# Ross Stores (ROST)

**Exchange:** NASDAQ  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-10  
**Report type:** Primer (steps 1–3 of 19)  
**API endpoint:** GET /api/v1/research/ROST/primer

## Financial Snapshot

# Step 8: Revenue Breakdown & Growth Drivers — Ross Stores (ROST)

**Date:** March 6, 2026
**Current Price:** $212.48 | **LTM Revenue:** $22,751M | **Store Count:** 2,267

---

## 8.1 Revenue by Segment / Brand

Ross Stores reports as a **single operating segment** and does not break out revenue between Ross Dress for Less and dd's DISCOUNTS in its SEC filings. However, we can derive estimates from store count data and management commentary.

### Store Count History (Fiscal Year-End)

| Fiscal Year | Ross Dress for Less | dd's DISCOUNTS | Total Stores | Net Adds | States |
|---|---|---|---|---|---|
| FY2015 (Jan 2016) | 1,274 | 172 | 1,446 | +84 | 34+DC |
| FY2016 (Jan 2017) | 1,340 | 193 | 1,533 | +87 | 36+DC |
| FY2017 (Feb 2018) | 1,409 | 213 | 1,622 | +89 | 37+DC |
| FY2018 (Feb 2019) | 1,480 | 237 | 1,717 | +95 | 38+DC |
| FY2019 (Feb 2020) | 1,546 | 259 | 1,805 | +88 | 39+DC |
| FY2020 (Jan 2021) | 1,585 | 274 | 1,859 | +54 | 40+DC |
| FY2021 (Jan 2022) | 1,628 | 295 | 1,923 | +64 | 40+DC |
| FY2022 (Jan 2023) | 1,693 | 322 | 2,015 | +92 | 40+DC |
| FY2023 (Jan 2024) | 1,764 | 345 | 2,109 | +94 | 43+DC |
| FY2024 (Feb 2025) | 1,831 | 355 | 2,186 | +77 | 43+DC |
| FY2025 (Jan 2026) | 1,904 | 363 | 2,267 | +81 | 44+DC |

**Sources:** Ross Stores FY2015-FY2025 Q4 earnings releases; SEC 10-K filings (CIK 0000745732).

### Estimated Revenue by Brand (FY2025)

dd's DISCOUNTS stores are smaller format (~22,000 sq ft vs. ~25,000-30,000 for Ross) and serve a lower-income demographic with lower price points, implying lower revenue per store.

| Metric | Ross Dress for Less | dd's DISCOUNTS | Total |
|---|---|---|---|
| Store Count (FY2025) | 1,904 | 363 | 2,267 |
| Store Mix (%) | 84% | 16% | 100% |
| Est. Avg Revenue/Store ($M) | ~$10.5 | ~$6.5 | ~$10.0 |
| Est. Segment Revenue ($M) | ~$19,990 | ~$2,360 | $22,751 |
| Est. Revenue Share (%) | ~88% | ~12% | 100% |

**Key assumptions:** Ross Dress for Less generates ~$10.5M per store (consistent with ~$430/sq ft on ~25,000 sq ft selling area). dd's DISCOUNTS generates ~$6.5M per store given smaller format and lower price points. Management has noted dd's posted "healthy sales gains above Ross" in recent years, suggesting dd's comp growth runs 200-400bps above Ross.

### Revenue and Store Count Growth by Brand

| Period | Ross Store CAGR | dd's Store CAGR | Total Store CAGR |
|---|---|---|---|
| FY2015-FY2025 (10 years) | 4.1% | 7.8% | 4.6% |
| FY2019-FY2025 (6 years) | 3.5% | 5.8% | 3.9% |

**dd's growth drivers:** dd's DISCOUNTS is the faster-growing concept, with nearly double the store count CAGR of Ross. Management accelerated dd's openings to 25 planned for FY2026 (vs. ~10 in FY2025), reflecting increased confidence following merchandising improvements and availability of former Rite Aid locations.

---

## 8.2 Revenue by Product Category

Ross discloses product category mix as a percentage of sales in its 10-K filings. Dollar amounts are not reported by category.

