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What changed in Ross Stores's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Ross Stores's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+170 added−198 removedSource: 10-K (2024-04-02) vs 10-K (2023-03-28)

Top changes in Ross Stores's 2024 10-K

170 paragraphs added · 198 removed · 151 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeFrom 2008 to 2009, he served as Executive Vice President, General Merchandise Manager at Macy’s West. He also held roles as Senior Vice President, General Merchandise Manager at Mervyn’s in 2008 and Macy’s North/Marshall Field’s from 2006 to 2008. For approximately 20 years prior to this, Mr. Morrow held various merchandising roles at The May Department Stores Company. Mr.
Biggest changeHe was also Vice Chairman of the Board of Directors and Chief Executive Officer for 18 years from 1996 to 2014, during which time he also served as President from 2005 to 2009. Prior to this, Mr. Balmuth was Executive Vice President, Merchandising from 1993 to 1996 and Senior Vice President and General Merchandise Manager from 1989 to 1993.
Previously, he was Group Senior Vice President, Supply Chain and Chief Information Officer from 2008 to 2010, and Senior Vice President and Chief Information Officer from 2004 to 2008. Prior to joining Ross, Mr. Kobayashi was a Partner with Accenture, providing consulting services to clients in Accenture’s Retail & Consumer Goods practice. Mr.
Previously, he was Group Senior Vice President, Supply Chain and Chief Information Officer from 2008 to 2010, and Senior Vice President and Chief Information Officer from 2004 to 2008. Prior to joining Ross, Mr. Kobayashi was a Partner with Accenture, providing consulting services to clients in Accenture’s Retail & Consumer Goods practice. Ms.
For seven years prior to joining Ross, Mr. Hartshorn held various financial roles at The May Department Stores Company. Mr. Kobayashi has served as President and Chief Capability Officer since February 2022.
For seven years prior to joining Ross, Mr. Hartshorn held various financial roles at The May Department Stores Company. Mr. Kobayashi has served as President and Chief Capability Officer since 2022.
Orvos has served as Executive Vice President and Chief Financial Officer since October 2021. Mr. Orvos joined Ross in January 2021 as Group Senior Vice President, Supply Chain Administration. Prior to joining Ross, Mr.
Orvos has served as Executive Vice President and Chief Financial Officer since 2021. Mr. Orvos joined Ross in January 2021 as Group Senior Vice President, Supply Chain Administration. Prior to joining Ross, Mr.
These strategic locations allow our buyers to be in the market frequently, sourcing opportunities and negotiating purchases with vendors and manufacturers. Thes e locations also enable our buyers to strengthen vendor relationships—a key element to the success of our off-price buying strategies. At the end of fiscal 2022, we had over 900 merchants for Ross and dd’s DISCOUNTS combined.
These strategic locations allow our buyers to be in the market frequently, sourcing opportunities and negotiating purchases with vendors and manufacturers. Thes e locations also enable our buyers to strengthen vendor relationships—a key element to the success of our off-price buying strategies. At the end of fiscal 2023, we had over 900 merchants for Ross and dd’s DISCOUNTS combined.
Orvos held several senior management positions at Belk Department Stores from 2006 to 2016, where he eventually became its C hief Financial Officer. For almost 20 years prior to this, Mr. Orvos held various financial roles at The May Department Stores Company, including Chief Financial Officer of their Foley’s division. 8
Orvos held several senior management positions at Belk Department Stores from 2006 to 2016, where he eventually became its C hief Financial Officer. For almost 20 years prior to this, Mr. Orvos held various financial roles at The May Department Stores Company, including Chief Financial Officer of their Foley’s division. 9
As such, the aging of packaway varies by merchandise category and seasonality of purchase, but typically packaway remains in storage less than six months. In fiscal 2022, we continued our emphasis on this important sourcing strategy in response to compelling opportunities available in the marketplace.
As such, the aging of packaway varies by merchandise category and seasonality of purchase, but typically packaway remains in storage less than six months. In fiscal 2023, we continued our emphasis on this important sourcing strategy in response to compelling opportunities available in the marketplace.
Packaway accounted for approximately 40% of total inventories as of January 28, 2023 and January 29, 2022. Our primary buying offices are located in New York City and Los Angeles, the nation’s two largest apparel markets. We also operate a smaller buying office located in Boston.
Packaway accounted for approximately 40% of total inventories as of February 3, 2024 and January 28, 2023. Our primary buying offices are located in New York City and Los Angeles, the nation’s two largest apparel markets. We also operate a smaller buying office located in Boston.
Our associates, managers, and executives may participate in technical and leadership development activities. We support associates interested in leadership roles by offering opportunities to gain experience and build the skills necessary to advance within the Company. 6 Compensation and benefits.
We provide training opportunities to help associates grow and build their careers. Our associates, managers, and executives may participate in technical and leadership development activities. We support associates interested in leadership roles by offering opportunities to gain experience and build the skills necessary to advance within the Company. Compensation and benefits.
We also operate 322 dd’s DISCOUNTS stores in 21 states as of January 28, 2023. dd’s DISCOUNTS features more moderately-priced 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.
We also operate 345 dd’s DISCOUNTS stores in 22 states as of February 3, 2024. dd’s DISCOUNTS features more moderately-priced 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 term of office is at the discretion of our Board of Directors. Name Age Position Barbara Rentler 65 Chief Executive Officer Michael J.
The term of office is at the discretion of our Board of Directors. Name Age Position Michael Balmuth 73 Executive Chairman Barbara Rentler 66 Chief Executive Officer Michael J.
A similar pricing strategy is in place at dd’s DISCOUNTS where prices are compared to those in moderate department and discount stores. Stores As of January 28, 2023, we operated a total of 2,015 stores comprised of 1,693 Ross stores and 322 dd’s DISCOUNTS stores.
A similar pricing strategy is in place at dd’s DISCOUNTS where prices are compared to those in moderate department and discount stores. Stores As of February 3, 2024, we operated a total of 2,109 stores comprised of 1,764 Ross stores and 345 dd’s DISCOUNTS stores.
Ross is the largest off-price apparel and home fashion chain in the United States, with 1,693 locations in 40 states, the District of Columbia, and Guam, as of January 28, 2023.
Ross is the largest off-price apparel and home fashion chain in the United States, with 1,764 locations in 43 states, the District of Columbia, and Guam, as of February 3, 2024.
We identify and enumerate key competencies we believe are critical to our ability to execute our business model and deliver the values our customers expect. We utilize these competencies in the hiring, development, evaluation, and future planning of our teams. We provide training opportunities to help associates grow and build their careers.
The professional growth of our associates is important to our success as a business. We identify and enumerate key competencies we believe are critical to our ability to execute our business model and deliver the values our customers expect. We utilize these competencies in the hiring, development, evaluation, and future planning of our teams.
We refer to our fiscal years ended January 28, 2023, January 29, 2022, and January 30, 2021 as fiscal 2022, fiscal 2021, and fiscal 2020, respectively, each of which were 52-week years.
We refer to our fiscal year ended February 3, 2024 as fiscal 2023 which was a 53-week year. Our fiscal years ended January 28, 2023 and January 29, 2022 are referred to as fiscal 2022 and fiscal 2021, respectively, each of which were 52-week years.
Throughout our organization, we recognize and appreciate the importance of attracting, retaining, and developing our associates and we have a number of key programs to do so. Our culture. Values start with our people. At Ross, we strive to do what is right for our associates, customers, and the communities we serve.
We strive to have a workforce that reflects our values, supports our business growth, and strengthens our communities. Throughout our organization, we recognize and appreciate the importance of attracting, retaining, and developing our associates and we have a number of key programs to do so. Our culture. Values start with our people.
