ROSS STORES, INC.

Ross Stores, Inc. operates two brands of off-price retail apparel and home fashion stores—Ross Dress for Less and dd's DISCOUNTS. Ross is the largest off-price apparel and home fashion chain in the United States, with 1,904 ¹ locations in 44 states, the District of Columbia, Guam, and Puerto Rico as of January 31, 2026. The company also operates 363 ² dd's DISCOUNTS stores in 22 states as of the same date. The retail apparel and home fashion markets are highly fragmented and competitive, with competition from online retailers, department stores, specialty stores, discount stores, warehouse stores, other off-price retailers, and manufacturer-owned outlet stores, many of which are units of large national or regional chains that have substantial resources.

The company believes the principal competitive factors in the off-price retail apparel and home fashion industry are offering significant discounts on brand name merchandise, offering a well-balanced assortment that appeals to target customers, and consistently providing store environments that are convenient and easy to shop. Ross offers first-quality, in-season, brand name and designer apparel, accessories, footwear, and home fashions at savings of 20% to 60% ³ off department and specialty store regular prices every day. dd's DISCOUNTS features more moderately-priced first-quality, in-season apparel, accessories, footwear, and home fashions at savings of 20% to 70% ⁴ off moderate department and discount store regular prices every day. The company's target customers for Ross are primarily from middle income households, while dd's DISCOUNTS target customers typically come from households with lower to more moderate incomes.

The company generates revenue through the sale of first-quality, in-season, brand name and designer apparel, accessories, footwear, and home fashions at off-price discounts in brick-and-mortar stores. Revenue is recognized at the point of sale, net of sales taxes collected and an allowance for estimated future returns. The company's business is exclusively in brick-and-mortar stores, with no e-commerce operations. Sales are generally higher during the second half of the year, which includes the back-to-school and holiday seasons.

The company's merchandise offerings include apparel, footwear, home accents and furniture, beauty, bed and bath, accessories, gourmet food, toys, luggage, pet accessories, electronics, jewelry and watches, and cookware. For fiscal 2025, the sales mix by merchandise category was: Home Accents and Bed and Bath 26% ⁵, Ladies 22% ⁶, Men's 15% ⁷, Accessories, Lingerie, Fine Jewelry, and Cosmetics 15% ⁸, Shoes 13% ⁹, and Children's 9% ¹⁰. For fiscal 2024, the sales mix was: Home Accents and Bed and Bath 26% ¹¹, Ladies 22% ¹², Men's 16% ¹³, Accessories, Lingerie, Fine Jewelry, and Cosmetics 15% ¹⁴, Shoes 12% ¹⁵, and Children's 9% ¹⁶. For fiscal 2023, the sales mix was: Home Accents and Bed and Bath 26% ¹⁷, Ladies 23% ¹⁸, Men's 15% ¹⁹, Accessories, Lingerie, Fine Jewelry, and Cosmetics 15% ²⁰, Shoes 13% ²¹, and Children's 8% ²².

During fiscal 2025, the company opened 80 ²³ Ross stores and 10 ²⁴ dd's DISCOUNTS stores, and closed 7 ²⁵ Ross stores and 2 ²⁶ dd's DISCOUNTS stores, for a net increase of 81 ²⁷ stores. The expansion program included entry into new geographic markets such as Puerto Rico and the New York Metro area. In April 2025, the company repaid at maturity $700 million ²⁸ of Senior Notes. In June 2025, the company entered into a new $1.3 billion ²⁹ senior unsecured revolving credit facility, replacing its previous $1.3 billion ³⁰ unsecured credit facility. In March 2026, the Board of Directors approved a new two-year program to repurchase up to $2.55 billion ³¹ of the company's common stock through January 29, 2028. The Board of Directors declared a cash dividend of $0.4050 ³² per common share in March, May, August, and November 2025. During fiscal 2025, the company repurchased 7.1 million ³³ shares at an average repurchase price of $147.61 ³⁴ for a total of $1,050 million ³⁵.

For fiscal 2025, total sales were $22,750,559 thousand ³⁶, compared to $21,129,219 thousand ³⁷ in fiscal 2024, representing an increase of approximately 8% ³⁸. Comparable store sales increased 5% ³⁹ in fiscal 2025. Operating income was $2,707,357 thousand ⁴⁰ in fiscal 2025, compared to $2,585,586 thousand ⁴¹ in fiscal 2024. Net income was $2,145,044 thousand ⁴² in fiscal 2025, compared to $2,090,730 thousand ⁴³ in fiscal 2024. Diluted earnings per share were $6.61 ⁴⁴ in fiscal 2025, compared to $6.32 ⁴⁵ in fiscal 2024.