### Product Category Sales Mix (FY2024 10-K, Year Ended Feb 1, 2025)

| Category | % of Sales | Est. Revenue ($M) | Trend (5-Year) |
|---|---|---|---|
| Home Accents & Bed and Bath | 26% | ~$5,495 | Stable; largest category since ~2020 |
| Ladies | 22% | ~$4,649 | Declining share (was 33% in FY2000) |
| Men's | 16% | ~$3,381 | Steady |
| Accessories, Lingerie, Fine Jewelry & Cosmetics | 15% | ~$3,170 | Cosmetics standout performer |
| Shoes | 12% | ~$2,536 | Growing; best performer in FY2025 |
| Children's | 9% | ~$1,902 | Unchanged at ~9% for decades |
| **Total** | **100%** | **$21,133** | |

### Product Category Mix Through 9 Months of FY2025 (Nov 1, 2025)

| Category | % of Sales | Direction vs. FY2024 |
|---|---|---|
| Home Accents & Bed and Bath | 25% | -1pp (tariff headwinds) |
| Ladies | 23% | +1pp (juniors strong) |
| Men's | 16% | Flat |
| Accessories, Lingerie, Fine Jewelry & Cosmetics | 14-15% | Flat |
| Shoes | 13% | +1pp (best performer) |
| Children's | 9% | Flat |

### Category Mix Evolution — 20-Year Shift

| Category | FY2000 | FY2024 | Change |
|---|---|---|---|
| Ladies | 33% | 22% | -11pp (significant decline) |
| Home Accents & Bed/Bath | 17% | 26% | +9pp (now #1 category) |
| Men's | 21% | 16% | -5pp |
| Accessories/Jewelry/Cosmetics | 12% | 15% | +3pp |
| Children's | 9% | 9% | Flat |
| Shoes | 8% | 12% | +4pp |

**Key insight:** Home has grown from ~17% to ~26% of sales over two decades — a major strategic diversification that reduces dependence on apparel cycles.

### Growth Drivers & Risks by Category

| Category | Growth Drivers | Risks |
|---|---|---|
| **Home (26%)** | Department store closures (Bed Bath liquidation); trade-down from HomeGoods/Pottery Barn; broad assortment | Tariff exposure (imported goods); Amazon competition; bulky items harder to source opportunistically |
| **Ladies (22%)** | Juniors segment "particularly strong"; trade-down from Nordstrom/Macy's; trend-driven purchases | Fashion risk (wrong trends = markdowns); Amazon apparel growth; fast fashion (Shein, Temu) competition |
| **Men's (16%)** | Steady demand; branded basics; less fashion risk than ladies | Slower growth category; limited differentiation vs. TJX/BURL |
| **Accessories/Cosmetics (15%)** | Cosmetics is a standout performer; high-margin impulse buys; fine jewelry draws affluent trade-down | Counterfeiting/shrinkage risk on small high-value items; Ulta/Sephora competition in cosmetics |
| **Shoes (12%)** | Fastest-growing category; branded athletic shoes at deep discounts; DSW/Famous Footwear closures | Sizing/returns complexity; Nike DTC shift could limit off-price supply |
| **Children's (9%)** | Stable, recession-resistant (kids outgrow clothes); repeat purchase cycle | Stagnant share for 20+ years; limited growth catalyst |

**FY2025 Q4 Earnings Call Highlights:**
- **Best performers:** Shoes and Cosmetics
- **Ladies:** Continued strength; juniors "particularly strong"
- **Home:** "Sequential improvement" after tariff headwinds; dd's had "vibrant home" business
- **Outerwear:** "Bigger business for us this quarter than it has been"

---

## 8.3 Revenue by Geography

Ross Stores operates **exclusively in the United States** (plus Guam and Puerto Rico). There are no international operations.

### Store Concentration by State (FY2024-FY2025 Data)

| Rank | State | Approx. Stores | % of Total | Pop. per Store |
|---|---|---|---|---|
| 1 | California | ~339 | ~19% | ~116,600 |
| 2 | Texas | ~226 | ~13% | ~128,300 |
| 3 | Florida | ~202 | ~11% | ~109,400 |
| 4 | Illinois | ~85 | ~5% | — |
| 5 | Arizona | ~69 | ~4% | — |
| 6 | Georgia | ~60 | ~3% | — |
| 7 | Pennsylvania | ~52 | ~3% | — |
| 8 | North Carolina | ~49 | ~3% | — |
| 9 | Washington | ~48 | ~3% | — |
| 10 | Virginia | ~42 | ~2% | — |
| | All Other (34 states) | ~1,095 | ~35% | — |
| | **Total** | **~2,267** | **100%** | |

**Top 3 states (CA, TX, FL) = ~43% of all stores.** This geographic concentration is a key risk factor — a state-level recession, natural disaster, or regulatory change in any of these three states would disproportionately impact results.

