Ross Stores 10-Q 2025-11-01

Filed 2025-12-10. 8 sections, 137K characters. Original on sec.gov · Markdown · JSON

Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 01, 2025

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number:0-14678

Ross Stores, Inc.

(Exact name of registrant as specified in its charter)

Delaware94-1390387
(State or other jurisdiction of incorporation or(I.R.S. Employer Identification No.)
organization)
5130 Hacienda Drive,Dublin,California94568
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code(925)965-4400

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading symbolName of each exchange on which registered
Common Stock, par value $.01ROSTNasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer o Non-accelerated filer o Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares of Common Stock, with $.01 par value, outstanding on November 14, 2025 was 323,444,928.

Ross Stores, Inc.

Form 10-Q

Table of Contents

Page
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements (unaudited)
Condensed Consolidated Statements of Earnings3
Condensed Consolidated Statements of Comprehensive Income4
Condensed Consolidated Balance Sheets5
Condensed Consolidated Statements of Stockholders’ Equity6
Condensed Consolidated Statements of Cash Flows8
Notes to Condensed Consolidated Financial Statements9
Report of Independent Registered Public Accounting Firm17
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations18
Item 3.Quantitative and Qualitative Disclosures About Market Risk25
Item 4.Controls and Procedures25
PART II. OTHER INFORMATION
Item 1.Legal Proceedings26
Item 1A.Risk Factors26
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds28
Item 5.Other Information28
Item 6.Exhibits29
Signatures30

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Condensed Consolidated Statements of Earnings

Three Months EndedNine Months Ended
($000, except per share data, unaudited)November 1, 2025November 2, 2024November 1, 2025November 2, 2024
Sales$5,600,946$5,071,354$16,115,069$15,216,940
Costs and Expenses
Cost of goods sold4,032,4463,634,28311,615,97910,916,884
Selling, general and administrative920,002832,8552,605,8482,445,494
Operating income648,498604,2161,893,2421,854,562
Interest income, net(33,900)(42,527)(100,655)(131,827)
Earnings before taxes682,398646,7431,993,8971,986,389
Provision for taxes on earnings170,463157,935494,718482,443
Net earnings$511,935$488,808$1,499,179$1,503,946
Earnings per share
Basic$1.59$1.49$4.64$4.56
Diluted$1.58$1.48$4.61$4.53
Weighted-average shares outstanding (000)
Basic321,270327,710323,049329,453
Diluted323,297329,937325,054331,728

The accompanying notes are an integral part of these condensed consolidated financial statements.

Condensed Consolidated Statements of Comprehensive Income

Three Months EndedNine Months Ended
($000, unaudited)November 1, 2025November 2, 2024November 1, 2025November 2, 2024
Net earnings$511,935$488,808$1,499,179$1,503,946
Other comprehensive income————
Comprehensive income$511,935$488,808$1,499,179$1,503,946

The accompanying notes are an integral part of these condensed consolidated financial statements.

Condensed Consolidated Balance Sheets

($000, except share data, unaudited)November 1, 2025February 1, 2025November 2, 2024
Assets
Current Assets
Cash and cash equivalents$4,061,173$4,730,744$4,349,262
Accounts receivable203,891144,482176,218
Merchandise inventory3,128,9712,444,5132,859,106
Prepaid expenses and other235,617218,957241,703
Total current assets7,629,6527,538,6967,626,289
Property and Equipment
Land and buildings1,833,3021,493,4961,487,579
Fixtu

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

This section and other parts of this Form 10-Q contain forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed below under the caption “Forward-Looking Statements” and also those in Part II, Item 1A. Risk Factors of this Form 10-Q, and Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for fiscal 2024. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q and in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for fiscal 2024. All information is based on our fiscal calendar.

Overview

Ross Stores, Inc. operates two brands of off-price retail apparel and home fashion stores—Ross Dress for Less® (“Ross”) and dd’s DISCOUNTS®. Ross is the largest off-price apparel and home fashion chain in the United States, with 1,909 locations in 44 states, the District of Columbia, Guam, and Puerto Rico as of November 1, 2025. Ross offers first-quality, in-season, name brand 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. We also operate 364 dd’s DISCOUNTS stores in 22 states as of November 1, 2025 that feature a more moderately-priced assortment of first-quality, in-season, name brand 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.

The macroeconomic environment continues to be uncertain. Tariffs remain at elevated levels, inflation persists, and geopolitical conditions and other government actions continue to significantly affect the retail industry. Uncertainty surrounding these factors and pressure on household disposable income impacts consumer spending and confidence. Despite the ongoing challenges and uncertainty in the macroeconomic environment, we remain focused on delivering high quality, branded bargains at compelling values to our customers.

