Ross Stores, Inc. (ROST): history, ownership, mission, how it works & makes money

A Brief History of Ross Stores, Inc.

Company Overview

Ross Stores, Inc. operates as a national off-price retailer of apparel and home accessories in the United States. The company operates two brands: Ross Dress for Less and dd’s DISCOUNTS. As of August 3, 2024, Ross Stores had a total of 2,148 locations, including 1,795 Ross Dress for Less stores and 353 dd’s DISCOUNTS stores.

Financial Performance

For the fiscal quarter ending August 3, 2024, Ross Stores reported sales of $5.288 billion, reflecting a 7.1% increase compared to the same period in 2023. For the first six months of fiscal 2024, total sales were $10.146 billion, representing a 7.6% increase year-over-year.

Earnings and Margins

Net earnings for the three months ended August 3, 2024, were $528 million, resulting in a net earnings margin of 10.0%. This compares to a net earnings margin of 9.0% for the same quarter in the previous year. For the six-month period, net earnings reached $1.015 billion.

Cost Structure

Store Expansion

In the second quarter of fiscal 2024, Ross Stores opened 24 new stores and plans to open approximately 90 stores by the end of the fiscal year. The company is strategically positioned to expand based on market demographics and store profitability.

Stock Performance

Diluted earnings per share (EPS) for the quarter ending August 3, 2024, was $1.59, up from $1.32 a year earlier. For the six-month period, diluted EPS rose to $3.05 from $2.41.

Cash Flow and Liquidity

Net cash provided by operating activities amounted to $961 million for the six months ended August 3, 2024, compared to $1.116 billion for the same period in 2023. The company ended the period with $4.732 billion in cash, cash equivalents, and restricted cash.

Debt and Financing

As of August 3, 2024, Ross Stores had total long-term debt of $2.462 billion, with a current portion of $949 million. The company maintains a $1.3 billion unsecured revolving credit facility.

Dividends

Ross Stores declared a quarterly cash dividend of $0.3675 per share on August 21, 2024, which will be payable on September 30, 2024.

Market Position

Ross Stores continues to focus on providing value to its low-to-moderate income customers, despite facing challenges from inflation and changing consumer spending patterns. The company aims to expand its market share through strategic store openings and operational efficiencies.

A Who Owns Ross Stores, Inc. (ROST)

Major Shareholders

As of 2024, Ross Stores, Inc. (ROST) has a diverse ownership structure that includes institutional and individual investors. The following table outlines the largest shareholders of the company:

Institutional Ownership

Institutional investors hold a significant portion of Ross Stores' shares, totaling approximately 70% of the company’s outstanding shares. This level of institutional ownership reflects confidence in the company's long-term growth prospects.

Insider Ownership

Insider ownership at Ross Stores is relatively low, with executives and directors holding about 1.5% of the total shares. The following table details the insider ownership of key executives:

Recent Stock Performance

The stock performance of Ross Stores has shown resilience, with a year-to-date increase of 15%. The closing stock price as of August 3, 2024, was $145.09. The company has consistently repurchased shares, indicating a commitment to returning value to shareholders.

Stock Repurchase Program

Ross Stores announced a stock repurchase program of up to $2.1 billion, set to run through January 31, 2026. In the first half of 2024, the company repurchased approximately 3.7 million shares for $525 million.

Dividend Information

Ross Stores declared a quarterly cash dividend of $0.3675 per share, payable on September 30, 2024. The total cash dividends paid in the first half of 2024 amounted to $245.8 million.

Summary of Financial Position

As of August 3, 2024, Ross Stores reported a total stockholders' equity of $5.13 billion. The company has maintained strong cash flows, with net earnings for the six months ending August 3, 2024, at $1.02 billion.

Conclusion

The ownership structure of Ross Stores is characterized by significant institutional investment, a small but meaningful insider ownership, and a robust financial position that supports growth and shareholder returns.

Ross Stores, Inc. (ROST) Mission Statement

Overview of Mission Statement

The mission of Ross Stores, Inc. focuses on providing customers with the best branded values in the off-price retail sector, targeting low-to-moderate income consumers. The company emphasizes offering a wide array of merchandise at competitive prices while maintaining operational efficiency and a commitment to customer satisfaction.

Financial Performance Metrics

Ross Stores has experienced robust financial growth, as evidenced by the following key performance metrics:

Store Expansion and Strategy

Ross Stores continues to expand its footprint strategically. In the first half of 2024, the company opened 87 net new stores, contributing to its growth strategy. The following table summarizes store counts:

Operational Efficiency

Ross Stores is focused on operational efficiency, particularly in managing costs associated with goods sold and selling, general, and administrative expenses. The following table provides a breakdown of cost metrics:

Shareholder Returns

Ross Stores has maintained a commitment to returning value to shareholders through dividends and stock repurchases. The following table outlines recent dividend declarations and stock repurchase activities:

Future Outlook

Looking ahead, Ross Stores aims to continue expanding its store base and enhancing its brand value proposition to customers. The focus remains on delivering quality merchandise at value prices while optimizing operational costs to maintain profitability in a competitive retail environment.