The Ross and dd’s DISCOUNTS buying organizations are separate and distinct, and each includes merchandise management, buyers, and assistant buyers. Ross and dd’s DISCOUNTS buyers have on average seven years of experience, including merchandising positions with other retailers.
The Ross and dd’s DISCOUNTS buying organizations are separate and distinct, and each includes merchandise management, buyers, and assistant buyers. Ross and dd’s DISCOUNTS buyers have on average eight years of experience, including merchandising positions with other retailers. We expect to make continued investments in our merchant organization to further develop our relationships with our manufacturers and vendors.
This includes a mix of television, digital channels, radio, and new store grand openings. Within digital channels, we continue to grow our social media, digital video, and digital audio presence to communicate our brand positions. We believe that a mix of channels is important to reach our customers.
This includes a mix of traditional and streaming television, digital channels, and new store grand openings. We continue to shift our marketing and advertising to digital channels, including social media, digital video, and digital audio, to reflect changes in media consumption. We believe that a mix of channels is important to reach our customers.
Prior to that, she held various merchandising positions since joining the Company in 1986. Mr. Hartshorn has served as Group President and Chief Operating Officer since August 2019 and a member of the Board of Directors since March 2021.
Hartshorn has served as Group President and Chief Operating Officer since 2019 and a member of the Board of Directors since 2021.
Our associates play essential roles in not only delivering great values to our customers but also evolving and strengthening the culture at Ross. We strive to have a workforce that reflects our values, supports our business growth, and strengthens our communities.
We have no associates that are covered by a collective bargaining agreement. Management considers the relationship between the Company and our associates to be strong. Our associates play essential roles in not only delivering great values to our customers but also evolving and strengthening the culture at Ross.
From 2009 to 2014, she was President and Chief Merchandising Officer, Ross Dress for Less and Executive Vice President, Merchandising, from 2006 to 2009. She also served at dd’s DISCOUNTS as Executive Vice President and Chief Merchandising Officer from 2005 to 2006, and Senior Vice President and Chief Merchandising Officer from 2004 to 2005.
Rentler has served as Chief Executive Officer and a member of the Board of Directors since 2014 and as Vice Chair of the Board since 2021. From 2009 to 2014, she was President and Chief Merchandising Officer, Ross Dress for Less and Executive Vice President, Merchandising, from 2006 to 2009.
We are also committed to promoting an inclusive culture and work environment in which our associates are treated with dignity and respect. Talent development. The professional growth of our associates is important to our success as a business.
At Ross, we value integrity, accountability, respect, learning, and humility. We strive to do what is right for our associates, customers, and the communities we serve. We are also committed to promoting an inclusive culture and work environment in which our associates are treated with dignity and respect. 6 Talent development.
Hartshorn 55 Group President and Chief Operating Officer Michael Kobayashi 58 President and Chief Capability Officer Brian Morrow 63 President and Chief Merchandising Officer, dd’s DISCOUNTS Adam Orvos 58 Executive Vice President and Chief Financial Officer Ms. Rentler has served as Chief Executive Officer and a member of the Board of Directors since 2014.
Hartshorn 56 Group President, Chief Operating Officer Michael Kobayashi 59 President, Chief Capability Officer Karen Fleming 57 President, Chief Merchandising Officer – dd’s DISCOUNTS Stephen Brinkley 50 President, Operations Adam Orvos 59 Executive Vice President, Chief Financial Officer Mr. Balmuth has served as Executive Chairman since September 2023 and also rejoined our Board of Directors at that time.
Trademarks The trademarks for ROSS ® , Ross Dress For Less ® , and dd’s DISCOUNTS ® have been registered with the United States Patent and Trademark Office. Human Capital As of January 28, 2023, we had approximately 101,000 total a ssociates, which includes both full- and part-time associates in our stores, distribution centers, and buying and corporate offices.
Human Capital As of February 3, 2024, we had approximately 108,000 total a ssociates, which includes both full- and part-time associates in our stores, distribution centers, and buying and corporate offices. Approximately 85% of these associates worked in our retail stores. Additionally, we hire temporary associates, especially during peak seasons.
Morrow has served as President and Chief Merchandising Officer, dd’s DISCOUNTS since December 2015. Prior to joining Ross, Mr. Morrow served as President, Chief Merchandising Officer of Stein Mart from 2014 to 2015 and Executive Vice President and Chief Merchandising Officer from 2010 to 2014.
She also served at dd’s DISCOUNTS as Executive Vice President and Chief Merchandising Officer from 2005 to 2006, and Senior Vice President and Chief Merchandising Officer from 2004 to 2005. Prior to that, she held various merchandising positions since joining the Company in 1986. Mr.
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We expect to continue to make additional targeted investments in our merchant organization to further develop our relationships with our manufacturers and vendors.
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Trademarks Our principal trademarks are ROSS ® , Ross Dress For Less ® , and dd’s DISCOUNTS ® , which are registered in the United States and in certain other countries. We expect our rights in these trademarks to endure in locations where we use them for as long as our use continues.
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The majority of these associates worked in our retail stores. Additionally, we hire temporary associates, especially during peak seasons. We have no associates that are covered by a collective bargaining agreement. Management considers the relationship between the Company and our associates to be strong.
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Prior to rejoining the Board in 2023, Mr. Balmuth had served on the Board from 1996 to 2021. Previously, he served as Strategic Advisor of the Company from 2021 to August 2023, Chairman of the Board and Senior Advisor from 2019 to 2021, and Executive Chairman from 2014 to 2019.
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Before joining Ross, he was Senior Vice President and General Merchandising Manager at Bon Marché in Seattle from 1988 to 1989 and Executive Vice President and General Merchandising Manager for Karen Austin Petites from 1986 to 1988. Ms.
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Fleming has served as President and Chief Merchandising Officer – dd’s DISCOUNTS since April 2024. Previously, she served as Group Executive Vice President, Merchandising at dd’s DISCOUNTS since 2023 and Executive Vice President, Merchandising at dd’s DISCOUNTS since 2022. Prior to this, Ms.
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Fleming served as Group Senior Vice President of Merchandising from 2018 to 2022 and Senior Vice President of Merchandising from 2015 to 2018. Prior to that, she held various merchandising positions since joining the Company in 1999. 8 Mr. Brinkley has served as President, Operations since October 2023.
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Prior to joining Ross, he served as President of SportChek, a subsidiary of Canadian Tire Corporation, since 2020 and as Senior Vice President, Stores from 2019 to 2020.
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Previously, he held roles at Save A Lot Food Stores Ltd. as Executive Vice President and Chief Operating Officer from 2017 to 2019 and before that as Senior Vice President, Corporate Store Operations since 2017. He also held several store and field management positions during his 14-year tenure at Target Corporation. Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe extent and duration of the impacts from the COVID-19 pandemic on our business and our financial results will depend largely on future developments, including the duration and spread of outbreaks within the U.S., regional surges in infection, vaccination rates, and acquired immunity rates, the effectiveness of vaccines in controlling current and future variants of the virus, the response by all levels of government in their efforts to contain the outbreak and to mitigate the resulting economic disruptions, and the related impact on consumer confidence, shopping behavior, and spending, all of which are highly uncertain and cannot be predicted.
Biggest changeThe extent and duration of impacts from future public health crisis on our business and our financial results will depend largely on future developments, including the severity, location, and duration of the issue, efforts to mitigate the resulting economic disruptions, and the related impact on consumer confidence, shopping behavior, and spending, all of which are highly uncertain and cannot be predicted.
A breach of our information or data security, a system shut down or other response we may take, or our failure or delay in detecting and mitigating a loss of personal or business information, could result in damage to our reputation, loss of customer confidence, violation (or alleged violation) of applicable laws (including laws relating to consumer data protection and privacy, and required notifications of data security breaches), and expose us to civil claims, litigation, and regulatory action, and to unanticipated costs and disruption of our operations.