Store Openings

We opened 40 new stores in the third quarter of fiscal 2025, consisting of 36 Ross and four dd’s DISCOUNTS stores. These store openings completed our expansion program for fiscal 2025, which added a total of 90 new stores and growth into new markets such as Puerto Rico and the New York Metro area.

Our 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. We continually evaluate opportunistic real estate acquisitions and opportunities for potential new store locations. We also evaluate our current store locations and determine store closures based on similar criteria. We continue to believe that customers’ focus on value and convenience provides opportunities for us to gain market share.

Sales Metrics

Comparable store sales (“comp store sales”) is a metric used by management and across the retail industry to evaluate the performance of existing stores by measuring the change in net sales for a particular period over the comparable prior period of equivalent length. We define comp store sales to be sales from stores that have been open for 14 complete months.

Sales excluded from comp store sales (“non-comp store sales”) consist primarily of sales from new stores that have been open for less than 14 complete months. Non-comp store sales also include sales from stores that are permanently closed (beginning in the month prior to closure) and temporarily closed (i.e., stores that do not have sales for at least two weeks within a fiscal month).

The calculation of comp store sales varies across the retail industry; therefore, our measure of comp store sales may differ from other retailers.

Metrics relating to customer purchasing behavior, such as “traffic” (defined as the number of transactions) and “basket” (defined as average transaction value), may provide additional insight into our comp store sales results (see Sales discussion).

Results of Operations

The following table summarizes our financial results for the three and nine month periods ended November 1, 2025 and November 2, 2024:

Three Months EndedNine Months Ended
November 1, 2025November 2, 2024November 1, 2025November 2, 2024
Sales
Sales (billions)$5.6$5.1$16.1$15.2
Sales growth10%3%6%6%
Comparable store sales growth7%1%3%3%
Costs and expenses (as a percent of sales)
Cost of goods sold72.0%71.7%72.1%71.7%
Selling, general and administrative16.4%16.4%16.2%16.1%
Operating income (as a percent of sales)11.6%11.9%11.7%12.2%
Interest income, net (as a percent of sales)(0.6%)(0.8%)(0.6%)(0.9%)
Net earnings (as a percent of sales)9.1%9.6%9.3%9.9%

Sales. Sales for the three month period ended November 1, 2025 increased $0.5 billion, or 10%, compared to the three month period ended November 2, 2024. This was primarily due to the 7% increase in comp store sales of $0.3 billion and an increase in non-comp store sales of $0.2 billion. The 7% comp store sales increase was driven equally by basket and traffic.

Sales for the nine month period ended November 1, 2025 increased $0.9 billion, or 6%, compared to the nine month period ended November 2, 2024. This was primarily due to an increase in non-comp store sales of $0.5 billion and the 3% increase in comp store sales, or $0.4 billion. The 3% comp store sales increase reflects an approximate 2% increase in basket and 1% increase in traffic.

Our sales mix for the three and nine month periods ended November 1, 2025 and November 2, 2024 is shown below:

Three Months EndedNine Months Ended
November 1, 2025November 2, 2024November 1, 2025November 2, 2024
Home Accents and Bed and Bath25%25%24%25%
Ladies23%23%23%23%
Men’s16%16%16%16%
Accessories, Lingerie, Fine Jewelry, and Cosmetics14%14%15%14%
Shoes13%13%13%13%
Children’s9%9%9%9%
Total100%100%100%100%

Cost of goods sold. Cost of goods sold for the three and nine month periods ended November 1, 2025 increased $0.4 billion and $0.7 billion, respectively, compared to the three and nine month periods ended November 2, 2024, primarily due to the increases in sales.

Cost of goods sold as a percentage of sales for the three month period ended November 1, 2025 increased approximately 35 basis points compared to the three month period ended November 2, 2024, primarily due to a 60 basis point increase in distribution costs mainly due to the deleveraging effect from the opening of our eighth distribution center in Buckeye, Arizona in May 2025 and tariff-related processing costs. Merchandise margin decreased 10 basis points primarily due to tariff-related costs. Partially offsetting these higher costs were lower domestic freight costs of 25 basis points and lower occupancy costs of 10 basis points.

Cost of goods sold as a percentage of sales for the nine month period ended November 1, 2025 increased approximately 35 basis points compared to the nine month period ended November 2, 2024, primarily due to a 40 basis point increase in distribution costs mainly due to the deleveraging effect from the opening of our eighth distribution center in Buckeye, Arizona in May 2025 and tariff-related processing costs. Merchandise margin decreased 30 basis points primarily due to tariff-related costs. Occupancy costs deleveraged by 5 basis points. Partially offsetting these higher costs were lower domestic freight costs and lower buying costs of 20 basis points each.

