stockrowWhat it does
Ross Stores is an off-price retailer of apparel and home fashions. It operates two store brands: Ross Dress for Less and dd’s DISCOUNTS. Founded in 1954 and headquartered in Dublin, the company is led by Chief Executive Officer James G. Conroy.
Ross sells first-quality, in-season brand-name and designer apparel, accessories, footwear, and home fashions for the whole family. Its merchandise range also includes beauty, furniture, bed and bath, gourmet food, toys, luggage, pet accessories, electronics, jewelry, watches, and cookware. Ross prices merchandise at savings of 20% to 60% versus department and specialty-store regular prices.
The dd’s DISCOUNTS chain offers a more moderately priced assortment of similar categories, generally at savings of 20% to 70% versus moderate department and discount-store regular prices. Ross primarily serves middle-income households, while dd’s DISCOUNTS generally serves lower- to moderate-income households.
Both chains are physical-store businesses built around frequently changing assortments. Stores receive new merchandise three to six times per week, and customers shop a self-service “treasure-hunt” format rather than a fixed, season-long assortment. The company had 2,267 stores as of January 31, 2026, including 1,904 Ross stores and 363 dd’s DISCOUNTS stores.
How it makes money
Ross Stores earns retail sales through one reportable segment that contains both Ross and dd’s DISCOUNTS. It buys merchandise below conventional retail prices, marks it up less than department and specialty stores, and sells it through its store network. Revenue therefore depends on customer transactions, average transaction value, merchandise availability, store openings, and the ability to move inventory without excessive markdowns.
The company purchases advance-of-season, in-season, and past-season goods. Sources include manufacturer and brand overruns, canceled orders, close-outs, direct production from brands and factories, in-house brands, and vendor brands. Some goods are sent directly to stores; some are held as packaway inventory for release later, typically in less than six months.
Ross relies on a high-frequency buying and replenishment model. Buyers review assortments weekly, and store teams review departments for markdowns based on selling rates and at the end of fashion seasons. This supports the changing selection that brings customers back, while lower purchase prices and a self-service store design support the price proposition.
Reportable-segment revenue was $22.8 billion in FY2026; second-quarter 2026 sales were $6.3 billion.
Management said on the call that second-quarter comparable-store sales increased 10%, primarily driven by more transactions. Management also said that merchandise margin increased and distribution costs were lower during the quarter, while freight costs rose with fuel prices. The company’s sales are generally higher in the second half because it includes back-to-school and holiday shopping.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Reportable Segment | $21.1 billion | — | — |
Customers and how it sells
Ross and dd’s DISCOUNTS both target value-driven customers, but their customer profiles differ. Ross primarily targets middle-income households. dd’s DISCOUNTS targets lower- to moderate-income households and generally operates in established shopping centers in densely populated urban or suburban neighborhoods.
The company sells exclusively through brick-and-mortar stores. Its stores are predominantly located in community and neighborhood shopping centers in heavily populated urban and suburban areas. Ross clusters stores where market size and real-estate opportunities permit, seeking greater local market penetration and economies of scale in marketing, distribution, field management, and other costs.
As of January 31, 2026, Ross operated in 44 states, the District of Columbia, Guam, and Puerto Rico; dd’s DISCOUNTS operated in 22 states. The company has no customer concentration disclosed in the supplied material.
Management said on the call that new and lapsed customers, more frequent visits by existing customers, and higher spending by existing customers contributed to second-quarter comparable-store sales growth. Management also said that its new-customer cohort resembles its existing customer base across income, age, and ethnicity.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Reportable Segment | $21.1 billion | — | — |
Suppliers and costs
Ross has a large network of merchandise vendors and manufacturers and purchases most merchandise directly from manufacturers. Its primary buying offices are in New York City and Los Angeles, with a smaller office in Boston. The Ross and dd’s DISCOUNTS buying organizations are separate, and the company had over 800 combined merchants at the end of fiscal 2025.
Vendors generally deliver merchandise to distribution centers, which process goods before regional cross-dock facilities send shipments to stores three to six times per week. The company also operates warehouses for packaway inventory. It uses owned, leased, and third-party cross-dock facilities, plus contract carriers for store deliveries.
Key operating costs include merchandise, distribution, freight, store labor, occupancy, store-related expenses, technology, and marketing. The self-service store format, centralized merchandising and purchasing, and conversion of existing buildings are intended to constrain operating costs. More than half of the goods sold originate from China, although the company directly imports only a small portion of its merchandise. Management said on the call that the company does not hedge fuel costs.
- Revenue$22.8B
- Cost of revenue−$16.4B
- Selling, general and administrative−$3.6B
- Operating income$2.7B
Competitive position
Ross competes for customers, associates, store locations, and merchandise with other off-price retailers, department stores, mass merchandisers, specialty stores, online and catalog businesses, warehouse stores, discount stores, manufacturer-owned outlets, and local, regional, and national retailers. The company operates only physical stores while consumer e-commerce spending continues to increase.