### Geographic Growth Drivers & Risks

| Region | % of Stores | Growth Driver | Risk |
|---|---|---|---|
| **Sun Belt (CA, TX, FL, AZ, GA)** | ~50% | Population growth; core market; strong brand recognition | Over-penetration; natural disaster exposure; CA regulatory cost |
| **Midwest (IL, OH, MI, IN)** | ~10% | Underpenetrated; new market entry; strong initial productivity | Weaker population growth; less brand awareness; weather risk |
| **Northeast (PA, NY, NJ, CT)** | ~8% | High population density; affluent trade-down customers; new NY Metro stores "very strong" | High real estate costs; union labor markets; entrenched TJX presence |
| **Southeast (NC, VA, TN, SC)** | ~12% | Growing populations; affordable real estate; favorable demographics | Increasing competition from BURL expansion |
| **West/Mountain (WA, OR, CO, NV)** | ~10% | Established markets; steady performance | Limited runway for additional stores |

### Recent Expansion Milestones
- **FY2025:** First stores in New York Metro area and Puerto Rico — "very strong" initial performance
- **FY2024-25:** Expanded into Michigan (new market)
- **FY2026 plan:** 110 new stores (85 Ross + 25 dd's), with emphasis on Midwest and Northeast

**Geographic concentration risk is partially mitigated** by the diversification trend — Ross has gone from 34 states to 44 states over 10 years, and the top 3 state share has been gradually declining as newer markets grow faster.

---

## 8.4 Customer Demographics

### Target Customer Profile

| Attribute | Ross Dress for Less | dd's DISCOUNTS |
|---|---|---|
| **Primary Age** | 25-54 years old | 25-44 years old |
| **Growing Cohort** | 18-34 (juniors, young men's) | Similar |
| **Gender** | ~75-80% female | ~80% female |
| **Household Income** | $35,000-$75,000 | $25,000-$50,000 |
| **Education** | Broad; value-conscious across income | Skews toward non-college |
| **Visit Frequency** | 2-3x per month | 2-3x per month |
| **Average Basket** | ~$30-35 per transaction | ~$25-28 (est.) |
| **Average Item Price** | ~$10 | ~$8 (est.) |

### Customer Trends (FY2025)
- Growth "broad-based across income demographics and age demographics, including 18- to 34-year-old customers"
- Comp growth "driven mainly by an increase in transactions and customers with a modest increase in basket"
- Trade-down from department stores continues — TJX reports "record influxes of high-income shoppers"
- 87% of financially stressed shoppers plan to use discount stores (Bank of America survey)

---

## 8.5 Store Economics

### Revenue per Store — 10-Year History

| Fiscal Year | Revenue ($B) | Avg Store Count* | Rev/Store ($M) | YoY Change |
|---|---|---|---|---|
| FY2015 | $11.94 | 1,404 | $8.5 | — |
| FY2016 | $12.87 | 1,490 | $8.6 | +1.8% |
| FY2017 | $14.13 | 1,578 | $9.0 | +3.7% |
| FY2018 | $15.00 | 1,670 | $9.0 | 0.0% |
| FY2019 | $16.04 | 1,761 | $9.1 | +1.1% |
| FY2020 | $12.53 | 1,832 | $6.8 | -25.3% (COVID) |
| FY2021 | $18.92 | 1,891 | $10.0 | +47.1% (recovery) |
| FY2022 | $18.70 | 1,969 | $9.5 | -5.0% |
| FY2023 | $20.38 | 2,062 | $9.9 | +4.2% |
| FY2024 | $21.10 | 2,148 | $9.8 | -0.5% |
| FY2025 | $22.80 | 2,227 | $10.2 | +4.1% |

*Avg store count = (beginning + ending) / 2*

**10-Year Rev/Store CAGR: 2.0%** ($8.5M → $10.2M). Post-recovery, revenue per store exceeded pre-COVID levels by ~12%.

### Unit Economics Summary

| Metric | Ross Dress for Less | dd's DISCOUNTS | Blended |
|---|---|---|---|
| Avg Gross Square Footage | ~28,000 sq ft | ~22,000 sq ft | ~27,000 sq ft |
| Avg Selling Square Footage | ~23,000-25,000 sq ft | ~18,000 sq ft (est.) | ~22,000-24,000 sq ft |
| FY2025 Revenue per Store ($M) | ~$10.5 (est.) | ~$6.5 (est.) | ~$10.0 |
| Revenue per Selling Sq Ft | ~$420-$450 (est.) | ~$360 (est.) | ~$410-$430 |
| Est. 4-Wall EBITDA Margin | 20-25% | 15-20% (est.) | 18-23% |
| New Store Productivity (Yr 1) | 70-75% of mature store | 70-75% of mature store | — |
| Time to Maturity | 3-5 years | 3-5 years | — |

### New Store Economics
- FY2026 plan: 110 new stores (85 Ross + 25 dd's) = ~5% unit growth
- Management guidance: "70% to 75% new store productivity" in Year 1
- FY2025 described as "one of our best years in a while" for new store performance
- New stores in Northeast and Midwest markets showing "very strong" productivity, validating the expansion thesis