Selling, general and administrative expenses. For the three and nine month periods ended November 1, 2025, selling, general and administrative expenses (“SG&A”) increased $0.1 billion and $0.2 billion, respectively, compared to the three and nine month periods ended November 2, 2024, primarily due to higher store-related costs.

SG&A as a percentage of sales for the three month period ended November 1, 2025 was flat compared to the three month period ended November 2, 2024. SG&A as a percentage of sales for the nine month period ended November 1, 2025 increased 10 basis points compared to the nine month period ended November 2, 2024, primarily due to costs associated with our Chief Executive Officer transition.

Operating income. Operating income as a percentage of sales for the three and nine month periods ended November 1, 2025 decreased by 35 basis points and 45 basis points, respectively, compared to the three and nine month periods ended November 2, 2024, primarily driven by the increase in cost of goods sold as a percentage of sales period-over-period.

Operating income as a percentage of sales for the three and nine month periods ended November 1, 2025 included negative impacts of approximately 35 basis points and 45 basis points, respectively, primarily due to tariff-related costs.

Interest income, net. For the three and nine month periods ended November 1, 2025, interest income, net decreased $9 million and $31 million, respectively, compared to the three and nine month periods ended November 2, 2024, primarily due to decreased interest income both from lower average interest rates and from lower average cash balances, which decreased largely due to our repayment at maturity of $700 million of Senior Notes in April 2025 and $250 million of Senior Notes in September 2024. The decrease in interest income was partially offset by lower interest expense primarily due to the repayment of those Senior Notes.

The table below shows the components of interest income, net for the three and nine month periods ended November 1, 2025 and November 2, 2024:

Three Months EndedNine Months Ended
($000)November 1, 2025November 2, 2024November 1, 2025November 2, 2024
Interest income$(42,871)$(57,922)$(130,065)$(181,422)
Capitalized interest(1,979)(5,047)(10,346)(13,889)
Other interest expense3814171,1731,142
Interest expense on long-term debt10,56920,02538,58362,342
Interest income, net$(33,900)$(42,527)$(100,655)$(131,827)

Taxes on earnings. Our effective tax rate is impacted by changes in tax laws and accounting guidance, location of new stores, level of earnings, tax effects associated with stock-based compensation, and the resolution of tax positions with various tax authorities. Our effective tax rate for the three month period ended November 1, 2025 was approximately 25%, compared to approximately 24% for the three month period ended November 2, 2024. Our effective tax rate for the nine month period ended November 1, 2025 was approximately 25%, compared to approximately 24% for the nine month period ended November 2, 2024. The increases in the effective tax rates for the three and nine month periods ended November 1, 2025 compared to the three and nine month periods ended November 2, 2024 were primarily due to the tax effects associated with stock-based compensation.

In July 2025, the OBBBA, was signed into law. The OBBBA made several changes to business tax provisions including the reinstatement of 100% bonus depreciation and immediate expensing of domestic research and development expenditures. These changes are not expected to have a material impact on our income tax provision for fiscal 2025 but are expected to lower our current year cash tax payments.

Earnings per share. Diluted earnings per share for the three month period ended November 1, 2025 was $1.58 compared to $1.48 for the three month period ended November 2, 2024. The $0.10, or 7%, increase in the diluted earnings per share for the three month period ended November 1, 2025 was primarily attributable to an approximately 5% increase in net earnings and a 2% reduction in weighted-average diluted shares outstanding, largely due to stock repurchases under our stock repurchase program.

Diluted earnings per share for the nine month period ended November 1, 2025 was $4.61 compared to $4.53 for the nine month period ended November 2, 2024. The $0.08, or 2%, increase in the diluted earnings per share for the nine month period ended November 1, 2025 was primarily attributable to a 2% reduction in weighted-average diluted shares outstanding, largely due to stock repurchases under our stock repurchase program.

Earnings for both the three and nine month periods ended November 1, 2025 included per share negative impacts of approximately $0.05 and $0.16, respectively, due to tariff-related costs.