A breach of our information or data security, a system shut down or other response we may take, or our failure or delay in detecting and mitigating a system breach and a loss of personal or business information, could result in damage to our reputation, loss of customer confidence, violation (or alleged violation) of applicable laws (including laws relating to consumer data protection and privacy, and required notifications of data security breaches), and expose us to civil claims, litigation, and regulatory action, and to unanticipated costs and disruption of our operations.
We are currently making, and will continue to make, significant technology investments to improve or replace information processes and systems that are key to managing our business. We must monitor and choose sound investments and implement them at the right pace. The risk of system disruption is increased whenever significant system changes are undertaken.
We are currently making, and will continue to make, technology investments to improve or replace information processes and systems that are key to managing our business. We must monitor and choose sound investments and implement them at the right pace. The risk of system disruption is increased whenever significant system changes are undertaken.
These may include lawsuits, inquiries, demands, or other claims or proceedings by governmental entities and private plaintiffs, including those relating to employment and employee benefits (including classification, employment rights, discrimination, harassment, wage and hour, and retaliation), workplace safety, securities, real estate, tort, commercial, consumer protection, privacy, product compliance and safety, advertising, environmental, comparative pricing, product labeling, intellectual property, tax, escheat, and whistle-blower claims.
These may include lawsuits, inquiries, demands, or other claims or proceedings by governmental entities and private plaintiffs, including those relating to employment and employee benefits (including classification, employment rights, discrimination, harassment, wage and hour, and retaliation), workplace safety, 16 securities, real estate, tort, commercial, consumer protection, privacy, product compliance and safety, advertising, environmental, comparative pricing, product labeling, intellectual property, tax, escheat, and whistle-blower claims.
Factors such as higher fuel and energy costs, rising food prices, rising interest rates, increases in housing costs, the size and timing of government stimulus programs, wage rates, unemployment levels, income tax rates and the timing of tax refunds, availability of consumer credit, consumer debt levels, 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.
Factors such as higher fuel and energy costs, rising food prices, high interest rates, increases in housing costs, the size and timing of government stimulus programs, wage rates, unemployment levels, income tax rates and the timing of tax refunds, availability of consumer credit, consumer debt levels, 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.
If our information systems or our back-up systems are damaged or cease to 13 function properly, we may have to make significant investments to fix or replace them, and we may suffer interruptions in our operations in the interim. Any material interruption in our computer systems could have a material adverse effect on our business and results of operations.
If our information systems or our back-up systems are damaged or cease to function properly, we may have to make significant investments to fix or replace them, and we may suffer interruptions in our operations in the interim. Any material interruption in our computer systems could have a material adverse effect on our business and results of operations.
Our ability to meet or exceed our operating performance targets depends upon the continuous, sufficient availability of high quality merchandise that we can acquire at prices 10 sufficiently below those paid by conventional retailers and that represent a value to our customers.
Our ability to meet or exceed our operating performance targets depends upon the continuous, sufficient availability of high quality merchandise that we can acquire at prices sufficiently below those paid by conventional retailers and that represent a value to our customers.
We continue to be involved in a number of employment-related lawsuits, including class/representative actions which are primarily in California. 15 We are subject to federal, state, and local rules and regulations in the United States, and to various international laws, which change from time to time.
We continue to be involved in a number of employment-related lawsuits, including class/representative actions which are primarily in California. We are subject to federal, state, and local rules and regulations in the United States, and to various international laws, which change from time to time.
RISK FACTORS Our fiscal 2022 Annual Report on Form 10-K and information we provide in our Annual Report to Stockholders, press releases, and other investor communications, including those on our corporate website, may contain forward-looking statements with respect to anticipated future events, our projected future financial performance, operations, competitive position, and our planned growth, that are all subject to risks and uncertainties that could cause our actual results to differ materially from those forward-looking statements and from our prior expectations and projections.
RISK FACTORS Our fiscal 2023 Annual Report on Form 10-K and information we provide in our Annual Report to Stockholders, press releases, and other investor communications, including those on our corporate website, may contain forward-looking statements with respect to anticipated future events, our projected future financial performance, operations, competitive position, and our planned growth, that are all subject to risks and uncertainties that could cause our actual results to differ materially from those forward-looking statements and from our prior expectations and projections.
To the extent that certain of our vendors are better able to manage their inventory levels and reduce the amount of their excess inventory, the amount of high quality merchandise available to us could be materially reduced.
To the extent that certain of our vendors are better able to manage their inventory levels and reduce the amount of their excess 11 inventory, the amount of high quality merchandise available to us could be materially reduced.
Consumer spending levels and shopping behaviors for the merchandise we sell are affected by many external factors. Currently, elevated inflation is affecting consumer demand for our products and increasing our costs.
Consumer spending levels and shopping behaviors for the merchandise we sell are affected by many external macroeconomic factors. Currently, elevated inflation is affecting consumer demand for our products and increasing our costs.
We may find it more difficult in new markets to hire, motivate, and retain qualified associates. 11 We are subject to risks associated with selling and importing merchandise produced in other countries.
We may find it more difficult in new markets to hire, motivate, and retain qualified associates. We are subject to risks associated with selling and importing merchandise produced in other countries.
We would then need to aggressively and progressively reduce our selling prices in order to clear out that inventory, which would result in decreased profit margins or losses on sales of that inventory, and adversely affect our results of operations in future periods. 12 As a regular part of our business, we purchase “packaway” inventory with the intent that it will be stored in our warehouses until a later date.
We would then need to reduce our selling prices aggressively and progressively in order to clear out that inventory, which would result in decreased profit margins or losses on sales of that inventory, and adversely affect our results of operations in future periods. 13 As a regular part of our business, we purchase “packaway” inventory with the intent that it will be stored in our warehouses until a later date.
Unexpected changes in the level of consumer spending on or preferences for apparel and home-related merchandise could adversely affect us. Our success depends on our ability to effectively buy and resell merchandise that meets customer demand. We work on an ongoing basis to identify customer trends and preferences, and to obtain merchandise inventory to meet anticipated customer needs.
Unexpected changes in the level of consumer spending on or preferences for apparel and home-related merchandise could adversely affect us. Our success depends on our ability to effectively buy and sell merchandise that meets customer demand. We work on an ongoing basis to identify customer trends and preferences, and to obtain merchandise inventory to meet anticipated customer needs.
All of our stores are located in the United States and its territories, so we are especially susceptible to changes in the U.S. economy. 9 Competitive pressures in the apparel and home-related merchandise retailing industry are high.
All of our stores are located in the United States and its territories, so we are especially susceptible to changes in the U.S. economy. 10 Competitive pressures in the apparel and home-related merchandise retailing industry are high.
It is also possible that an associate within our Company, or a third party we do business with, may purposefully or inadvertently cause a security breach involving such information. The increasing sophistication of cybercriminals, the increased potential for cyberattacks, and the advances in computer capabilities and remote access increases these risks.
It is also possible that an associate within our Company, or at a third party we do business with, may purposefully or inadvertently cause a security breach involving such information. The increasing sophistication of cybercriminals, the increased potential for cyberattacks, the advances in computer capabilities and artificial intelligence, and remote access increases these risks.
The flow of merchandise from our vendors could also be adversely affected by global shipping capacity limitations, or by financial or political instability in any of the countries in which the goods we purchase are manufactured.
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.
Some of the key information systems and processes we use to handle payment card transactions and check approvals, and the levels of security technology utilized in payment cards, are controlled by the banking and payment card industry, not by us.
Many of the key information systems and processes we use to handle payment card transactions and check approvals, and the levels of security technology utilized in payment cards, are controlled by the banking and payment card industry, not by us.
