quality and timing of incoming goods. This dynamic creates a virtuous cycle where better inventory leads to stronger sales which in turn reinforces vendor confidence in the retailer. The potential for tariff refunds remains an unmodeled upside that could add several basis points to earnings per share if the timing and amount become clearer. Overall the combination of strong vendor ties and the possibility of refund related gains presents a hidden catalyst that the market may be underestimating.

The company reported a double digit increase in customer count across all income levels ethnicities and age groups with particular strength among younger shoppers aged 18 to 24. This surge in new customers was identified as the primary driver of transaction growth which accounted for the bulk of the 17% comparable store sales increase in the first quarter. Management emphasized that the growth is underpinned by a flywheel where marketing initiatives bring more traffic improved in store experience converts visitors into buyers and generates more hours for labor investment. Because the initiative is still in early stages there is room for continued acceleration as the company refines its creative messaging media mix and event strategies. The breadth of the demographic gains suggests that the appeal is not limited to a niche segment but extends to a wide base of shoppers providing a stable foundation for future comp growth. Early indicators show that the customer acquisition trend has persisted into the second quarter supporting the view that the momentum is not a one time spike. Investors who focus only on the headline comp number may be missing the structural shift in the customer base that could sustain higher growth rates over multiple years.
New store productivity is tracking above the guided range of 70 to 75% of mature store sales with early results indicating potential to exceed that target especially in the Northeast where stores opened in New York have surpassed underwriting pro forma expectations. The company paused its store remodel program after completing half the chain to measure impact and observed improved sales and customer satisfaction in refreshed locations suggesting that a full rollout could deliver additional upside. With approximately 110 new stores planned for the year representing about 5% unit growth the pipeline into next year looks robust to sustain expansion. The combination of higher productivity new stores and the upside from remodels provides a structural tailwind to same store sales growth beyond the guided 6 to 7% range. In addition the firm has begun to experiment with updated store formats including signage and cosmetic changes that have produced better survey responses and higher sales per square foot. These format tests are being evaluated for broader deployment which could further lift productivity of both new and existing stores. The Northeast market is proving to be a fertile ground for expansion due to its high population density and strong consumer response to the off price offering.
The cosmetics category emerged as a standout segment with exploding brands and rising sales productivity per square foot despite no material change in space allocation indicating genuine operating leverage. Management noted that the team has secured priority access to new high growth brands and capitalized on underlying consumer trends such as Korean beauty products which have contributed to strong performance. Because the category is generating higher margin sales without additional square footage the improvement flows directly to merchandise margin and overall profitability. Continued success in cosmetics could provide a persistent source of margin expansion as the company leverages its buying relationships to introduce more exclusive labels. The strong performance in cosmetics also highlights the effectiveness of the merchant team in identifying and securing trend right merchandise before it becomes widely available. This ability to capture early stage trends gives Ross a competitive edge in attracting fashion conscious shoppers who seek novelty at value prices. The category’s success may encourage further investment in similar high growth segments such as active wear or beauty accessories amplifying the overall margin profile.
Ross merchants have cultivated strong relationships with vendors that give them priority calls on opportunistic closeouts allowing the company to secure desirable inventory at favorable prices even as the market tightens. This access to off price goods has not been fully reflected in forward guidance which excludes potential tariff refunds due to timing and amount uncertainties. Should those refunds materialize they would represent an additional source of earnings that could boost net income beyond current projections. Furthermore the ability to quickly turn closeouts into floor ready merchandise supports sustained sales momentum and mitigates risk from inventory shortages. The merchant team’s reputation for being easy to work with has encouraged vendors to allocate first look opportunities to Ross which improves the quality and timing of incoming goods. This dynamic creates a virtuous cycle where better inventory leads to stronger sales which in turn reinforces vendor confidence in the retailer. The potential for tariff refunds remains an unmodeled upside that could add several basis points to earnings per share if the timing and amount become clearer. Overall the combination of strong vendor ties and the possibility of refund related gains presents a hidden catalyst that the market may be underestimating.