Stores. The following table summarizes the stores opened and closed during the three and nine month periods ended November 1, 2025 and November 2, 2024:

Three Months EndedNine Months Ended
Store CountNovember 1, 2025November 2, 2024November 1, 2025November 2, 2024
Ross Dress for Less
Beginning of the period1,8731,7951,8311,764
Opened in the period36438075
Closed in the period—(2)(2)(3)
Total Ross Dress for Less stores end of period1,9091,8361,9091,836
dd’s DISCOUNTS
Beginning of the period360353355345
Opened in the period441014
Closed in the period—(1)(1)(3)
Total dd’s DISCOUNTS stores end of period364356364356
Total stores end of period2,2732,1922,2732,192

Financial Condition

Liquidity and Capital Resources

The primary sources of funds for our business activities are cash flows from operations and short-term trade credit. Our primary ongoing cash requirements are for merchandise inventory purchases, payroll, operating and variable lease costs, taxes, capital expenditures related to new and existing stores, and investments in distribution centers, information systems, and buying and corporate offices. We also use cash to repurchase stock under active stock repurchase programs, repay debt as it becomes due, and pay dividends. The $500 million principal amount of our 0.875% Senior Notes is due in April 2026. In April 2025, we repaid at maturity $700 million of our Senior Notes. In the third quarter of fiscal 2024, we repaid at maturity $250 million of 3.357% Senior Notes.

Nine Months Ended
($ millions)November 1, 2025November 2, 2024
Cash provided by operating activities$1,905$1,474
Cash used in investing activities(618)(514)
Cash used in financing activities(1,955)(1,481)
Net decrease in cash, cash equivalents, and restricted cash and cash equivalents$(668)$(521)

Operating Activities

Net cash provided by operating activities was $1.9 billion for the nine month period ended November 1, 2025. This was primarily driven by net earnings excluding non-cash expenses for depreciation, amortization, and stock-based compensation, partially offset by the payment of fiscal 2024 incentive bonuses. Net cash provided by operating activities was $1.5 billion for the nine month period ended November 2, 2024. This was primarily driven by net earnings excluding non-cash expenses for depreciation, amortization, and stock-based compensation, partially offset by the payment of fiscal 2023 incentive bonuses.

The $0.4 billion increase in cash flow provided by operating activities for the nine month period ended November 1, 2025 compared to the same period in the prior fiscal year was primarily driven by higher accounts payable leverage (defined as Accounts payable divided by Merchandise inventory), lower taxes paid, and lower incentive bonus payments. Accounts payable leverage was 85% and 82% as of November 1, 2025 and November 2, 2024, respectively. The increase in accounts payable leverage was primarily due to the timing of inventory receipts and related payments versus last year.

As a regular part of our business, packaway inventory levels will vary over time based on availability of compelling merchandise purchase opportunities in the marketplace and our decisions on the timing for release of that inventory to our stores. Packaway merchandise is purchased with the intent that it will be stored in our warehouses until a later date. The timing of the release of packaway inventory to our stores is principally driven by the product mix and seasonality of the merchandise, and its relation to our store merchandise assortment plans. As such, the aging of packaway varies by merchandise category and seasonality of purchase, but typically packaway remains in storage for less than six months. We expect to continue to take advantage of packaway inventory opportunities to maximize our ability to deliver bargains to our customers.

Changes in packaway inventory levels affect our operating cash flow. As of November 1, 2025, February 1, 2025, and November 2, 2024 packaway inventory was 36%, 41%, and 38% of total inventory, respectively.

Investing Activities

Net cash used in investing activities was $0.6 billion and $0.5 billion for the nine month periods ended November 1, 2025 and November 2, 2024, respectively, and was related to our capital expenditures. Our capital expenditures include costs to open new stores and improve existing stores, build, expand, and improve distribution centers, and for various other expenditures related to our information technology systems and buying and corporate offices.

The $0.1 billion increase in cash used in investing activities for the nine month period ended November 1, 2025, compared to the same period in the prior fiscal year, was primarily due to higher capital expenditures in the current year related to the construction of our next distribution center in Randleman, North Carolina.

Capital expenditures for fiscal 2025 are currently projected to be approximately $800 million. Our remaining planned capital expenditures for fiscal 2025 are for costs related to existing and future new stores, investment in our supply chain to support long-term growth, including construction of our next distribution center, investment in our information technology systems, and for various other expenditures related to our stores, distribution centers, and buying and corporate offices. We expect to fund capital expenditures with available cash.

Financing Activities

Net cash used in financing activities was $2.0 billion for the nine month period ended November 1, 2025 primarily resulting from stock repurchases under our stock repurchase program, the repayment at maturity of the $700 million principal amount of 4.600% Senior Notes in April 2025, and dividend payments. Net cash used in financing activities was $1.5 billion for the nine month period ended November 2, 2024 primarily resulting from stock repurchases under our stock repurchase program, dividend payments, and the repayment at maturity of the $250 million principal amount of 3.375% Senior Notes in the third quarter of fiscal 2024.

