How did Ross Department Store's revenue and expenses trend in Q4 2025?

Ross Stores' revenue and expenses in Q4 2025 showed a slight decline in revenue compared to the previous year, but the company still managed to meet Wall Street's expectations. Here's a detailed analysis:

1. Revenue Trend: Ross Stores' revenue in Q4 2024 was $5.91 billion, which was a 1.8% year-on-year decline. This decline was primarily due to softening sales trends in January and February 2025, attributed to unseasonable weather and macroeconomic volatility. Despite this, the company's revenue guidance for Q1 2025 was $4.79 billion, which was 6.9% below analysts' estimates. This indicated a cautious outlook for the upcoming quarter.

2. Expense Trend: The company's Gross Margin was 12.4%, which was flat compared to the previous year. This was partly offset by higher incentive costs and store wages, which led to an increase in SG&A expenses as a percentage of sales. The Operating Margin was 12.4%, similar to the same quarter last year. The company's Free Cash Flow Margin was 11.4%, similar to the same quarter last year. These figures suggested that while the company was managing its expenses effectively, the impact of softer revenue was felt in the form of lower margins.
3. Profitability: Ross Stores reported a GAAP profit of $1.79 per share for Q4 2024, which was 7.9% above analysts' consensus estimates. This was largely driven by a one-time sale, which boosted the EPS by $0.14. Despite the lower revenue, the company's net income for the quarter was $587 million, compared to $610 million in the previous year.
4. Store Performance: The company ended the quarter with 2,186 stores, an increase from 2,109 in the same quarter last year. Same-store sales rose by 3% year-on-year. The company's expansion plans included adding 75 new Ross Dress for Less stores and 14 dd's DISCOUNTS stores, indicating a continued focus on growth through new store openings.

In conclusion, while Ross Stores faced challenges with declining revenue and softer sales trends, the company's strategic initiatives, including improved assortments and effective cost management, helped maintain profitability and meet financial expectations.