Ross Stores, Inc., through its various subsidiaries, manages a chain of off-price retail establishments focusing on apparel and home goods. These stores ...
Ross Stores, Inc. (NASDAQ: ROST) is a dominant player in the off-price retail sector, known for delivering exceptional value to customers. The company operates two distinct store formats: Ross Dress for Less, which targets middle-income households with savings of 20-60% off regular retail prices on a wide selection of apparel, ...Ross Stores, Inc. (NASDAQ: ROST) is a dominant player in the off-price retail sector, known for delivering exceptional value to customers. The company operates two distinct store formats: Ross Dress for Less, which targets middle-income households with savings of 20-60% off regular retail prices on a wide selection of apparel, accessories, footwear, and home goods; and dd's DISCOUNTS, which caters to moderate-income families with prices lower than typical discount stores. As of 2022, the company had approximately 1,950 stores across 40 states, the District of Columbia, and Guam, with plans for continued expansion.
Business-wise, Ross Stores follows a treasure-hunt shopping model, constantly refreshing inventory with new shipments, which drives frequent customer visits and impulse purchases. The company's supply chain is a key strength, as it buys opportunistically from manufacturers and other retailers, allowing for flexible sourcing at deeply discounted prices. This model results in lower inventory costs and higher gross margins compared to traditional retailers. Financially, Ross Stores is robust, with a market capitalization of nearly $82 billion and strong profitability metrics: as of the latest TTM data, it boasts a return on equity of 38.4%, a net profit margin of 9.7%, and a debt-to-equity ratio of 0.749, indicating prudent leverage. The company generates substantial free cash flow, enabling investments in new stores and shareholder returns through dividends and share buybacks.
Product and service offerings include a broad assortment of brand-name and designer merchandise. While apparel typically dominates sales (over 70%), home fashion, shoes, and accessories also play significant roles. Ross Stores maintains strong relationships with thousands of vendors, allowing it to offer a rapidly changing selection that keeps customers coming back. The company's cost structure is efficient, with low occupancy and labor costs, and it emphasizes productivity per square foot.
Leadership plays a crucial role in Ross's success. CEO James G. Conroy, who took the helm in 2023, brings extensive retail experience and focuses on maintaining the company's value proposition and growth trajectory. Barbara Rentler, the former CEO, remains involved as an advisor. Founder Stuart Moldaw, who passed away in 2008, established the off-price concept in 1982, but the company traces its origins to 1957 when Morris Ross opened a store in Pacifica, California.
Employee size is significant, with over 107,000 full-time and part-time workers. The company invests in training and development, fostering a customer-centric culture. Ross Stores is committed to sustainability, community engagement, and ethical sourcing, which enhances its corporate reputation.
Looking ahead, Ross Stores continues to expand, particularly in under-penetrated markets, and its off-price model is resilient in varying economic climates, as consumers seek value during inflationary periods. The company's future prospects remain strong, with consistent revenue growth and a focus on operational excellence. As a result, Ross Stores remains a benchmark in the retail industry and a favorite among investors seeking stable returns.
YoYYoY means Year-over-Year. It compares the latest annual value with the previous annual value to show long-term trend strength.
QoQQoQ means Quarter-over-Quarter. It compares the latest quarter with the immediately previous quarter to show short-term momentum changes.
RevenueThe total money that came through the front door from selling things, before paying a single bill. Think of it as the grand total of every credit card swipe from customers. (YoY compares this year to last year's performance, while QoQ compares the current three months to the previous three).
$22.8B
+7.7%
+4.2%
Net IncomeThe absolute bottom line. If the company paid every single supplier, employee, banker, and tax collector, this is the actual money left in their pocket at the end of the day.
$2.1B
+2.6%
+31.0%
Gross MarginThe basic markup. If they sell a $100 pair of sneakers, this percentage tells you how much of that price tag is profit right after paying for the rubber and shoelaces, but before paying for things like store rent or TV commercials.