The $0.5 billion increase in cash used in financing activities for the nine month period ended November 1, 2025, compared to the same period in the prior fiscal year, was primarily due to higher Senior Note repayments.

Revolving credit facilities. In June 2025, we entered into a $1.3 billion 2025 Credit Facility, which replaced our previous $1.3 billion unsecured credit facility. As of November 1, 2025, we had no borrowings or standby letters of credit outstanding under the 2025 Credit Facility, our 2025 Credit Facility remained in place and available, and we were in compliance with the financial covenant. Refer to Note E: Debt in the Notes to Condensed Consolidated Financial Statements for additional information.

Senior notes. As of November 1, 2025, we had approximately $1.5 billion of outstanding unsecured Senior Notes, of which $499 million was classified in Current Liabilities on our Condensed Consolidated Balance Sheet for the period ended November 1, 2025. Refer to Note E: Debt in the Notes to Condensed Consolidated Financial Statements for additional information.

Other financing activities. In March 2024, our Board of Directors approved a two-year program to repurchase up to $2.1 billion of our common stock through fiscal 2025. During the nine month period ended November 1, 2025, we repurchased 5.6 million shares of common stock for $787.5 million (excluding excise tax) under this program. As of November 1, 2025, there was $262.5 million available for repurchase under this program.

On November 19, 2025, our Board of Directors declared a quarterly cash dividend of $0.4050 per common share, payable on December 31, 2025. The Board of Directors declared quarterly cash dividends of $0.4050 per common share in March, May, and August 2025, and $0.3675 per common share in March, May, August, and November 2024.

For the nine month periods ended November 1, 2025 and November 2, 2024, we paid cash dividends of $397.2 million and $367.5 million, respectively.

Short-term trade credit represents a significant source of financing for merchandise inventory. Trade credit arises from customary payment terms and trade practices with our vendors. We regularly review the adequacy of credit available to us from all sources, and expect to be able to maintain adequate trade credit, bank credit, and other credit sources to meet our capital and liquidity requirements.

We ended the third quarter of fiscal 2025 with $4.1 billion of unrestricted cash balances, which were held primarily in overnight money market funds invested in U.S. treasury and government instruments across a highly diversified set of banks and other financial institutions. We also have $1.3 billion available under our 2025 Credit Facility. We estimate that existing cash and cash equivalent balances, cash flows from operations, our 2025 Credit Facility, and trade credit are adequate to meet our operating cash needs and to fund our common stock repurchases, planned capital investments, quarterly dividend payments, debt repayments, and interest payments, for at least the next 12 months.

Contractual Obligations and Off-Balance Sheet Arrangements

As of November 1, 2025, there have been no material changes to our contractual obligations as disclosed in our Annual Report on Form 10-K as of February 1, 2025, other than those which occur in the ordinary course of business.

Standby letters of credit and collateral trust. We use standby letters of credit outside of our revolving credit facility and a funded trust to collateralize some of our insurance obligations. As of November 1, 2025, February 1, 2025, and November 2, 2024, we had $1.0 million, $1.8 million, and $2.2 million, respectively, in standby letters of credit outstanding. As of November 1, 2025, February 1, 2025, and November 2, 2024, we had $66.0 million, $63.9 million, and $63.2 million, respectively, held in a collateral trust. The standby letters of credit are collateralized by restricted cash and the collateral trust consists of restricted cash and cash equivalents.

Critical Accounting Estimates

During the third quarter of fiscal 2025, there were no significant changes to the critical accounting estimates discussed in our Annual Report on Form 10-K for the year ended February 1, 2025.

Forward-Looking Statements

This report contains a number of forward-looking statements regarding, without limitation, projected sales, costs and earnings, planned new store growth, capital expenditures, liquidity, and other matters. These forward-looking statements reflect our then-current beliefs, plans, and estimates with respect to future events and our projected financial performance, operations, and competitive position. The words “plan,” “expect,” “target,” “anticipate,” “estimate,” “believe,” “forecast,” “projected,” “guidance,” “outlook,” “looking ahead,” and similar expressions identify forward-looking statements.