---

## 8.6 Growth Drivers — Detailed Analysis

### A. Store Expansion Runway (Primary Driver — ~65% of Revenue Growth)

| Metric | Current (FY2025) | Long-Term Target | Remaining | Growth (%) |
|---|---|---|---|---|
| Ross Dress for Less | 1,904 | 2,900 | 996 | +52% |
| dd's DISCOUNTS | 363 | 700 | 337 | +93% |
| **Total** | **2,267** | **3,600** | **1,333** | **+59%** |

At the current pace of ~90-110 new stores/year, the runway provides **12-15 years of unit growth**. FY2026 guidance of 110 new stores represents an acceleration to ~5% unit growth (from ~3.7% in FY2025).

**Risks to store expansion:**
- Diminishing returns as newer markets may have lower population density and weaker brand recognition
- Competition for prime retail real estate from Burlington (100+ stores/yr), TJX (~90/yr), and Nordstrom Rack
- Construction cost inflation and permitting delays
- Cannibalization of existing stores as density increases in mature markets

### B. Comparable Store Sales (Secondary Driver — ~35% of Revenue Growth)

| Period | Average Annual Comp | Primary Driver |
|---|---|---|
| FY2015-FY2019 (Pre-COVID) | +3.8% | Traffic + modest ticket growth |
| FY2022-FY2025 (Post-COVID) | +2.3% (incl. FY2022 -4%) | Transaction recovery + trade-down |
| FY2023-FY2025 (Normalized) | +4.3% | Strong execution + consumer shift |
| FY2026 Guidance | +3% to +4% | Conservative (historical beat by ~240bps) |

**Comp growth decomposition:** Management stated FY2025 comp growth was "driven mainly by an increase in transactions and customers with a modest increase in basket" — i.e., traffic-led, which is healthier than ticket-led growth.

**Risks to comp growth:**
- Recession could reduce even trade-down spending if consumers eliminate discretionary purchases entirely
- Competition from TJX, Burlington, and digital off-price (ThredUp, Poshmark) could cap comp gains
- Post-COVID consumer behavior still normalizing — elevated FY2025 comps may not be sustainable

### C. dd's DISCOUNTS Acceleration

dd's is the higher-growth concept with the most runway:
- Long-term target: 700 stores (vs. 363 today) = 93% growth potential
- Currently in only 22 states — significant white space
- Benefiting from Rite Aid and other retail bankruptcies freeing real estate
- FY2026 plan accelerates dd's openings to 25 (from ~10 in FY2025)
- Comps have consistently outperformed Ross Dress for Less by 200-400bps
- Targets lower-income demographic that is most responsive to trade-down trends

**Risks to dd's growth:**
- Lower-income customer is most vulnerable to macro downturns
- Smaller store format limits category assortment vs. Ross
- Dollar stores (Dollar General, Dollar Tree) compete for the same demographic
- Lower revenue per store means dd's stores contribute less to total revenue per incremental unit

### D. New Market Entry

| Market | Status | Opportunity |
|---|---|---|
| New York Metro | Entered FY2025; "very strong" | Large, high-density market; premium trade-down |
| Puerto Rico | Entered FY2025 | Underserved off-price market |
| Michigan | Entered FY2024-25 | Large Midwest state; underpenetrated |
| Upper Midwest (WI, MN, IA) | Not yet entered | Population of ~15M with few off-price options |
| New England (CT, MA, NH, VT, ME) | Limited presence | ~15M population; high-income trade-down potential |

### E. Structural / Secular Tailwinds

1. **Department store closures:** Macy's closing 150 stores by FY2026; Kohl's closing 27; Forever 21 and Joann liquidated — frees both inventory and customers
2. **Tariff disruption:** Creates excess branded inventory that feeds directly into off-price buying channels
3. **Consumer trade-down:** 87% of financially stressed shoppers plan to use discount stores (BofA)
4. **Generational shift:** Gen Z and millennials embrace off-price as "smart shopping" — cultural tailwind
5. **Real estate availability:** Retail bankruptcies (Rite Aid, Bed Bath, etc.) provide prime locations at favorable rents

---

## 8.7 CAGR Calculations

### Total Revenue CAGR

| Period | Start Revenue | End Revenue | Years | CAGR |
|---|---|---|---|---|
| FY2015 - FY2025 | $11,940M | $22,751M | 10 | **6.7%** |
| FY2019 - FY2025 | $16,039M | $22,751M | 6 | **6.0%** |
| FY2014 - FY2025 | $11,042M | $22,751M | 11 | **6.8%** |