Cybercriminals may attempt to penetrate our point of sale and other information systems to misappropriate customer or business information, including but not limited to credit/debit card, personnel, or trade information.
Cybercriminals may attempt to penetrate our point of sale and other transaction processing information systems to misappropriate customer or business information, including but not limited to credit/debit card, personnel, or trade information.
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 the imposition of import or other restrictions such as product detention, war, acts of terrorism, natural disasters, or public health issues such as the COVID-19 pandemic (or other future pandemics) could adversely affect our business.
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 the imposition of import or other restrictions such as product detention, war, acts of terrorism, natural disasters, or public health issues such as pandemics could adversely affect our business.
The substantial sales growth in e-commerce within the last decade has also encouraged the entry of many new competitors, new business models, and an increase in competition from established companies looking for ways to create successful online shopping alternatives.
The substantial sales growth in e-commerce has also encouraged the entry of many new competitors, new business models, and an increase in competition from established companies looking for ways to create successful online shopping alternatives.
As a result of changes in shopping behaviors due to inflation, the COVID-19 pandemic, and disruptions to supply chains and store operations, we are at risk for inventory imbalances and the potential for higher than normal levels of markdowns to sell through our inventory, increased cost of goods, and for lost sales due to insufficient inventory to meet customer demand, any of which would negatively affect our sales, gross margin, and operating results.
As a result of changes in shopping behaviors due to factors such as inflation, the COVID-19 pandemic and the possibility of future pandemics, and disruptions to supply chains and store operations, we are at risk for inventory imbalances and the potential for higher than normal levels of markdowns to sell through our inventory, increased cost of goods, and for lost sales due to insufficient inventory to meet customer demand, any of which would negatively affect our sales, gross margin, and operating results.
Significant or continuing noncompliance (or alleged noncompliance) with such standards and laws by one or more vendors could have a negative impact on our reputation, could subject us to claims and liability, and could have an adverse effect on our results of operations.
Significant or continuing non-compliance (or alleged non-compliance) with such standards and laws by one or more vendors could have a negative impact on our reputation, could subject us to claims and liability, and could have an adverse effect on our results of operations.
Cybercriminals (including state-sponsored actors) may attempt to penetrate our information systems to deprive us from access to necessary business information and to disrupt our operations, as part of so-called “ransomware” extortion activity or otherwise.
Cybercriminals (including state-sponsored actors) may attempt to penetrate our information systems, including supply chain and logistics systems, to deprive us from access to necessary business information and to disrupt our operations, as part of so-called “ransomware” extortion activity or otherwise.
We depend upon our operations to generate strong cash flows to support our general operating activities, and to finance our operations, make capital expenditures and acquisitions, manage our debt levels, and return value to our stockholders through dividends and stock repurchases. While the pandemic continues, disruptions to our operations may occur, nationally, regionally, or in specific locations.
We depend upon our operations to generate strong cash flows to support our general operating activities, and to finance our operations, make capital expenditures and acquisitions, manage our debt levels, and return value to our stockholders through dividends and stock repurchases. Disruptions to our operations may occur, nationally, regionally, or in specific locations.
Risks in importing and selling such merchandise include import duties and quotas, compliance with anti-dumping regulations, economic 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, wars and fears of war, political unrest, natural disasters, regulations to address climate change, and trade restrictions.
Risks in importing and selling such merchandise include import duties and quotas, economic and supply chain uncertainties and adverse economic conditions (including shipping capacity limitations, cost increases, inflation, 12 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.
Because a significant portion of the apparel and other goods we sell is originally manufactured in other countries, constraints on the availability of shipping capacity, changes in transportation costs or in U.S. tariffs, trade relationships, or tax policies, and natural disasters, or public health issues such as the COVID-19 pandemic (or other future pandemics), that reduce the supply or increase the relative cost of imported goods, could also result in disruptions to our existing supply relationships.
Because a significant portion of the apparel and other goods we sell is originally manufactured in other countries, constraints on the availability of shipping capacity, changes in transportation costs or in U.S. tariffs, trade relationships or tax policies, geopolitical conflicts, natural disasters, or public health issues such as pandemics, that reduce the supply or increase the relative cost of imported goods, could also result in disruptions to our existing supply relationships.
Such disruptions may result from public health issues such as the COVID-19 pandemic (or other future pandemics), cyberattacks, damage or destruction to our distribution centers, weather-related events, natural disasters, trade restrictions, tariffs, third-party strikes or ineffective cross-dock operations, work stoppages or slowdowns, shipping capacity constraints, supply or shipping interruptions, or other factors beyond our control.
Such disruptions may result from public health issues such as pandemics, cyberattacks, damage or destruction to our distribution centers, weather-related events, natural disasters, trade restrictions, tariffs, third-party strikes or ineffective cross-dock operations, work stoppages or slowdowns, shipping capacity constraints, supply or shipping interruptions, or other factors beyond our control.
Natural or other disasters, such as the COVID-19 pandemic (or other future pandemics), wildfires, earthquakes, hurricanes, tornadoes, floods, or other extreme weather and climate conditions, or fires, explosions, and acts of war or terrorism, or public health issues, in any of our markets could disrupt our operations or our supply chain, or could shut down, damage, or destroy our stores or distribution facilities.
Natural or other disasters, such as wildfires, earthquakes, hurricanes, tornadoes, floods, or other extreme weather and climate conditions, or fires, explosions, and acts of war or terrorism, or public health issues (such as pandemics), in any of our markets could disrupt our operations or our supply chain, or could shut down, damage, or destroy our stores or distribution facilities.
Many of our retail store associates are in entry level or part-time positions with historically high rates of turnover. Our ability to control labor costs is subject to numerous external factors, including prevailing wage rates and health and other insurance costs, as well as the impact of legislation or regulations governing minimum wage or healthcare benefits.
Many of our retail store associates are in entry level or part-time positions with elevated rates of turnover. Our ability to control labor costs is subject to numerous external factors, including prevailing wage rates and health and other insurance costs, potential labor organizing activities, as well as the impact of legislation or regulations governing minimum wage or healthcare benefits.
The COVID-19 pandemic and accompanying economic impacts may continue to change shopping behavior so that our predictions and sales plans become less accurate, and that may lead us to have higher than usual levels of slow-moving or non-salable inventory at our prior planned price levels.
As evidenced by the COVID-19 pandemic, future pandemics and accompanying economic impacts may change shopping behavior so that our predictions and sales plans become less accurate, and that may lead us to have higher than usual levels of slow-moving or non-salable inventory at our prior planned price levels.
Although we use marketing and advertising mediums to attract customers to our stores, particularly through television and digital channels, our competitors may spend more or use different approaches, which could provide them with a competitive advantage.
Although we use marketing and advertising mediums to attract customers to our stores, particularly through traditional and streaming television, digital channels, and new store grand openings, our competitors may spend more or use different approaches, which could provide them with a competitive advantage.
The situation continues to evolve and has an unknown duration and severity. If we are unable to generate sufficient cash flows from operations to support our activities, our growth plans and our financial performance would be adversely affected. If our access to capital is restricted or our borrowing costs increase, our operations and financial condition could be adversely impacted.
If we are unable to generate sufficient cash flows from operations to support our activities, our growth plans and our financial performance would be adversely affected. If our access to capital is restricted or our borrowing costs increase, our operations and financial condition could be adversely impacted.
The harm may be immediate, without affording us an opportunity for redress or correction. 14 We are subject to impacts from instances of damage to our stores and losses of merchandise accompanying protests or demonstrations, which may result in temporary store closures. In recent years, there have been demonstrations and protests in cities throughout the United States.
We are subject to impacts from instances of damage to our stores and losses of merchandise accompanying protests or demonstrations, which may result in temporary store closures. In recent years, there have been demonstrations and protests in cities throughout the United States.