+27.9%
+0.6%
+14.3%
Operating MarginThe 'day job' efficiency score. Out of every dollar a customer spends, this shows how many cents the company keeps after making the product AND paying for all the everyday corporate overhead (like salaries, marketing, and keeping the lights on).
+11.9%
-2.8%
+31.7%
Net MarginThe final take-home percentage. When you strip away every conceivable cost, tax, and interest payment, this is the exact number of cents the company truly gets to keep from every dollar in sales.
+9.4%
-4.7%
+25.7%
Free Cash FlowThe holy grail of corporate cash. It's the spendable, physical money left over after the business pays for its daily operations AND buys the big, expensive upgrades (like new factories or servers) it needs to survive. This is the 'free' money they can use to pay dividends or buy back stock.
$2.2B
+34.9%
-0.4%
FCF MarginThe ultimate cash conversion rate. It shows how good the company is at turning regular sales directly into cold, hard, spendable cash. A high percentage means the business is an absolute cash-printing machine.
+9.7%
+25.3%
-4.5%
Debt / EquityThe financial risk gauge. It compares how much of the company's empire was built using borrowed money (loans) versus the owners' own money (shareholders). A high number means they are heavily leveraged and playing a riskier game; a low number means they are playing it safe.
84.2%
-18.3%
-6.2%
Current RatioThe 12-month survival check. It simply compares the cash they have right now (plus things they can quickly turn into cash) against the immediate bills they absolutely must pay this year. A score above 1 means they have enough in the wallet to cover the upcoming bills without panicking.
1.58x
-2.1%
+4.6%
Total AssetsThe absolute size of the company's empire. It bundles together absolutely everything of value they own—from the cash in the register and the inventory in the warehouse, to the software patents in the vault and the factories on the ground.
Operator: Good afternoon, welcome to the Ross Stores Second Quarter 26 Earnings Release Conference Call. The call will begin with prepared comments by management followed by a question and answer session. As a reminder, this conference is being recorded. Before we get started, on behalf of Ross Stores, I would like to note that the comments made on this call will contain forward looking statements regarding expectations about future growth and financial results. Including sales and earnings forecast, new store openings, and other matters that are based on the company's current forecast of aspects of its future business. These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical performance or current expectations. Risk factors are included in today's press release and in the company's fiscal 2025 Form 10-Ks and fiscal 26 Form 10-Q and 8-Ks on file with the SEC. Now I would like to turn the call over to James G. Conroy, chief executive officer.
James G. Conroy: Thank you, and good afternoon, everyone. Joining me on our call today are Michael J. Hartshorn, Group president and chief operating officer Bill Sheehan, executive vice president and chief financial officer and Connie Kao, senior vice president, investor relations. Before discussing our results, I want to recognize the outstanding team across the company and throughout the country. The robust sales and earnings growth in the quarter are a direct result of your hard work and commitment to the Ross organization. Thank you. Now turning to our results. We are extremely pleased with the 10% comparable store sales growth we delivered in the second quarter. marking the second quarter in a row with double digit comp growth. Sales were strong in May, and improved sequentially each month with July delivering our strongest performance despite cycling a strong back to school performance last year. Customer traffic once again served as a primary driver of our comparable store sales increase which underscores the durability of our growth and the momentum we are building. We believe the increased traffic reflects the effectiveness of our customer acquisition efforts. During the quarter, we saw gains from new and lapsed customers along with more frequent trips and higher spending from existing customers. Reflecting deeper engagement with both of our chains. Importantly, the new customers we are attracting span a broad range of income demographics and age cohorts. Including younger shoppers, which we believe reflects the broad appeal of our brand and the success of our marketing efforts in reaching and engaging a diverse customer base. Once in our stores, both new and existing customers are responding to our compelling values and a broader selection of fashion and brands. Merchants and planners have done a terrific job of opening new vendors and satisfying the demands of a wide variety of customers. Finally, our stores …