▼ Bear case

The first quarter benefit was partly attributed to higher consumer spending related to tax refunds which management acknowledged as an idiosyncratic boost that may not recur in subsequent periods. If tax related spending normalizes the underlying transaction growth could decelerate making the current double digit customer count increase harder to sustain. The company has excluded potential tariff refunds from guidance due to timing and amount uncertainties indicating that any upside from that source is speculative and not baked into expectations. Consequently investors may be overestimating the durability of the current sales momentum absent those temporary tailwinds. In addition the reliance on tax related stimulus makes the results sensitive to changes in fiscal policy that are outside the company’s control. A shift in government refund timing or size could quickly erode the comp advantage that has been driving the recent outperformance. The business would then need to rely solely on organic initiatives such as marketing and merchandising to maintain growth rates which may prove challenging in a softer macro environment.
Management highlighted that elevated fuel prices are expected to pressure distribution and domestic freight costs throughout the year and that current guidance already reflects this headwind. Should fuel prices rise beyond the assumptions embedded in the forecast the resulting increase in freight expenses could erode the merchandise margin gains and occupancy leverage that have contributed to operating margin expansion. The company noted that distribution costs declined only modestly in the quarter and any further deterioration would directly impact the bottom line. This sensitivity to energy prices introduces a notable risk to the forecasted operating margin range of 12 point 8 to 13%. Furthermore any increase in freight costs would likely be passed on to consumers only indirectly through higher operating expenses which could limit the company’s ability to maintain low price positioning. The off price model depends on keeping operating costs low to preserve the value proposition to shoppers. If freight pressures persist the company may need to absorb higher costs or risk compromising its price advantage. This scenario could lead to margin compression even if sales remain solid.
Consolidated inventories rose 12% with packaway representing 36% of total inventory down from 41% a year ago but still a significant portion held for future sale. If consumer demand weakens the elevated packaway level could lead to increased markdown pressure and higher inventory carrying costs. The increase in overall inventory also raises the risk of obsolescence particularly for fashion forward items that may lose relevance quickly. A slowdown in sales could force the company to liquidate excess inventory at lower prices undermining merchandise margin improvements. Additionally higher inventory levels tie up working capital that could otherwise be used for store expansions or share repurchases. The company’s inventory turnover may deteriorate which would be a negative signal for investors focused on efficiency metrics. Monitoring the trend in packaway percentages will be important to gauge whether the buildup is temporary or indicative of a deeper mismatch between supply and demand.
Incentive compensation costs were cited as the primary driver of SG&A deleverage in the quarter meaning that higher payouts tied to earnings outperformance inflated selling general and administrative expenses. Should earnings growth slow the company may face pressure to maintain or increase incentive payments to retain talent which would reverse the current SG&A leverage trend. An increase in SG&A as a percentage of sales would directly offset gains from merchandise margin and occupancy leverage potentially keeping operating margin flat or lower than guidance. This creates a risk that the current margin expansion is not sustainable without continued earnings surprises. Moreover the reliance on incentive based pay could lead to greater variability in quarterly results making earnings less predictable. Investors who favor stable earnings streams may view this as a drawback especially if macro conditions become less favorable. The compensation structure may also attract scrutiny from governance groups concerned about pay for performance alignment. Overall the dependence on incentive compensation adds a layer of uncertainty to the outlook for SG&A trends.
The off price model depends heavily on the ability to secure attractive closeout merchandise at discounted prices and any disruption in vendor relationships or market availability could constrain assortment quality. Labor shortages and turnover in store operations could increase payroll costs and hinder the company’s capacity to support increased product flow and maintain the improved in store experience. Both factors could dampen the traffic growth that has been driving comparable store sales and put pressure on the company’s ability to meet its new store productivity targets. In addition the company’s reliance on a lean operating model means that any increase in labor expenses could have a disproportionate impact on profitability. The retail sector is currently experiencing heightened competition for workers which may push wages upward and increase turnover rates. If store teams cannot be adequately staffed the in store experience may suffer leading to lower conversion rates and basket sizes. These operational challenges could offset the benefits generated from strong merchandising and marketing initiatives.