Our reputation is partially based on perceptions of various subjective qualities and overall integrity. Any incident that erodes the trust or confidence of our customers or the general public could adversely affect our reputation and business, particularly if the incident results in significant adverse publicity or governmental inquiry.
Any incident that erodes the trust or confidence of our customers or the general public could adversely affect our reputation and business, particularly if the incident results in significant adverse publicity or governmental inquiry.
Information posted may be adverse to our interests or may be inaccurate, which could negatively affect our sales, diminish customer trust, reduce employee morale and productivity, and lead to difficulties in recruiting and retaining qualified associates.
Information posted may be adverse to our interests or may be inaccurate, which could negatively affect our sales, diminish customer trust, reduce employee morale and productivity, and lead to difficulties in recruiting and retaining qualified associates. The harm may be immediate, without affording us an opportunity for redress or correction.
Inflation, supply chain disruptions, and other accompanying economic impacts from the Russia-Ukraine conflict, the COVID-19 pandemic, or other external events may continue to have significant negative effects on our costs and on consumer confidence, shopping behavior, and spending, which may adversely affect our sales and profitability.
Inflation, supply chain disruptions, and other accompanying economic impacts from geopolitical conflicts, public health crises (such as pandemics), or other external events may continue to have significant negative effects on our costs and on consumer confidence, shopping behavior, and spending, which may adversely affect our sales and profitability.
Elevated inflation, the Russia-Ukraine conflict, bank failures, the continuing COVID-19 pandemic, and other potential, adverse developments in these or other areas, could reduce demand for our merchandise, increase our cost of goods, freight, and payroll, decrease our inventory turnover, cause greater markdowns, and negatively affect our sales and margins.
Elevated inflation, geopolitical conflicts, bank failures, pandemics, and other potential, adverse developments, could reduce demand for our merchandise, increase our cost of goods, freight, and payroll, decrease our inventory turnover, cause greater markdowns, and negatively affect our sales and margins.
We may still face temporary store and distribution center closures nationally, regionally, or in specific locations. We have a concentration of store locations in the states of California, Texas, and Florida; together those states include almost 50% of our stores. More than half of our distribution center and warehouse capacity is located in California.
We have a concentration of store locations in the states of California, Texas, and Florida; together those states include almost 50% of our stores. More than half of our distribution center and warehouse capacity, approximately 22% of our stores, and our corporate headquarters, are located in California.
To support our continuing operations, our new store and distribution center growth plans and other capital investment plans, our quarterly dividends, and our stock repurchase program, we must maintain sufficient liquidity; the COVID-19 pandemic and related economic disruptions are adding significant uncertainty and challenges.
To support our continuing operations, our new store and distribution center growth plans and other capital investment plans, our quarterly dividends, our debt repayments, and our stock repurchase program, we must maintain sufficient liquidity.
Information or data security breaches, including cyber-attacks on our transaction processing and computer information systems, could result in theft or unauthorized disclosure of customer, credit card, employee, or other private and valuable information that we handle in the ordinary course of our business, disrupt our operations, damage our reputation, and increase our costs.
Information or data security breaches, including cyberattacks on our transaction processing and computer information systems (including malware intrusion, data exfiltration, identity theft, and other types of cybersecurity threats), could disrupt our operations, result in theft or unauthorized disclosure of our confidential and valuable business information or credit card and other customer information, and could adversely affect our business, disrupt our operations, damage our reputation, increase our costs, and create significant legal exposure.
An excessive rate of technological change could detract from the effectiveness of adoption and could make it more difficult for us to realize benefits from new technology. Poorly targeting opportunities, failing to make good investments, or making an investment commitment significantly above or below our needs could damage our competitive position and adversely impact our business and results of operations.
An excessive rate of technological change could detract from the effectiveness of adoption and could make it more difficult for us to realize benefits from new technology.
Additionally, the potential problems and interruptions associated with implementing technology system changes could disrupt or reduce the efficiency of our operations in the short term. These initiatives might not provide us with the anticipated benefits, or may provide them on a delayed schedule or at a higher cost.
These initiatives might not provide us with the anticipated benefits, or may provide them on a delayed schedule or at a higher cost.
There is significant uncertainty over potential changes in consumer behavior and shopping patterns as the pandemic continues and as different regions experience surges. Such impacts have and may in the future adversely affect our profitability, cash flows, financial results, and our capital resources.
Such impacts have in the past, and may in the future, adversely affect our profitability, cash flows, financial results, and our capital resources.
These risks could adversely affect our revenues and expenses, increase our effective tax rates, and reduce our profitability. GENERAL RISKS We may experience volatility in sales and earnings. Our business has slower and busier periods based on holiday and back-to-school seasons, weather, and other factors.
As a result, adverse or unseasonable weather in any of our markets could lead to lower-than-expected sales and cause us to increase our markdowns, which may negatively affect our sales and margins. We may experience volatility in sales and earnings. Our business has slower and busier periods based on holiday and back-to-school seasons, weather, and other factors.
In addition, if we do not properly allocate our capital resources to maximize returns, our operations, cash flows, and returns to stockholders could be adversely affected. 16 ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable. 17
In addition, if we do not properly allocate our capital resources to maximize returns, our operations, cash flows, and returns to stockholders could be adversely affected. 15 A pandemic, or natural or man-made disaster in a region where we have a concentration of stores, offices, or a distribution center could harm our business.
Removed
The ongoing Russia-Ukraine conflict is resulting in major, potentially prolonged economic sanctions and other responses from the United States and other countries, which present significant risks and uncertainties. These events may continue to cause various adverse macroeconomic effects, including inflation, increases in fuel and energy costs, rising food prices, and depressed financial markets.
Added
Ongoing geopolitical conflicts may continue to cause various adverse macroeconomic effects, including supply chain disruptions, market volatility and uncertainty, inflation, increases in fuel and energy costs, rising food prices, and depressed financial markets. Our business and operations were adversely affected by the COVID-19 pandemic in recent years, and could be affected by another public health event in the future.
Removed
The effects of the COVID-19 pandemic continue to present significant risks and uncertainty. The widespread pandemic continues to adversely impact global economies and has resulted in significant economic volatility.
Added
Poorly targeting opportunities, failing to make good investments, or making an investment commitment significantly above or below our needs could 14 damage our competitive position and adversely impact our business and results of operations. Additionally, the potential problems and interruptions associated with implementing technology system changes could disrupt or reduce the efficiency of our operations in the short term.
Removed
As a result, adverse or unseasonable weather in any of our markets could lead to disappointing sales and cause us to increase our markdowns, which may negatively affect our sales and margins. A pandemic, natural or man-made disaster in California or in another region where we have a concentration of stores, offices, or a distribution center could harm our business.
Added
A disruption within our logistics or supply chain network could adversely affect our ability to timely and efficiently transport merchandise to our stores or our distribution centers, which could impair our ability to meet customer demand for products and result in lost sales or increased supply chain costs.
Removed
Although no one store accounts for more than one percent of our sales, our corporate headquarters, Los Angeles buying office, nine distribution centers/warehouses, and approximately 22% of our stores are located in California.
Added
Any such disruptions could negatively impact our financial performance or financial condition. Damage to our corporate reputation or brands could adversely affect our sales and operating results. Our reputation is partially based on perceptions of various subjective qualities and overall integrity.
Removed
We carry fire, flood, wind, and earthquake insurance to help mitigate the risk of financial loss that may result from such events.
Added
These risks could adversely affect our revenues and expenses, increase our effective tax rates, and reduce our profitability. 17 ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable. 18
Removed
Any such disruptions could negatively impact our financial performance or financial condition. The COVID-19 pandemic may continue to adversely affect our business, operations, and financial performance and condition. The United States and other countries continue to experience a global pandemic with related, potentially significant, disruptions and cost impacts to retail operations and supply chains, and to general economic activities.