The company expects to open approximately 110 ⁴⁶ new stores in fiscal 2026, which represents 5% ⁴⁷ growth, with 85 ⁴⁸ Ross stores and 25 ⁴⁹ dd's DISCOUNTS stores planned. The company expects its operating income as a percentage of sales to be slightly higher in fiscal 2026 than in fiscal 2025, reflecting higher merchandise margin and lower distribution costs, partially offset by higher store-related costs related to key initiatives.

The company's growth strategy is based on successfully expanding its off-price model in current markets and in new geographic regions. The company continues to believe that customers' focus on value and convenience supports opportunities to expand its reach and serve more customers over time. The long-term strategy is to open additional stores based on market penetration, local demographic characteristics, competition, expected store profitability, and the ability to leverage overhead expenses. The company continually evaluates opportunistic real estate acquisitions and opportunities for potential new store locations.

The company's key initiatives include merchandising—delivering broad-based assortments timely and offering more brands at compelling values for customers; marketing—advancing marketing initiatives to further strengthen customer awareness and engagement; and stores—making meaningful improvements to the in-store shopping experience for customers. The company continues to invest in new information systems and technology to provide a platform for growth over the next several years, including continued enhancements to stores, supply chain, merchandising, and cybersecurity systems.

Capital expenditures for fiscal 2026 are projected to be approximately $1.1 billion ⁵⁰. Planned capital expenditures include costs to open new stores and improve existing stores, investments in the supply chain to support long-term growth including construction of next distribution centers, investments in information technology systems, and various other expenditures related to stores, distribution centers, and buying and corporate offices. The increase in planned capital expenditures for fiscal 2026 compared to fiscal 2025 is primarily driven by investments in new stores and existing stores, investments in next distribution centers, and various investments in information technology systems.

In March 2026, the Board of Directors approved a new two-year program to repurchase up to $2.55 billion ⁵¹ of the company's common stock through January 29, 2028. On March 3, 2026, the Board of Directors declared a quarterly cash dividend of $0.4450 ⁵² per common share, payable on March 31, 2026. The company expects to fund capital expenditures with available cash.

The company faces a challenging and rapidly changing macroeconomic and retail environment that creates intense competition. Continuing inflation, tariff increases (or threats of increases), potential supply chain disruptions, and other external events may have significant negative effects on costs, consumer confidence, shopping behavior, and spending. More than half of the goods the company sells originate from China, making it especially susceptible to changes in U.S. trade policy, particularly toward China. The company also faces risks from changes in consumer spending levels and shopping behaviors affected by many external macroeconomic factors including elevated consumer costs of living, relative wage rates, unemployment levels, availability of consumer credit, consumer debt levels, income tax rates, and various government policies.

The company faces material risks from changes in U.S. trade policy, as more than half of the goods it sells originate from China, making it especially susceptible to tariff increases that could significantly increase cost of goods and reduce profitability. The company's growth strategy depends on successfully expanding in existing and new geographic markets, and stores opened in new markets may not reach expected sales and profit levels, may have higher costs, and may face competitive conditions and consumer tastes that are more difficult to predict. The company depends on the continuous availability of attractive brand name merchandise at desirable discounts, and to the extent that vendors better manage inventory levels or decide not to sell to the company, the amount of high quality merchandise available could be materially reduced. A natural or man-made disaster in regions where the company has a concentration of stores could harm the business, as approximately half of distribution center and warehouse capacity, approximately 22% ⁵³ of stores, and the corporate headquarters are located in California, and the states of California, Texas, and Florida together include almost 50% ⁵⁴ of stores.

Management's message emphasizes that the company's initiatives and focus on providing merchandise that resonates with customers remain central to supporting efforts to drive sustainable, profitable growth. Management notes that while the company believes its key initiatives are contributing positively to the business, there remains uncertainty in the broader environment, and the company continues to monitor ongoing macroeconomic factors such as tariffs, inflation, and geopolitical conditions. Management expects operating income as a percentage of sales to be slightly higher in fiscal 2026 than in fiscal 2025, reflecting higher merchandise margin and lower distribution costs, partially offset by higher store-related costs related to key initiatives. Management expects to open approximately 110 ⁵⁵ new stores in fiscal 2026, which represents 5% ⁵⁶ growth, with 85 ⁵⁷ Ross stores and 25 ⁵⁸ dd's DISCOUNTS stores planned. Capital expenditures for fiscal 2026 are projected to be approximately $1.1 billion ⁵⁹.