### Store Count CAGR

| Period | Start | End | Years | CAGR |
|---|---|---|---|---|
| FY2015 - FY2025 (Total) | 1,446 | 2,267 | 10 | **4.6%** |
| FY2015 - FY2025 (Ross only) | 1,274 | 1,904 | 10 | **4.1%** |
| FY2015 - FY2025 (dd's only) | 172 | 363 | 10 | **7.8%** |

### Revenue per Store CAGR

| Period | Start Rev/Store | End Rev/Store | Years | CAGR |
|---|---|---|---|---|
| FY2015 - FY2025 | $8.5M | $10.2M | 10 | **2.0%** |
| FY2019 - FY2025 | $9.1M | $10.2M | 6 | **2.0%** |

### Revenue Growth Decomposition

| Driver | Contribution to Revenue CAGR | 10-Year CAGR |
|---|---|---|
| Store count growth | ~65% | 4.6% |
| Revenue per store growth (comp + mix) | ~35% | 2.0% |
| **Total revenue growth** | **100%** | **6.7%** |

This confirms Ross Stores' growth is predominantly **unit-driven** (~65% from new stores) with a meaningful contribution from same-store productivity improvements (~35%). This is a healthy, repeatable growth profile that is less dependent on pricing power and more on disciplined execution of a proven store model.

### Forward Revenue CAGR Implied by DCF Assumptions

| Scenario | FY2025 Revenue | FY2035 Revenue (Yr 10) | Implied 10-Yr CAGR |
|---|---|---|---|
| Conservative | $22,751M | $33,182M | 3.8% |
| Base | $22,751M | $40,527M | 5.9% |
| Growth-Oriented | $22,751M | $44,097M | 6.8% |
| Extreme Bear | $22,751M | $33,182M | 3.8% |

The Base Case forward CAGR of 5.9% is modestly below the historical 10-year CAGR of 6.7%, reflecting expected deceleration as the store base grows and comp growth normalizes. This appears reasonable given the 1,333-store expansion runway and consistent 3-5% comp growth history.

---

## 8.8 Summary of Key Findings

1. **Single segment reporting** — Ross does not break out Ross vs. dd's revenue. Estimated split: Ross Dress for Less ~88% ($20.0B), dd's DISCOUNTS ~12% ($2.4B).

2. **Home is now the #1 category** at 25-26% of sales, having surpassed Ladies (22-23%) over the past two decades. This diversification reduces apparel cycle dependence.

3. **Geographic concentration risk** — Top 3 states (CA, TX, FL) represent ~43% of stores. However, expansion into Midwest and Northeast is diluting this concentration, and new markets are showing "very strong" productivity.

4. **Enormous store expansion runway** — 1,333 stores remaining to reach the 3,600 target (+59% growth), providing 12-15 years of unit growth at the current ~100 stores/year pace.

5. **10-year revenue CAGR of 6.7%**, driven ~65% by new stores and ~35% by same-store productivity. The 6-year CAGR (FY2019-FY2025) is 6.0%, reflecting COVID disruption.

6. **dd's DISCOUNTS is the higher-growth concept** — 7.8% store count CAGR (vs. 4.1% for Ross) with comp growth consistently 200-400bps above the larger banner. FY2026 accelerates dd's openings to 25.

7. **Store economics are strong** — ~$10M revenue per store, ~$420-450 revenue per selling sq ft, estimated 20-25% 4-wall EBITDA margins. New stores achieve 70-75% productivity in Year 1.

8. **Forward growth is well-supported** — The Base Case DCF's 5.9% revenue CAGR is conservative relative to the historical 6.7%, and the store expansion runway, secular off-price tailwinds, and consistent comp growth provide high visibility.

---

*Step 8 Complete. Ross Stores' revenue growth is driven by a predictable, unit-economics-driven model: ~90-110 new stores per year contributing ~65% of growth, plus 3-5% annual comp sales providing the remaining ~35%. The company has 1,333 stores of expansion runway to its 3,600-store target, providing 12-15 years of visible organic growth. dd's DISCOUNTS is emerging as the higher-growth concept (93% store growth remaining vs. 52% for Ross). Key risks are geographic concentration (43% in 3 states), margin pressure from wages/shrinkage, and increasing competition from TJX, Burlington, and Nordstrom Rack.*

## Recent Catalysts

# Step 15 — News Impact Analysis: Ross Stores (ROST)

**Date:** March 6, 2026
**Period Covered:** September 2025 — March 2026
**Last Major Event:** Q4 FY2025 Earnings (March 3, 2026)

---

## 1. Comprehensive News Summary (September 2025 — March 2026)

### A. CEO Jim Conroy — First Full Year in Charge

**Background:** James G. Conroy joined Ross as CEO in February 2025, recruited from Boot Barn (BOOT) where he was CEO. He received a ~$75M total first-year compensation package including $7.6M sign-on bonus, $32.2M restricted stock, and $8M performance-contingent RSUs.