The first quarter benefit was partly attributed to higher consumer spending related to tax refunds which management acknowledged as an idiosyncratic boost that may not recur in subsequent periods. If tax related spending normalizes the underlying transaction growth could decelerate making the current double digit customer count increase harder to sustain. The company has excluded potential tariff refunds from guidance due to timing and amount uncertainties indicating that any upside from that source is speculative and not baked into expectations. Consequently investors may be overestimating the durability of the current sales momentum absent those temporary tailwinds. In addition the reliance on tax related stimulus makes the results sensitive to changes in fiscal policy that are outside the company’s control. A shift in government refund timing or size could quickly erode the comp advantage that has been driving the recent outperformance. The business would then need to rely solely on organic initiatives such as marketing and merchandising to maintain growth rates which may prove challenging in a softer macro environment.
Management highlighted that elevated fuel prices are expected to pressure distribution and domestic freight costs throughout the year and that current guidance already reflects this headwind. Should fuel prices rise beyond the assumptions embedded in the forecast the resulting increase in freight expenses could erode the merchandise margin gains and occupancy leverage that have contributed to operating margin expansion. The company noted that distribution costs declined only modestly in the quarter and any further deterioration would directly impact the bottom line. This sensitivity to energy prices introduces a notable risk to the forecasted operating margin range of 12 point 8 to 13%. Furthermore any increase in freight costs would likely be passed on to consumers only indirectly through higher operating expenses which could limit the company’s ability to maintain low price positioning. The off price model depends on keeping operating costs low to preserve the value proposition to shoppers. If freight pressures persist the company may need to absorb higher costs or risk compromising its price advantage. This scenario could lead to margin compression even if sales remain solid.
Consolidated inventories rose 12% with packaway representing 36% of total inventory down from 41% a year ago but still a significant portion held for future sale. If consumer demand weakens the elevated packaway level could lead to increased markdown pressure and higher inventory carrying costs. The increase in overall inventory also raises the risk of obsolescence particularly for fashion forward items that may lose relevance quickly. A slowdown in sales could force the company to liquidate excess inventory at lower prices undermining merchandise margin improvements. Additionally higher inventory levels tie up working capital that could otherwise be used for store expansions or share repurchases. The company’s inventory turnover may deteriorate which would be a negative signal for investors focused on efficiency metrics. Monitoring the trend in packaway percentages will be important to gauge whether the buildup is temporary or indicative of a deeper mismatch between supply and demand.
Incentive compensation costs were cited as the primary driver of SG&A deleverage in the quarter meaning that higher payouts tied to earnings outperformance inflated selling general and administrative expenses. Should earnings growth slow the company may face pressure to maintain or increase incentive payments to retain talent which would reverse the current SG&A leverage trend. An increase in SG&A as a percentage of sales would directly offset gains from merchandise margin and occupancy leverage potentially keeping operating margin flat or lower than guidance. This creates a risk that the current margin expansion is not sustainable without continued earnings surprises. Moreover the reliance on incentive based pay could lead to greater variability in quarterly results making earnings less predictable. Investors who favor stable earnings streams may view this as a drawback especially if macro conditions become less favorable. The compensation structure may also attract scrutiny from governance groups concerned about pay for performance alignment. Overall the dependence on incentive compensation adds a layer of uncertainty to the outlook for SG&A trends.
The off price model depends heavily on the ability to secure attractive closeout merchandise at discounted prices and any disruption in vendor relationships or market availability could constrain assortment quality. Labor shortages and turnover in store operations could increase payroll costs and hinder the company’s capacity to support increased product flow and maintain the improved in store experience. Both factors could dampen the traffic growth that has been driving comparable store sales and put pressure on the company’s ability to meet its new store productivity targets. In addition the company’s reliance on a lean operating model means that any increase in labor expenses could have a disproportionate impact on profitability. The retail sector is currently experiencing heightened competition for workers which may push wages upward and increase turnover rates. If store teams cannot be adequately staffed the in store experience may suffer leading to lower conversion rates and basket sizes. These operational challenges could offset the benefits generated from strong merchandising and marketing initiatives.

Peer Comparison

Companies in the Apparel Retail

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	TJX	Tjx Companies Inc /De/	169.48 Bn	29.30	2.75	2.87 Bn
2	ROST	Ross Stores, Inc.	74.91 Bn	34.91	3.29	1.52 Bn
3	BURL	Burlington Stores, Inc.	21.30 Bn	34.12	1.79	1.92 Bn
4	LULU	lululemon athletica inc.	12.32 Bn	8.34	1.11	-
5	GAP	Gap Inc	6.81 Bn	7.20	0.44	1.49 Bn
6	VSXY	Victoria's Secret & Co.	6.71 Bn	27.49	0.99	0.99 Bn
7	URBN	Urban Outfitters Inc	5.96 Bn	12.90	0.94	-
8	BOOT	Boot Barn Holdings, Inc.	4.50 Bn	20.83	2.08	-

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Investment Thesis

Segments Breakdown of Revenue (2026)

Peer Comparison

Research Tools

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Investment Thesis

Segments Breakdown of Revenue (2026)

Peer Comparison

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