ROSS STORES, INC. ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Ross Stores, Inc. filed its annual report for the fiscal year ended January 31, 2026, reporting a market value of $43.69 billion for its voting common stock held by non-affiliates as of August 2, 2025. The company’s outstanding shares of common stock totaled 322.36 million as of March 9, 2026. The report does not provide detailed financial information, but it does indicate that the company is a large accelerated filer and has filed all required reports with the Securities and Exchange Commission (SEC) during the preceding 12 months. The report also notes that the company has elected not to use the extended transition period for complying with new or revised financial accounting standards.
Store Openings and Expansion
The company continued its steady expansion in fiscal 2025, opening 90 new stores across its Ross Dress for Less and dd’s DISCOUNTS brands. This included entering new geographic markets like Puerto Rico and the New York Metro area. The total number of stores at the end of fiscal 2025 was 2,267, a 4% increase from the prior year. The company’s total selling square footage also grew by 3% to 45.1 million square feet.
Looking ahead, the company plans to open around 110 new stores in fiscal 2026, representing 5% growth. This will include 85 new Ross stores and 25 new dd’s DISCOUNTS stores, reflecting an acceleration of growth for the dd’s DISCOUNTS brand. The company’s long-term strategy is to continue expanding its store base based on factors like market penetration, demographics, competition, and the ability to leverage overhead expenses.
Sales Performance
The company reported strong sales growth in fiscal 2025, with total sales increasing 8% to $22.75 billion. This was driven by a 5% increase in comparable store sales, which the company attributes to a 3% increase in average basket size and a 2% increase in customer traffic.
The company’s sales mix remained relatively stable, with the largest categories being Home Accents and Bed and Bath (26% of sales), Ladies (22%), and Men’s (15%). The Accessories, Lingerie, Fine Jewelry, and Cosmetics category also represented 15% of sales.
Profitability and Expenses
The company’s gross margin declined slightly in fiscal 2025, with cost of goods sold increasing to 72.3% of sales compared to 72.2% the prior year. This was primarily due to a 25 basis point increase in distribution costs, partially offset by lower domestic freight and buying costs.
Selling, general, and administrative (SG&A) expenses increased to 15.8% of sales, up from 15.5% the prior year. This was mainly due to the impact of a $61.6 million gain on the sale of a packaway warehouse facility that was recognized in the prior year.
Overall, the company’s operating income margin decreased to 11.9% of sales in fiscal 2025, down from 12.2% the prior year, as both the gross margin and SG&A deleverage impacted profitability.
Looking ahead, the company expects its operating income margin to be slightly higher in fiscal 2026 compared to fiscal 2025, driven by an expected improvement in merchandise margin and lower distribution costs, partially offset by higher store-related costs.
Interest Income and Taxes
The company’s net interest income decreased by $37 million in fiscal 2025, primarily due to lower average interest rates and lower average cash balances. This was partially offset by lower interest expense from the repayment of $700 million in senior notes in April 2025 and $250 million in September 2024.
The company’s effective tax rate increased slightly to 24.5% in fiscal 2025, up from 24.2% in the prior year, primarily due to the tax effects associated with stock-based compensation. The company noted that recent tax law changes, including the reinstatement of 100% bonus depreciation and immediate expensing of domestic R&D, did not have a material impact on its fiscal 2025 results.
Earnings and Earnings Per Share
Net earnings in fiscal 2025 increased 3% to $2.15 billion, while diluted earnings per share grew 5% to $6.61. The EPS growth was driven by the increase in net earnings as well as a 2% reduction in weighted-average diluted shares outstanding due to the company’s stock repurchase program.
The company estimated that tariff-related costs had an unfavorable impact of approximately $0.16 per share on fiscal 2025 earnings, while the prior year’s earnings benefited by $0.14 per share from the sale of the packaway warehouse facility.
Cash Flow and Liquidity
The company generated strong cash flow from operations in fiscal 2025, with net cash provided by operating activities increasing to $3.03 billion, up from $2.36 billion the prior year. This was driven by higher net earnings, improved accounts payable leverage, lower taxes paid, and lower incentive bonus payments.
Cash used in investing activities increased to $819 million in fiscal 2025, up from $637 million the prior year, primarily due to higher capital expenditures related to the construction of a new distribution center and the absence of the prior year’s proceeds from the sale of the packaway warehouse facility.
Financing activities used $2.34 billion in cash in fiscal 2025, up from $1.86 billion the prior year, mainly due to higher repayments of senior notes. The company also continued its active stock repurchase program, buying back $1.05 billion worth of shares in fiscal 2025.
The company ended fiscal 2025 with $4.6 billion in unrestricted cash and cash equivalents and had $1.3 billion available under its revolving credit facility. Management believes these liquidity sources, along with cash flow from operations and trade credit, are adequate to meet the company’s operating needs and fund its planned capital investments, stock repurchases, dividend payments, and debt repayments for at least the next 12 months.
Capital Expenditures and Future Outlook
The company’s capital expenditures totaled $819 million in fiscal 2025, up from $720 million the prior year. This included investments in new and existing stores, distribution and transportation infrastructure, information systems, and other corporate initiatives.
Looking ahead, the company expects capital expenditures to increase to approximately $1.1 billion in fiscal 2026. This will include costs to open around 110 new stores, invest in supply chain capabilities, and make various technology and other infrastructure improvements.
Overall, the company remains focused on its long-term growth strategy of expanding its store base, enhancing its supply chain and technology capabilities, and delivering compelling value to customers. Management is optimistic about the company’s prospects, citing customers’ continued focus on value and convenience as supportive of opportunities to expand the business over time.
Risks and Uncertainties
The company highlighted several risk factors that could potentially impact its future performance, including:
- Inflation, increases in tariffs, interest rate changes, military conflicts, economic sanctions, weather events, public health crises, and other macroeconomic and industry trends
- The ability to successfully execute its store expansion plans and leverage overhead expenses
- Changes in consumer spending patterns and preferences
- Disruptions to its supply chain and distribution network
- Increasing competition and pricing pressures
- Regulatory changes and the resolution of various tax positions
The company noted that these and other factors could affect its projected financial performance, operations, and growth, and that actual results may differ materially from its forward-looking statements.
Overall, the financial report demonstrates the company’s continued operational and financial strength, with solid sales growth, profitability, and cash flow generation. While facing some near-term headwinds and risks, the company appears well-positioned to execute on its long-term expansion strategy and deliver value to shareholders.