**Key Strategic Actions & Announcements:**
- **Improved merchandising:** Credited with driving better buying, stronger assortments in ladies, men's, cosmetics, and shoes; center-core categories showed sequential improvement
- **Marketing effectiveness:** Enhanced marketing campaigns (unchanged spend rate but higher customer awareness/engagement); impact visible starting back-to-school season
- **Store execution:** "Test and learn" approach to payroll investments targeting high-volume activities like store recovery and register throughput
- **Self-checkout expansion:** Piloted in select stores with positive results; expansion across the fleet authorized for 2026
- **Accelerated store growth:** Increased dd's DISCOUNTS openings from 10 to 25 stores; overall 110 new stores planned (vs. 90 in FY2025)
- **AUR strategy shift:** Gaining confidence in shifting assortment to slightly higher-priced goods (new items, not like-for-like price increases) to recapture margin

**Assessment:** Conroy has delivered a strong first year. The Q4 results — 9% comp growth, record sales — validate the early initiatives. He brings a fresh "growth" orientation vs. the historically conservative Ross culture. The market rewarded this with a 7-8% stock surge post-earnings.

**Model Impact:** Positive. Supports the case for sustainable mid-single-digit comps and margin expansion. Consider raising near-term comp assumptions by 50-100 bps.

---

### B. Q4 FY2025 Earnings Results (Announced March 3, 2026)

| Metric | Q4 FY2025 | Consensus | Beat/Miss |
|--------|-----------|-----------|-----------|
| **Revenue** | $6.64B | $6.42B | **+$220M beat (+3.4%)** |
| **Comparable store sales** | +9% | ~+5-6% est. | **Significant beat** |
| **EPS** | $2.00 | $1.90 | **+$0.10 beat** |
| **Full-year FY2025 EPS** | $6.61 | — | vs. $6.32 FY2024 (+4.6% YoY) |
| **Full-year FY2025 revenue** | $22.8B (record) | — | +12% YoY |

**Key Takeaways:**
1. **Comp drivers:** Higher transactions and customer counts (traffic-driven), with only modest increase in basket size — healthy comp composition
2. **Strongest categories:** Shoes and cosmetics
3. **Strongest regions:** Midwest and Mountain states
4. **Merchandise margin:** Improved, driven by "better buying" — off-price's core value-creation lever
5. **Dividend:** Increased 10% to $0.445/quarter ($1.78 annualized)
6. **Buyback:** New $2.55B two-year authorization (FY2026-2027), 21% increase vs. prior program
7. **Stock reaction:** Surged ~8% to new 52-week high of $213.52 on March 4-5

**Model Impact:** Very material. Revenue came in well above consensus, suggesting the model's top-line assumptions may need upward revision. The 9% Q4 comp is exceptional for a mature retailer and reflects both secular off-price tailwinds and company-specific execution.

---

### C. FY2026 Guidance

| Metric | FY2026 Guidance | Commentary |
|--------|----------------|------------|
| **Q1 comp sales** | +7% to +8% | Implies very strong start to spring; management noted "very strong start to the spring season" |
| **Q1 EPS** | $1.60 to $1.67 | |
| **Q1 total sales growth** | +10% to +12% | Includes new store contribution |
| **Full-year comp sales** | +3% to +4% | Conservative vs. FY2025's trajectory; typical Ross sandbagging |
| **Full-year EPS** | $7.02 to $7.36 | Midpoint $7.19 = +8.8% YoY growth |
| **Full-year total sales growth** | +5% to +7% | |
| **Operating margin** | 12.0% to 12.3% | vs. 11.9% in FY2025; expansion driven by merchandise margin + lower distribution costs |
| **CapEx** | ~$1.1B | Supply chain, store maintenance, self-checkout |
| **New stores** | 110 (85 Ross + 25 dd's) | 5% unit growth |

**Model Impact:** The FY2026 guide is above consensus expectations and confirms the margin expansion thesis. The Q1 guide of +7-8% comps is especially bullish. However, full-year +3-4% may be sandbagged — Ross historically guides conservatively and beats. Model should use +4-5% comps for base case.