The TJX Companies competes with Ross in off-price retail. It was reported on 26 October 2026 that Ross’s store productivity had increased 24% by the end of 2025, compared with a 44% increase at TJX over the same period. Management said on the call that it has formidable competition for merchandise purchase opportunities, while close-out availability was strong.
The company identifies significant discounts on branded goods, balanced assortments, and convenient, easy-to-shop stores as the principal competitive factors in off-price apparel and home fashion. Its buying capability rests on purchasing later in the buying cycle, flexible vendor requirements, a merchant organization, frequent buying-office access to apparel markets, and distribution facilities designed for its model.
Our reading: Ross’s merchant network and opportunistic buying process are a meaningful operating moat because they determine access to discounted goods and require ongoing vendor relationships. [item1]
Our reading: The store network and regional distribution system support scale in local markets, but they do not remove competition for sites, customers, or merchandise. [item1; item1a]
Our reading: Brand-name value and an easy-to-shop physical store experience can differentiate the chains, but online retail and other off-price operators limit the strength of that differentiation. [item1; item1a]
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| The TJX Companies, Inc. | United States off-price retail | High |
Growth opportunities
Ross’s growth plan combines additional stores, expansion in current and new markets, larger merchandise assortments, marketing, and improvements to the in-store experience. The company added 90 stores in fiscal 2025 and entered Puerto Rico and the New York Metro area. It expects to open approximately 110 new stores in 2026, comprising 85 Ross stores and 25 dd’s DISCOUNTS stores. Management later said on the call that the store-opening plan had increased from prior guidance, reflecting strength in recent openings, but did not disclose the revised store count here.
The company says future locations are evaluated using market penetration, local demographics, competition, expected store profitability, and the ability to leverage overhead expenses. It also continues to evaluate real-estate acquisitions, new sites, relocations, and closures. Its distribution centers and warehouses have expansion capacity intended to support near-term store growth.
Management said on the call that it is pursuing broader assortments, more brands and vendors, marketing changes, and store-experience improvements. Management also said that recent openings in newer markets were running ahead of the company’s original plan. It said new and lapsed customers, existing-customer frequency, and existing-customer spending supported its second-quarter results.
The company expects fiscal 2026 capital expenditures of approximately $1.1 billion for new and existing stores, supply-chain capacity, information systems, and buying and corporate offices. It also expects operating income as a percentage of sales to be slightly higher in fiscal 2026 than in fiscal 2025.
- $18.9BFY2022
- $18.7BFY2023
- $20.4BFY2024
- $21.1BFY2025
- $22.8BFY2026
Structural risks
-
More than half of the goods Ross sells originate from China. Tariffs, quotas, trade-policy changes, shipping disruption, and other import restrictions can raise merchandise costs, reduce supply, disrupt buying patterns, and pressure margins.
-
The business depends on a continuing supply of first-quality branded goods at discounts, disciplined opportunistic buying, inventory control, and merchandise choices that match customer demand. Reduced vendor excess inventory, vendor departures, shortages, or poor packaway decisions can result in lost sales or markdowns.
-
Retail competition is fragmented and intense across off-price, department, mass, specialty, online, warehouse, discount, outlet, and local retail formats. Competitors can adjust prices, promotions, business models, data capabilities, and store or online offerings.
-
Consumer spending is sensitive to inflation, fuel and food costs, interest rates, housing costs, employment, credit availability, tax refunds, consumer debt, and confidence. Weather can also alter shopping patterns, seasonal demand, store traffic, deliveries, and store operations.
-
Growth requires acceptable sites, favorable local demographics, qualified associates, and successful execution in new markets. New stores may take longer to reach planned sales or profit levels and can carry higher construction, occupancy, advertising, or operating costs.
-
Technology, payment, transaction, supply-chain, and logistics systems are critical to sales processing, inventory flow, allocation, distribution, reporting, and merchandising. Cyberattacks, security breaches, implementation failures, or system interruptions can disrupt operations and create legal, reputational, and cost exposure.
Bottom line
Our reading
Our reading: Ross is a store-based off-price retailer whose model combines discounted branded merchandise, frequent inventory flow, a self-service shopping format, and two customer-value propositions. [item1]
Our reading: Its operating execution depends heavily on merchant access to discounted goods, inventory management, store expansion, and distribution capacity; tariff exposure and the Chinese origin of more than half of its merchandise add supply-cost sensitivity. [item1; item1a]
Our reading: Recent transaction-led sales growth, new-customer acquisition, vendor access, and stronger recent store openings show the company’s current initiatives are affecting store activity, while competitive retail conditions and fuel, freight, and trade-policy exposure remain material constraints. [call_prepared; facts; item1a]