How Ross Stores, Inc. (ROST) Works

Business Model

Ross Stores, Inc. operates as an off-price retailer, primarily through its Ross Dress for Less and dd’s DISCOUNTS chains. The company offers a wide variety of branded merchandise at discounted prices, focusing on apparel, footwear, home goods, and accessories.

As of August 3, 2024, Ross Stores had a total of 2,148 stores, comprising 1,795 Ross Dress for Less stores and 353 dd’s DISCOUNTS stores.

Sales Performance

For the three months ended August 3, 2024, Ross Stores reported sales of $5.288 billion, a 7.1% increase from $4.935 billion in the same period of the previous year. For the six months, sales reached $10.146 billion, up 7.6% from $9.430 billion.

Financial Metrics

Net earnings for the three months ended August 3, 2024, were $527.148 million, translating to a net earnings margin of 10.0%, compared to 9.0% in Q2 2023. For the six months, net earnings amounted to $1.015 billion, or 10.0% of sales, up from 8.7% the previous year.

The diluted earnings per share (EPS) for Q2 2024 was $1.59, compared to $1.32 for Q2 2023. For the six-month period, diluted EPS rose to $3.05 from $2.41.

Cost Structure

The cost of goods sold (COGS) as a percentage of sales decreased to 71.7% in Q2 2024 from 72.3% in Q2 2023. For the six-month period, COGS was 71.8%, down from 72.8%.

Selling, general, and administrative expenses (SG&A) as a percentage of sales also improved, decreasing to 15.8% in Q2 2024 from 16.4% in Q2 2023.

Cash Flow and Capital Expenditures

Cash provided by operating activities for the six months ended August 3, 2024, was $961.042 million, down from $1.116 billion in the prior year. Cash used in investing activities was $333.735 million.

Debt and Equity Structure

As of August 3, 2024, Ross Stores had total long-term debt of $2.462 billion. The company also had a $1.3 billion credit facility, which was unused as of the reporting date.

The company repurchased 3.7 million shares for $525 million during the six months ended August 3, 2024.

Market Position and Strategy

Ross Stores continues to focus on opening new stores, with plans to open approximately 90 new stores in fiscal 2024. The company opened 87 new stores from July 29, 2023, to August 3, 2024.

The company's strategy emphasizes providing value to customers, particularly in a challenging economic environment for low-to-moderate income consumers.

How Ross Stores, Inc. (ROST) Makes Money

Business Model Overview

Ross Stores, Inc. operates as an off-price retailer, primarily through its two brands: Ross Dress for Less and dd’s DISCOUNTS. As of August 3, 2024, Ross had 1,795 locations and dd’s DISCOUNTS had 353 locations across the United States.

The company focuses on providing first-quality, in-season, name-brand and designer apparel, accessories, footwear, and home fashions at significant discounts—typically 20% to 60% off regular prices.

Revenue Generation

Ross Stores generates revenue primarily through sales from its retail locations. For the three months ended August 3, 2024, the company reported sales of $5,288 million, an increase of 7.1% from $4,935 million in the same period the previous year. For the six months ended August 3, 2024, sales totaled $10,146 million, up from $9,430 million, reflecting a growth of 7.6%.

Cost Structure

The cost of goods sold (COGS) for the three months ended August 3, 2024, was 71.7% of sales, a decrease from 72.3% in the prior year. This reduction in COGS percentage is attributed to lower distribution and buying costs, as well as a decrease in domestic freight costs.

For the six months ended August 3, 2024, COGS was 71.8% of sales, down from 72.8%.

Operating Expenses

Selling, general and administrative expenses (SG&A) for the three months ended August 3, 2024, represented 15.8% of sales, a decline from 16.4% in the same quarter last year. The decrease in SG&A as a percentage of sales is largely due to higher sales levels and lower incentive compensation expenses.

Net Earnings and Earnings Per Share

Net earnings for the three months ended August 3, 2024, were $527 million, up from $446 million in the prior year, resulting in a net earnings margin of 10.0%. The diluted earnings per share (EPS) for the same period was $1.59 compared to $1.32 the previous year.

Cash Flow Analysis

For the six months ended August 3, 2024, Ross Stores reported cash provided by operating activities of $961 million, a decrease from $1,116 million in the same period last year. The decline was primarily due to higher incentive compensation payments and lower accounts payable leverage.

Store Expansion Strategy

As part of its growth strategy, Ross Stores opened 87 net new stores between July 29, 2023, and August 3, 2024. The company plans to continue its expansion, with expectations to open approximately 90 new stores in 2024.