---

### D. Store Expansion Plans

- **FY2026:** 110 new stores (85 Ross Dress for Less + 25 dd's DISCOUNTS)
- **FY2025 actual:** 90 new stores opened, 9 closed; ended year at **2,267 total stores**
- **Long-term target:** **3,600 stores** (2,900 Ross + 700 dd's) — implies ~1,333 stores of remaining whitespace (~59% growth from current base)
- **dd's DISCOUNTS acceleration:** From 10 openings in FY2025 to 25 in FY2026 — signals renewed confidence in the dd's concept
- **New Arizona DC:** Opened in 2025, supporting Western expansion; features solar canopies

**Model Impact:** The 3,600-store long-term target is a significant growth runway. At 110 stores/year, reaching 3,600 would take ~12 years. This supports a long-duration growth story. The dd's acceleration is incrementally positive — historically underinvested.

---

### E. Tariff Impact

- **FY2025 total tariff cost:** ~$0.16/share (~$54M pre-tax estimate)
- **Q3 FY2025:** ~$0.05/share negative impact, partially offset by better buying
- **Q4 FY2025:** Tariff-related costs "negligible"
- **FY2026 outlook:** Expects to recapture some tariff pressure from FY2025 through better buying and selective AUR increases
- **Structural exposure:** >50% of merchandise originates in China (though Ross is primarily an indirect importer purchasing from brands/manufacturers)
- **Off-price advantage:** Tariffs create market dislocation that increases available off-price inventory as brands seek to move displaced/excess goods — net tailwind

**Model Impact:** Tariffs are a **net positive for off-price** long-term despite short-term cost headwinds. The $0.16/share FY2025 impact was manageable and declining. FY2026 guide already embeds tariff assumptions. No model adjustment needed unless tariff regime changes dramatically.

---

### F. Analyst Upgrades/Downgrades (Post Q4 Earnings)

| Firm | Action | Rating | Price Target | Notes |
|------|--------|--------|-------------|-------|
| **Telsey Advisory** | **Upgrade** | Market Perform → **Outperform** | $240 | Significant upgrade post-earnings |
| **Guggenheim** | Target raise | Buy | $226 | Maintained buy |
| **Barclays** | Target raise | — | $221 | Lifted target |
| **Wells Fargo** | Target raise | Overweight | $235 | Forecasts strong price appreciation |
| **Zacks** | **Downgrade** | Strong Buy → Hold | — | Contrarian; may reflect valuation concern post-surge |

**Consensus:** 17 Buy, 5 Hold, 0 Sell — **Moderate Buy** consensus, average PT $199.28 (likely stale pre-earnings; post-earnings targets clustering $220-240)

**Model Impact:** Broad analyst endorsement post-earnings. The Telsey upgrade is notable as a notable Street voice moving to bullish. Post-earnings targets suggest Street sees $220-240 as fair value range.

---

### G. Management Changes (Beyond CEO)

| Change | Details | Date |
|--------|---------|------|
| **CFO transition** | Adam Orvos retired Sept 30, 2025; replaced by **William Sheehan** (promoted from Group SVP of Finance; 20-year Ross veteran) | Oct 1, 2025 |
| **Board Chair transition** | Michael Balmuth stepped down as Executive Chairman Jan 31, 2026; replaced by **K. Gunnar Bjorklund** (independent director since 2003, Lead Independent Director since 2023) | Feb 1, 2026 |
| **COO** | Michael Hartshorn continues as Group President & COO (board member since 2021) | No change |

**Assessment:** The CFO transition to an internal candidate (Sheehan) provides continuity. The Board Chair transition from Balmuth (company insider) to Bjorklund (independent) is a **governance positive** — shifts to a fully independent chairman model. No red flags.

**Model Impact:** Neutral to slightly positive. Continuity in finance function; improved governance optics.

---

### H. Competitor News Affecting ROST

| Competitor | News | Impact on ROST |
|-----------|------|---------------|
| **TJX Companies** | Market leader with ~68% off-price share; strong 2025 results; aggressive international expansion | Validates off-price secular trend; ROST benefits from same macro tailwinds |
| **Burlington Stores** | Shifting to smaller store formats; plans 400 net new stores over 4 years; -5.5% stock YTD | Burlington's smaller format enters urban areas where Ross is dominant — modest competitive pressure |
| **Macy's** | Closing 150 underperforming stores by 2026 (announced 2024) | **Direct tailwind** — displaced Macy's shoppers are prime off-price converts |
| **Kohl's** | Closed 27 underperforming stores by April 2025 | **Direct tailwind** — same dynamic as Macy's closures |
| **Department stores broadly** | Continued secular decline accelerating in 2025-2026 | Structural market share shift to off-price accelerating |

**Model Impact:** Highly favorable competitive backdrop. Department store closures create a multi-year tailwind of customer acquisition for off-price. Burlington's small-format strategy is worth monitoring but not an immediate threat.