Removed
The COVID-19 pandemic continues to evolve, with new virus variants, and has an unknown duration and severity. As the COVID-19 pandemic continues, our business and operations may be affected by future recommendations and/or mandates from federal, state, and local authorities.
Removed
Additional outbreaks and spreading of the disease have been occurring across the United States and levels of spread have gone up and down in different regions.
Removed
Government authorities in affected regions have in the past taken actions, sometimes drastic, including mandatory capacity restrictions, reduced operating hours, and closure of retail operations, in an effort to slow down the spread of the disease. The COVID-19 pandemic may potentially adversely affect our ability to adequately staff our distribution centers, stores, and merchant and other support operations.
Removed
A severe outbreak or temporary closure affecting these facilities would be very disruptive to our ability to supply merchandise to our stores.
Removed
Further, the COVID-19 pandemic continues to impact multiple countries, leading to supply related disruptions, including port of exit/entry congestion, shipping delays, and ocean freight cost increases, which may also adversely affect our ability to access and ship products from affected regions. Damage to our corporate reputation or brands could adversely affect our sales and operating results.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeState/Territory January 28, 2023 January 29, 2022 Alabama 26 25 Arizona 84 82 Arkansas 10 10 California 452 443 Colorado 41 39 Delaware 4 4 District of Columbia 2 2 Florida 239 231 Georgia 66 64 Guam 3 2 Hawaii 21 22 Idaho 12 12 Illinois 101 94 Indiana 31 28 Iowa 7 6 Kansas 14 12 Kentucky 17 15 Louisiana 21 21 Maryland 28 27 Mississippi 11 9 Missouri 31 30 Montana 6 6 Nebraska 7 6 Nevada 41 41 New Jersey 18 18 New Mexico 20 18 North Carolina 52 49 North Dakota 3 3 Ohio 22 11 Oklahoma 29 28 Oregon 32 30 Pennsylvania 53 51 South Carolina 31 30 South Dakota 2 2 Tennessee 40 39 Texas 294 277 Utah 26 24 Virginia 42 41 Washington 45 45 West Virginia 4 2 Wisconsin 24 21 Wyoming 3 3 Total 2,015 1,923 18 Where possible, we obtain sites in buildings requiring minimal alterations, allowing us to establish stores in new locations in a relatively short period of time and at reasonable costs in a given market.
Biggest changeState/Territory February 3, 2024 January 28, 2023 Alabama 27 26 Arizona 89 84 Arkansas 10 10 California 463 452 Colorado 42 41 Delaware 4 4 District of Columbia 2 2 Florida 244 239 Georgia 70 66 Guam 3 3 Hawaii 21 21 Idaho 12 12 Illinois 102 101 Indiana 33 31 Iowa 9 7 Kansas 15 14 Kentucky 17 17 Louisiana 24 21 Maryland 32 28 Michigan 8 — Minnesota 1 — Mississippi 12 11 Missouri 31 31 Montana 6 6 Nebraska 8 7 Nevada 43 41 New Jersey 21 18 New Mexico 22 20 New York 4 — North Carolina 53 52 North Dakota 3 3 Ohio 25 22 Oklahoma 30 29 Oregon 32 32 Pennsylvania 56 53 South Carolina 31 31 South Dakota 2 2 Tennessee 45 40 Texas 304 294 Utah 27 26 Virginia 43 42 Washington 48 45 West Virginia 4 4 Wisconsin 28 24 Wyoming 3 3 Total 2,109 2,015 20 Where possible, we obtain sites in buildings requiring minimal alterations, allowing us to establish stores in new locations in a relatively short period of time and at reasonable costs in a given market.
Total Approximate Square Footage Location Number of Facilities Owned Leased Distribution/Warehouse Facilities Buckeye, Arizona 1 1 1,700,000 — Moreno Valley, California 3 1,300,000 1,850,000 Perris, California 2 1,999,000 — Riverside, California 1 449,000 — Shafter, California 3 1,700,000 1,353,000 Statesville, North Carolina 1 — 640,000 Carlisle, Pennsylvania 4 465,000 604,000 Fort Mill, South Carolina 5 2,051,000 415,000 Rock Hill, South Carolina 2 1,200,000 431,000 Brookshire, Texas 1 1,890,000 — Office Space Dublin, California 1 414,000 — Los Angeles, California 1 — 120,000 Boston, Massachusetts 1 — 5,000 New York City, New York 1 572,000 — 1 We are currently in the process of completing the construction of this distribution center.
Total Approximate Square Footage Location Number of Facilities Owned Leased Distribution and Warehouse Facilities Buckeye, Arizona 1 1 1,700,000 — Moreno Valley, California 3 1,300,000 1,850,000 Perris, California 2 1,999,000 — Riverside, California 1 449,000 — Shafter, California 3 1,700,000 1,353,000 Statesville, North Carolina 1 — 640,000 Carlisle, Pennsylvania 4 465,000 604,000 Fort Mill, South Carolina 5 2,051,000 415,000 Rock Hill, South Carolina 2 1,200,000 431,000 Brookshire, Texas 1 1,890,000 — Office Space Dublin, California 1 414,000 — Los Angeles, California 1 — 120,000 Boston, Massachusetts 1 — 5,000 New York City, New York 2 1 572,000 — 1 We are currently in the process of completing the construction of this distribution center. 2 Our New York buying office building is subject to a 99-year ground lease.
See additional discussion under “Distribution” in ITEM 1. BUSINESS. 19
See additional discussion under “Distribution” in ITEM 1. BUSINESS. 21
The following table summarizes the locations of our stores by state/territory as of January 28, 2023 and January 29, 2022.
BUSINESS. 19 The following table summarizes the locations of our stores by state/territory as of February 3, 2024 and January 28, 2023.
ITEM 2. PROPERTIES At January 28, 2023, we operated a total of 2,015 stores, of which 1,693 were Ross stores in 40 states, the District of Columbia, and Guam, and 322 were dd’s DISCOUNTS stores in 21 states. Nearly all our stores are leased. See additional discussion under “Stores” in ITEM 1. BUSINESS.
ITEM 2. PROPERTIES At February 3, 2024, we operated a total of 2,109 stores, of which 1,764 were Ross stores in 43 states, the District of Columbia, and Guam, and 345 were dd’s DISCOUNTS stores in 22 states. See additional discussion under “Stores” in ITEM 1.
The following table summarizes the location and approximate sizes of our distribution/warehouse facilities and office locations as of January 28, 2023. Square footage information for the distribution and warehouse facilities represents total ground floor area of the facility. Square footage information for office space represents total space owned and leased.
Square footage information for the distribution and warehouse facilities represents total ground floor area of the facility.
At January 28, 2023, the majority of our stores had unexpired original lease terms ranging from three to ten years with three to four renewal options of five years each. The weighted-average unexpired current lease term of our leased stores is approximately six years or approximately 19 years if renewal options are included.
Nearly all of our stores are leased. The majority of our new stores have unexpired original lease terms ranging from three to ten years with three to four renewal options of five years each. The following table summarizes the location and approximate sizes of our distribution/warehouse facilities and office locations as of February 3, 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS We have been named in class/representative action lawsuits, primarily in California, alleging violations by us of wage and hour laws and consumer protection laws. Class/representative action litigation remains pending as of January 28, 2023. We are also party to various other legal and regulatory proceedings arising in the normal course of business.
Biggest changeITEM 3. LEGAL PROCEEDINGS We have been named in class/representative action lawsuits, primarily in California, alleging violations by us of wage and hour laws. Class/representative action litigation remains pending as of February 3, 2024. We are also party to various other legal and regulatory proceedings arising in the normal course of business.