Future impact from inflation, interest rate changes, tariffs, ongoing military conflicts and economic sanctions, climate change, extreme weather, pandemics, natural disasters, and other economic, regulatory, consumer spending, and industry trends that could potentially adversely affect our revenue, profitability, operating conditions, and growth are difficult to predict. Our forward-looking statements are subject to risks and uncertainties which could cause our actual results to differ materially from those forward-looking statements and our previous expectations, plans, and projections. Such risks and uncertainties are not limited to but may include:

  • Uncertainties arising from the macroeconomic environment, including inflation and the price of necessities, high interest rates, housing costs, energy and fuel costs, financial and credit market conditions, recession concerns, geopolitical conditions, government policies and enforcement practices with respect to immigration, government shutdowns, and public health and public safety issues may affect consumer confidence, consumer disposable income, and shopping behavior, as well as our costs.

  • Unexpected changes in the level of consumer spending on, or preferences for, apparel and home-related merchandise could adversely affect us.

  • Competitive pressures in the apparel and home-related merchandise retailing industry.

  • Our need to effectively manage our inventories, markdowns, and inventory shortage in order to achieve our planned gross margins.

  • Changes in U.S. tax, tariff, or trade policy regarding apparel, shoes, and home-related merchandise produced in China and other countries could significantly and adversely affect our business. While we directly import only a small portion of our merchandise, more than half of the goods we sell originate from China. Elevated tariff levels on goods imported into the United States from China and other countries may disrupt our merchandise purchasing patterns, increase our costs, and put pressure on our margins and profitability.

  • Risks associated with importing and selling merchandise produced in China and other countries, including risks from supply chain disruption, shipping delays, and higher than expected ocean freight costs.

  • Unseasonable weather or extreme temperatures that may affect shopping patterns and consumer demand for seasonal apparel and other merchandise.

  • Our dependence on the market availability, quantity, and quality of attractive brand name merchandise at desirable discounts, and on the ability of our buyers to anticipate consumer preferences and to purchase merchandise to enable us to offer customers a wide assortment of merchandise at competitive prices.

  • Information or data security breaches, including cyber-attacks on our transaction processing and computer information systems, which could disrupt our operations, and result in theft or unauthorized disclosure of confidential and valuable business information, such as customer, credit card, employee, or other private and valuable information that we handle in the ordinary course of our business.

  • Disruptions in our supply chain or in our information systems, including from ransomware or other cyber-attacks could impact our ability to process sales and to deliver product to our stores in a timely and cost-effective manner.

  • Our need to obtain acceptable new store sites with favorable consumer demographics to achieve our planned store openings.

  • Our need to expand in existing markets and enter new geographic markets in order to achieve planned growth and market penetration.

  • Consumer problems or legal issues involving the quality, safety, or authenticity of products we sell could harm our reputation, result in lost sales, and/or increase our costs.

  • An adverse outcome in various legal, regulatory, or tax matters, or the adoption of new federal or state tax legislation that increases tax rates or adds new taxes could increase our costs.

  • Damage to our corporate reputation or brands could adversely affect our sales and operating results.

  • Our need to continually attract, train, and retain associates with the retail talent necessary to execute our off-price retail strategies.

  • Our need to effectively advertise and market our business.

  • Possible volatility in our revenues and earnings.

  • A public health or public safety crisis, or a natural or man-made disaster in California or another region where we have a concentration of stores, offices, or a distribution center could harm our business.

  • Our need to maintain sufficient liquidity to support our continuing operations and our new store openings.

The factors underlying our forecasts are dynamic and subject to change. As a result, any forecasts or forward-looking statements speak only as of the date they are given and do not necessarily reflect our outlook at any other point in time. We disclaim any obligation to update or revise these forward-looking statements.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks, which primarily include changes in interest rates. We do not engage in financial transactions for trading or speculative purposes.

We may occasionally use forward contracts to hedge against fluctuations in foreign currency prices. We had no outstanding forward contracts as of November 1, 2025.

Interest that is payable on our 2025 Credit Facility is based on variable interest rates and is therefore affected by changes in market interest rates. As of November 1, 2025, we had no borrowings outstanding under the 2025 Credit Facility.

As of November 1, 2025, we had outstanding five series of unsecured Senior Notes. Interest that is payable on all series of our Senior Notes is based on fixed interest rates, and is therefore unaffected by changes in market interest rates.

We receive interest payments on our cash and cash equivalents and restricted cash and cash equivalents. Changes in interest rates may impact the interest income we recognize in the future.

A hypothetical 100 basis point increase or decrease in prevailing market interest rates would not have had a material negative impact on our financial position, results of operations, cash flows, or the fair values of our cash and cash equivalents and restricted cash and cash equivalents as of and for the three month or nine month periods ended November 1, 2025. We do not consider the potential losses in future earnings and cash flows from reasonably possible, near-term changes in interest rates to be material.

Item 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our “disclosure controls and procedures” (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at that reasonable assurance level as of the end of the period covered by this report.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.