---

### I. Legal/Regulatory Developments

- **FLSA overtime class action:** Ongoing (see Step 14); no major new developments in the period
- **No new material litigation disclosed** in Q4 earnings or 10-K
- **UFLPA compliance:** Ongoing supply chain monitoring given China-origin merchandise concentration; no enforcement actions against Ross
- **SEC climate disclosure:** Evolving rules could require more comprehensive environmental reporting; Ross not yet preparing for Scope 3 disclosure

---

## 2. Materiality Assessment — Model Adjustment Recommendations

| News Item | Materiality | Model Adjustment |
|-----------|------------|------------------|
| **Q4 earnings beat** | **HIGH** | Raise FY2026 revenue assumption by 2-3%; confirm margin expansion trajectory |
| **FY2026 guidance (+3-4% comps)** | **HIGH** | Use +4-5% base case (historically sandbagged); EPS midpoint $7.19 as floor |
| **New CEO execution** | **HIGH** | Improved execution supports higher sustainable comp trajectory; reduce execution discount |
| **110 new stores in FY2026** | **MEDIUM** | Unit growth already in model at ~5%; confirm dd's acceleration |
| **$2.55B buyback** | **MEDIUM** | ~3.5% of market cap over 2 years; incorporate into share count decline |
| **10% dividend increase** | **LOW** | Confirms shareholder return commitment; immaterial to valuation |
| **Department store closures** | **MEDIUM** | Supports elevated near-term comps (+100-200 bps tailwind) |
| **Tariff recapture** | **LOW** | Modest FY2026 margin tailwind; already in guidance |
| **Analyst upgrades** | **LOW** | Sentiment indicator, not a model input |
| **Management transitions** | **LOW** | Internal promotions = continuity |

---

## 3. Pending Catalysts — Next 6-12 Months

| Catalyst | Expected Timing | Potential Impact |
|----------|----------------|------------------|
| **Q1 FY2026 earnings** | Early June 2026 | Guide implies +7-8% comps — beat would confirm momentum; HIGH impact |
| **Self-checkout fleet-wide rollout** | Throughout FY2026 | Labor productivity gains; potential 20-40 bps margin benefit at scale |
| **New tariff developments** | Ongoing (trade policy dependent) | Additional China tariffs = more off-price inventory availability (tailwind) |
| **dd's DISCOUNTS performance** | Quarterly updates | 25 new stores = meaningful data on long-term dd's potential |
| **Jim Conroy's first Investor Day** | Not yet announced (likely 2026-2027) | Could reset long-term financial targets; potential re-rating catalyst |
| **Department store closures accelerating** | 2026-2027 | Macy's 150 closures by 2026 deadline; potential incremental traffic gains |
| **Potential SBTi validation** | 2026-2027 | Would improve ESG positioning and potentially expand investor base |
| **Index rebalancing / ESG fund inclusion** | Ongoing | Improved ESG scores could drive passive inflow |
| **Share repurchase execution** | FY2026-2027 | $2.55B program = ~$1.3B/year in buybacks; accretive to EPS |
| **Consumer spending environment** | Macro-dependent | Recession risk = off-price tailwind (trade-down effect); strong economy = spending tailwind |

---

## Summary

The last six months have been overwhelmingly positive for Ross Stores. The new CEO has delivered execution improvements visible in record Q4 results (9% comps, $6.64B revenue, $2.00 EPS — all above expectations). FY2026 guidance is strong, the capital return program has been significantly expanded, and the competitive backdrop (department store closures, tariff-driven inventory availability) is highly favorable.

**Net news impact on model: POSITIVE.** The key adjustments are:
1. **Raise near-term comp assumptions** by 50-150 bps given demonstrated momentum and Q1 guide
2. **Confirm operating margin expansion** to 12%+ for FY2026
3. **Maintain 5% annual unit growth** assumption with upside from dd's acceleration
4. **Factor in ~1.5-2% annual share count reduction** from buyback program

The primary risks to monitor are: (1) whether the +9% Q4 comp is a one-time spike or sustainable trajectory, (2) any material escalation in tariff costs beyond guidance, and (3) Burlington's competitive positioning in urban markets. None of these risks are sufficient to offset the overwhelmingly positive news flow.

**Biggest upcoming catalyst:** Q1 FY2026 earnings (June 2026) — the +7-8% comp guide sets a high bar. A beat would confirm the thesis that Conroy has structurally improved execution; a miss would raise questions about sustainability.

## Full Research Available

This primer covers steps 1–3 of 19. The full deep dive (moat analysis, DCF, bull/bear,
management quality, earnings transcript analysis) is available via:

- Investment memo: /memo/rost
- Full research API: GET /api/v1/research/ROST/memo
- Coverage universe: /stocks