The proceedings are ongoing and remain subject to significant uncertainties. We believe that the resolution of our currently pending class/representative action litigation and other currently pending legal and regulatory proceedings will not have a material adverse effect on our financial condition, results of operations, or cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 20 PART II
The proceedings are ongoing and remain subject to significant uncertainties. We believe that the resolution of our currently pending class/representative action litigation and other currently pending legal and regulatory proceedings will not have a material adverse effect on our financial condition, results of operations, or cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 22 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeInformation regarding shares of common stock we repurchased during the fourth quarter of fiscal 2022 is as follows: Period Total number of shares (or units) purchased ¹ Average price paid per share (or unit) Total number of shares (or units) purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs ($000) November (10/30/2022 - 11/26/2022) 583,255 $99.14 583,255 $1,123,480 December (11/27/2022 - 12/31/2022) 861,651 $115.90 855,352 $1,024,350 January (01/01/2023 - 01/28/2023) 650,657 $118.49 627,629 $950,000 Total 2,095,563 $112.04 2,066,236 $950,000 ¹ We acquired 29,327 shares of treasury stock during the quarter ended January 28, 2023.
Biggest changeInformation regarding shares of common stock we repurchased during the fourth quarter of fiscal 2023 is as follows: Period Total number of shares (or units) purchased 1 Average price paid per share (or unit) Total number of shares (or units) purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs ($000) November (10/29/2023 - 11/25/2023) 461,842 $122.54 461,842 $190,000 December (11/26/2023 - 12/30/2023) 723,609 $134.08 723,609 $92,980 January (12/31/2023 - 02/03/2024) 672,906 $138.18 672,906 $0 Total 1,858,357 $132.70 1,858,357 $0 ¹ We did not acquire any shares of treasury stock during the quarter ended February 3, 2024.
The information under Item 12 of this Annual Report on Form 10-K under the caption “Equity compensation plan information” is incorporated herein by reference. 21 Stockholder Return Performance Graph The following information in this Item 5 shall not be deemed filed for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
The information under Item 12 of this Annual Report on Form 10-K under the caption “Equity compensation plan information” is incorporated herein by reference. 23 Stockholder Return Performance Graph The following information in this Item 5 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
Our Board of Directors declared a cash dividend of $0.285 per common share in March, May, August, and November 2021. Issuer purchases of equity securities.
Our Board of Directors declared a cash dividend of $0.3100 per common share in March, May, August, and November 2022. Issuer purchases of equity securities.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES General information. Our stock is traded on The NASDAQ Global Select Market ® under the symbol ROST. There were 1,217 stockholders of record as of March 6, 2023 and the closing stock price on that date was $112.40 per share. Cash dividends.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES General information. Our stock is traded on The Nasdaq Global Select Market ® under the symbol ROST. There were 1,234 stockholders of record as of March 11, 2024, and the closing stock price on that date was $145.87 per share. Cash dividends.
On February 28, 2023, our Board of Directors declared a quarterly cash dividend of $0.335 per common share, payable on March 31, 2023. Our Board of Directors declared cash dividends of $0.310 per common share in March, May, August, and November 2022.
On March 5, 2024, our Board of Directors declared a quarterly cash dividend of $0.3675 per common share, payable on March 29, 2024. Our Board of Directors declared cash dividends of $0.3350 per common share in February, May, August, and November 2023.
Treasury stock includes shares acquired from employees for tax withholding purposes related to vesting of restricted stock grants. All remaining shares were repurchased under our publicly announced stock repurchase program. In March 2022, our Board of Directors approved a new two-year program to repurchase up to $1.9 billion of our common stock through fiscal 2023.
Treasury stock includes shares acquired from employees for tax withholding purposes related to vesting of restricted stock grants. In March 2024, ou r Board of Directors approved a new two-year program to repurchase up to $2.1 billion of our common stock through fiscal 2025.
The graph is a historical representation of past performance only and is not necessarily indicative of future performance. 22 COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Ross Stores, Inc., the S&P 500 Index, and Dow Jones Apparel Retailers Indexed Returns for Fiscal Years Ended Base Period Company/Index 2017 2018 2019 2020 2021 2022 Ross Stores, Inc. 100 117 145 144 125 158 S&P 500 Index 100 98 119 139 172 158 Dow Jones Apparel Retailers 100 109 121 130 143 157 23 ITEM 6.
The graph is a historical representation of past performance only and is not necessarily indicative of future performance. 24 COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Ross Stores, Inc., the S&P 500 Index, and Dow Jones Apparel Retailers Indexed Returns for Fiscal Years Ended Base Period Company/Index 2018 2019 2020 2021 2022 2023 Ross Stores, Inc. 100 124 123 107 135 164 S&P 500 Index 100 122 143 176 161 195 Dow Jones Apparel Retailers 100 111 119 132 144 161 25 ITEM 6.
This new program replaced the previous $1.5 billion stock repurchase program, effective at the end of fiscal 2021 (at which time we had repurchased $650 million under the $1.5 billion program). Refer to Note H: Stockholders’ Equity in the Notes to Consolidated Financial Statements for equity compensation plan information.
Refer to Note H: Stockholders’ Equity in the Notes to Consolidated Financial Statements for equity compensation plan information.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe estimate that existing cash and cash equivalent balances, cash flows from operations, bank credit facility, and trade credit are adequate to meet our operating cash needs and to fund our planned capital investments, common stock repurchases, and quarterly dividend payments for at least the next 12 months. 30 Contractual Obligations The table below presents our significant contractual obligations as of January 28, 2023: Less than 1 year Greater than 1 year Total¹ ($000) Recorded contractual obligations: Senior notes $ — $ 2,474,991 $ 2,474,991 Operating leases 684,987 2,612,652 3,297,639 New York buying office ground lease 2 7,552 1,109,430 1,116,982 Unrecorded contractual obligations: Real estate obligations 3 13,167 262,651 275,818 Interest payment obligations 80,316 435,134 515,450 Purchase obligations 4 3,387,014 68,507 3,455,521 Total contractual obligations $ 4,173,036 $ 6,963,365 $ 11,136,401 1 We have a $57.4 million liability for unrecognized tax benefits that is included in Other long-term liabilities on our Consolidated Balance Sheets.
Biggest changeContractual Obligations The table below presents our significant contractual obligations as of February 3, 2024: Less than 1 year Greater than 1 year Total¹ ($000) Recorded contractual obligations: Senior notes $ 250,000 $ 2,224,991 $ 2,474,991 Operating leases 723,031 2,656,418 3,379,449 New York buying office ground lease 2 7,552 1,101,192 1,108,744 Unrecorded contractual obligations: Real estate obligations 3 14,339 218,625 232,964 Interest payment obligations 80,316 354,818 435,134 Purchase obligations 4 4,236,623 104,916 4,341,539 Total contractual obligations $ 5,311,861 $ 6,660,960 $ 11,972,821 1 We have a $56.0 million liability for unrecognized tax benefits that is included in Other long-term liabilities on our Consolidated Balance Sheets.
The factors underlying our forecasts and plans 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. 32
The factors underlying our forecasts and plans 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.
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,” “looking ahead,” and similar expressions identify forward-looking statements.
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.
A third party administers the program; our responsibility is limited to making payment on the terms originally negotiated with the supplier, regardless of whether the supplier sells its receivable to a financial institution. We do not enter into financial agreements with the participating financial institution in connection with the program.
A third party administers the program; our responsibility is limited to making payment on the terms originally negotiated with the supplier, regardless of whether the supplier sells its receivable to a financial institution. We do not enter into financial agreements with the participating financial institutions in connection with the program.
