Ross Stores Delivers Solid Results Amidst Economic Challenges

Ross Stores, Inc. (NASDAQ: ROST) reported its fourth quarter and fiscal 2024 results on Tuesday, March 4, 2025, providing insights into the company's performance amidst a challenging economic environment. The off-price retail giant delivered solid results, with full-year earnings per share (EPS) reaching $6.32, up 13.7% from $5.56 in FY2023, and net earnings rising to $2.1 billion on sales of $21.1 billion. Despite a slowdown in comparable store sales (CSS) growth, Ross Stores maintained its resilience and adaptability in the face of macroeconomic headwinds.

Ross Stores' CSS trends have evolved with a deceleration in growth over the past few years. In fiscal 2023, CSS grew by 5%, while in fiscal 2024, this growth slowed to 3%. For the fourth quarter of fiscal 2024, CSS increased by 3%, which was a deceleration from the 7% gain in the same period last year. Several factors contribute to the recent softening of Ross Stores' CSS, including unseasonable weather, heightened volatility in the macroeconomic and geopolitical environments, inflation, and economic uncertainty. Additionally, competition within the off-price retail segment may also play a role in the company's CSS trends.



Ross Stores' inventory management strategy, particularly its ability to opportunistically acquire inventory at favorable terms, contributes to its competitive advantage. The company's substantial cash position of $4.7 billion provides significant insulation against market volatility, allowing it to take advantage of opportunities when other retailers struggle. This financial strength, combined with the company's expertise in inventory management, enables Ross to acquire inventory at favorable terms, potentially creating a competitive advantage if economic conditions deteriorate further.

Ross Stores' store expansion strategy has also had a positive impact on its financial performance. The company has been expanding its Ross Dress for Less and dd's DISCOUNTS stores at a measured pace, with a long-term target of 2,900 Ross Stores and 700 dd's DISCOUNTS locations. In 2024, Ross Stores plans to open about 75 Ross stores annually, while assessing dd's expansion after refining its strategy, aiming for approximately 100 new stores per year overall. This expansion strategy has allowed Ross Stores to reach new customers and tap into new markets, driving sales growth.

However, Ross Stores is also mindful of balancing growth with operational efficiency. The company acknowledges that there is competition for retail locations, which could impact their ability to secure favorable real estate for new stores and potentially increase costs. To mitigate this, Ross Stores is investing in initiatives to improve operational efficiency, such as using AI in automated parts of its business and exploring generative AI to enhance efficiencies.

In conclusion, Ross Stores' solid performance in fiscal 2024 demonstrates the company's resilience and adaptability in the face of macroeconomic challenges. The company's inventory management strategy, store expansion strategy, and focus on operational efficiency contribute to its competitive advantage and strong financial performance. As Ross Stores continues to navigate the evolving retail landscape, investors should remain optimistic about the company's long-term prospects.