Quarterly Evaluation of Changes in Internal Control Over Financial Reporting

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of our internal control over financial reporting to determine whether any change occurred during the third fiscal quarter of 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, our management concluded that there was no such change during the third fiscal quarter of 2025.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The matters under the caption “Litigation, claims, and assessments” in Note A of Notes to Condensed Consolidated Financial Statements are incorporated herein by reference.

Item 1A. RISK FACTORS

Our financial condition, results of operations, cash flows, and the performance of our common stock may be adversely affected by a number of risk factors, including those provided below. See Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended February 1, 2025 for a further description of risks and uncertainties associated with our business.

MACROECONOMIC AND RETAIL INDUSTRY BUSINESS RISKS

We are subject to impacts from changes in the macroeconomic environment, financial and credit markets, geopolitical conditions, and government regulation or policy. Continuing inflation, tariff increases (or threats of increases), potential supply chain disruptions, and other external events may have significant negative effects on our costs, and also on consumer confidence, shopping behavior, and spending, which may adversely affect our sales and profitability.

Elevated inflation, rapidly changing and increased tariffs on goods imported into the United States, other government policy and regulatory changes, geopolitical conflicts, bank failures, public health crises, and other potential, adverse developments and related uncertainties, could reduce demand for our merchandise, disrupt our buying patterns, increase our cost of goods, create shortages of merchandise, cause shipping delays and increase freight costs, decrease our inventory turnover, cause greater markdowns, and negatively affect our sales and margins. All of our stores are located in the United States and its territories, and while we directly import only a small portion of our merchandise, more than half of the goods we sell originate from China, so we are especially susceptible to changes in the U.S. economy and its trade policy (particularly toward China).

Consumer spending levels and shopping behaviors for the merchandise we sell are affected by many external macroeconomic factors. In addition to consumer sensitivity to the price points and value differentiation we offer on the merchandise we sell, elevated inflation, including increased fuel and energy costs, food prices, interest rates, housing costs, wage rates, unemployment levels, availability of consumer credit, consumer debt levels, income tax rates and the timing of tax refunds, various government policies and practices (including enforcement practices with respect to immigration, particularly in regions with a relatively high concentration of Hispanic customers, which is an important demographic group within our overall customer base), and the resulting effects on consumers’ disposable income and consumer confidence in future economic conditions all have an impact on consumer spending habits for our merchandise.

Changes and uncertainty in U.S. trade or tax policy regarding apparel, shoes and home-related merchandise produced in China and other countries could adversely affect our business.

A predominant portion of the apparel, shoes, home-related merchandise, and other goods we sell is originally manufactured in other countries, including China. While we directly import only a small portion of our merchandise, more than half of the goods we sell originate from China. The U.S. government has indicated a willingness to significantly change existing trade policies, and has imposed dramatically increased tariffs on goods imported into the United States, in particular on goods produced in China. This exposes us to risks of disruption and significant cost increases in our established patterns for sourcing our merchandise, and creates increased uncertainties in planning our sourcing strategies and forecasting our margins. Changes in tariffs, quotas, trade relationships, or tax provisions that reduce the supply or increase the relative cost of goods produced in China and other countries could significantly increase our cost of goods and/or increase our effective tax rate. Although such changes would have implications across the entire retail sector, we may fail to effectively adapt and manage the adjustments in sourcing strategy that would be necessary in response to those changes. In addition to the general uncertainty and overall risk from potential changes in laws and policies, as we make business decisions in the face of uncertainty as to potential changes, we may incorrectly anticipate the outcomes, miss out on business opportunities, or fail to effectively adapt our business strategies and manage the adjustments that are necessary in response to those changes. These risks could adversely affect our revenues and expenses, increase our effective tax rates, and reduce our profitability and market share.

STRATEGIC RISKS

We are subject to risks associated with importing and selling merchandise produced in other countries.

Risks in importing and selling such merchandise include increased tariffs and more stringent quotas, economic and supply chain disruptions, uncertainties and adverse economic conditions (including shipping capacity limitations, cost increases, inflation, recession, and exchange rate fluctuations), foreign government regulations, employment and labor matters, concerns relating to human rights, working conditions, and other issues in factories or countries where merchandise is produced, transparency of sourcing and supply chains, exposure on product warranty and intellectual property issues, consumer perceptions of the safety of imported merchandise, geopolitical conflict (including wars and fears of war), political unrest, natural disasters, regulations to address climate change, and trade restrictions.

A predominant portion of the apparel, shoes, home-related merchandise, and other goods we sell (even when we purchase it domestically, often as excess inventory sold to us by a domestic vendor) is originally manufactured in other countries. In addition, we directly source a portion of the products sold in our stores from foreign vendors, predominantly in China. We also buy products that originate from foreign sources indirectly through domestic vendors and manufacturers’ representatives. More than half of the merchandise we sell is originally manufactured in China. Although our foreign purchases of merchandise are negotiated and paid for in U.S. dollars, increased tariffs or other import duties on goods imported into the United States, or decreases in the value of the U.S. dollar relative to foreign currencies, could increase the cost of products we purchase from overseas vendors and from domestic vendors who are reselling foreign-produced goods. When we are the importer of record, we may be subject to regulatory or other requirements similar to those applicable to a manufacturer.

To the extent that our vendors are located overseas or rely on overseas sources for a large portion of their products, any event causing a disruption, delay, or increase in the cost of imports, including imposition of import or other restrictions such as product detention, war, acts of terrorism, natural disasters, or public health issues could adversely affect our business. The flow of merchandise from our vendors could also be adversely affected by global shipping capacity limitations, labor stoppages, or by financial or political instability in any of the countries in which the goods we purchase are manufactured. Trade restrictions in the form of tariffs or quotas, or both, applicable to the products we sell could also affect the importation of those products and could increase the cost and reduce the supply of products available to us. We cannot predict whether China or any of the other countries from which our products are sourced, or in which our products are currently manufactured or may be manufactured in the future, will be subject to increased tariffs or trade restrictions imposed by the U.S. or foreign governments or the likelihood, type, or effect of any such restrictions.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Information regarding shares of common stock we repurchased during the third quarter of fiscal 2025 is as follows:

Total number of shares (or units) purchased****1Average price paid per share (or unit)Total number of shares (or units) purchased as part of publicly announced plans or programsMaximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs ($000)
Period
August
(8/3/2025 - 8/30/2025)464,446$146.59455,372$458,260
September
(8/31/2025 - 10/4/2025)809,394$149.36713,966$351,480
October
(10/5/2025 - 11/1/2025)571,385$155.73571,385$262,500
Total1,845,225$150.641,740,723$262,500

1 We acquired 105,000 shares of treasury stock during the quarter ended November 1, 2025. Treasury stock includes shares acquired from employees for tax withholding purposes related to vesting of restricted stock grants.

In March 2024, our Board of Directors approved a two-year program to repurchase up to $2.1 billion of our common stock through fiscal 2025.

Item 5. OTHER INFORMATION

Insider Adoption of Trading Arrangements:

During the three months ended November 1, 2025, none of our directors or executive officers informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” except as follows:

On October 10, 2025, Michael J. Hartshorn, Group President and Chief Operating Officer, and a member of our Board of Directors, adopted a trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) to sell up to 49,000 shares of common stock. Unless otherwise terminated pursuant to its terms, the plan will terminate on September 30, 2026, or when all shares under the plan are sold.

Item 6. EXHIBITS

Exhibit
NumberExhibit
3.1Certificate of Incorporation of Ross Stores, Inc. as amended (Corrected First Restated Certificate of Incorporation, dated March 17, 1999, together with amendments thereto through Amendment of Certificate of Incorporation dated May 29, 2015) incorporated by reference to Exhibit 3.1 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended August 1, 2015.
3.2Amended and Restated Bylaws of Ross Stores, Inc. (as amended March 8, 2023), incorporated by reference to Exhibit 3.2 to the Form 8-K filed by Ross Stores, Inc. on March 14, 2023.
10.1Executive Employment Agreement effective October 1, 2025 between William W. Sheehan II and Ross Stores, Inc.
15Letter re: Unaudited Interim Financial Information from Deloitte & Touche LLP dated December 9, 2025.
31.1Certification of Chief Executive Officer Pursuant to Sarbanes-Oxley Act Section 302(a).
31.2Certification of Chief Financial Officer Pursuant to Sarbanes-Oxley Act Section 302(a).
32.1Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
32.2Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
101.INSXBRL Instance Document. (The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.)
101.SCHInline XBRL Taxonomy Extension Schema
101.CALInline XBRL Taxonomy Extension Calculation Linkbase
101.DEFInline XBRL Taxonomy Extension Definition Linkbase
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104Cover Page Interactive Data File. (The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

ROSS STORES, INC.
(Registrant)
Date:December 9, 2025By:/s/ Jeffrey P. Burrill
Jeffrey P. Burrill
Group Senior Vice President, Chief Accounting Officer and Corporate Controller (Principal Accounting Officer)