Should a greater amount of claims occur compared to what is estimated or the costs of medical care increase beyond what was anticipated, our recorded reserves may not be sufficient and additional charges could be required. A five percent increase or decrease in our insurance reserves would not have materially impacted our net earnings in fiscal 2022 .
Should a greater amount of claims occur compared to what is estimated or the costs of medical care increase beyond what was anticipated, our recorded reserves may not be sufficient and additional charges could be required. A five percent increase or decrease in our insurance reserves would not have materially impacted our net earnings in fiscal 2023.
Our planned capital expenditures for fiscal 2023 are for investments in our supply chain to support long-term growth, including construction of our next distribution centers, costs for fixtures and leasehold improvements to open new Ross and dd’s DISCOUNTS stores, investments in information technology systems, and for various other expenditures related to our stores, distribution centers, and buying and corporate offices.
Our planned capital expenditures for fiscal 2024 are for investments in our supply chain to support long-term growth, including construction of our next distribution centers, investments in our information technology systems, costs for fixtures and leasehold improvements to open new Ross and dd’s DISCOUNTS stores, 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. The increase in our planned capital expenditures for fiscal 2023 compared to fiscal 2022 is primarily driven by investments in our next distribution centers, existing store improvements, information technology systems, and various expenditures related to distribution centers, and buying and corporate offices.
We expect to fund capital expenditures with available cash. The increase in our planned capital expenditures for fiscal 2024 compared to fiscal 2023 is primarily driven by investments in our next distribution centers, information technology systems, existing store improvements, and various expenditures related to distribution centers, and buying and corporate offices.
We continue to believe that consumers’ increased focus on value and convenience and the significant number of brick-and-mortar retail closures and bankruptcies over the last several years, provides opportunities for us to gain market share.
We continue to believe that consumers’ increased focus on value and convenience and the significant number of brick-and-mortar retail closures and bankruptcies over the last several years provide opportunities for us to gain market share.
Our effective tax rate is impacted by changes in tax law and accounting guida nce, location of new stores, level of earnings, tax effects associated with stock-based compensation, and the resolution of tax positions with various tax authorities. In fiscal 2022, the Inflation Reduction Act (“IRA”) was signed into law.
Our effective tax rate is impacted by changes in tax law 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. In fiscal 2022, the Inflation Reduction Act (“IRA”) was signed into law.
This liability is excluded from the schedule above as the timing of payments cannot be reasonably estimated. 2 Our New York buying office building is subject to a 99-year ground lease. 3 Minimum lease payments for operating leases signed that have not yet commenced. 4 Purchase obligations primarily consist of merchandise inventory purchase orders, commitments related to construction projects, transportation, information technology services, store fixtures and supplies, and maintenance contracts.
This liability is excluded from the schedule above as the timing of payments cannot be reasonably estimated. 2 Our New York buying office building is subject to a 99-year ground lease. 3 Minimum lease payments for operating leases signed that have not yet commenced. 4 Purchase obligations primarily consist of merchandise inventory purchase orders, commitments related to construction projects, transportation, information technology services, store fixtures and supplies, and maintenance contracts. 32 Supply chain finance program.
Our primary ongoing cash requirements are for merchandise inventory purchases, payroll, operating and variable lease costs, taxes, capital expenditures in connection with 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, pay dividends, and repay debt as it becomes due.
Our primary ongoing cash requirements are for merchandise inventory purchases, payroll, operating and variable lease costs, taxes, capital expenditures related to our new and existing stores, and investments in distribution centers, information systems, and buying and corporate offices. We also use cash to repurchase stock under our stock repurchase programs, pay dividends, and repay debt as it becomes due.
We ended fiscal 2022 with $4.6 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 senior unsecured revolving credit facility.
We ended fiscal 2023 with $4.9 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 senior unsecured revolving credit facility.
Supply chain finance program. We facilitate a voluntary supply chain finance program (the “program”) to provide certain suppliers with the opportunity to sell receivables due from us to a participating financial institution at the sole discretion of both the suppliers and the financial institution.
We facilitate a voluntary supply chain finance program (the “program”) to provide certain suppliers with the opportunity to sell their receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions.
During fiscal 2022, 2021, and 2020, we paid dividends of $431.3 million, $405.1 million , and $101.4 million, respectively. Short-term trade credit represents a significant source of financing for our merchandise inventory. Trade credit arises from customary payment terms and trade practices with our vendors.
During fiscal 2023, 2022, and 2021, we paid dividends of $454.8 million, $431.3 million, and $405.1 million, respectively. Short-term trade credit represents a significant source of financing for our merchandise inventory. Trade credit arises from customary payment terms and trade practices with our vendors.
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 impact our operating cash flow. At the end of fiscal 2022, packaway inventory was 40% of total inventory compared to 40% and 38% at the end of fiscal 2021 and 2020, respectively.
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 impact our operating cash flow. Packaway inventory was 40% of total inventory at the end of fiscal 2023 and 2022.
As of January 28, 2023 , we had no borrowings or standby letters of credit outstanding under the 2022 Credit Facility, the $1.3 billion credit facility remained in place and available, and we were in compliance with the financial covenant. Refer to Note D: Debt in the Notes to Consolidated Financial Statements for additional information. Senior notes.
As of February 3, 2024 , we had no borrowings or standby letters of credit outstanding under the Credit Facility, t he $1.3 billion Credit Facility remained in place and available, and we were in compliance with the financial covenant. Refer to Note D: Debt in the Notes to Consolidated Financial Statements for additional information. Senior notes.
We also operate 322 dd’s DISCOUNTS stores in 21 states as of January 28, 2023 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.
We also operate 345 dd’s DISCOUNTS stores in 22 states as of February 3, 2024 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.
Historically, our actual physical inventory count results have shown our provision for shortage to be reliable. As a measure of sensitivity, a five percent change in shortage rates as of January 28, 2023 would not have materially impacted our cost of goods sold in fiscal 2022. Insurance obligations.
Historically, our actual physical inventory count results have shown our provision for shortage to be reliable. A five percent change in shortage rates as of February 3, 2024 would not have materially impacted our cost of goods sold in fiscal 2023. Insurance obligations.
Other than the unrecorded contractual obligations noted above, we do not have any material off-balance sheet arrangements as of January 28, 2023. 31 Other Critical Accounting Estimates The preparation of our consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts.
Other than the unrecorded contractual obligations noted above, we did not have any material off-balance sheet arrangements as of February 3, 2024. Other Critical Accounting Estimates The preparation of our consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts.
Investing Activities Net cash used in investing activities was $654.1 million, $557.8 million, and $405.4 million in fiscal 2022, 2021, and 2020, respectively, and was related to capital expenditures.
Investing Activities Net cash used in investing activities was $762.8 million, $654.1 million, and $557.8 million in fiscal 2023, 2022, and 2021 , respectively, and was related to our capital expenditures.
The amounts owed to a participating financial institution under the program and included in Accounts payable were $119.2 million and $272.7 million at January 28, 2023 and January 29, 2022, respectively. We account for all payments made under the program as a reduction to operating cash flows in Accounts payable within the Consolidated Statements of Cash Flows.
The amounts owed to participating financial institutions under the program and included in Accounts payable were $146.9 million and $119.2 million at February 3, 2024 and January 28, 2023, respectively. We account for all payments made under the program as a reduction to operating cash flows in Accounts payable within the Consolidated Statements of Cash Flows.
This was primarily driven by net earnings excluding non-cash expenses for depreciation, amortization, and stock-based compensation, partially offset by higher merchandise inventory receipts net of accounts payable . Net cash provided by operating activities was $2.2 billion in fiscal 2020.
This was primarily driven by net earnings excluding non-cash expenses for depreciation, amortization, and stock-based compensation, partially offset by higher merchandise inventory receipts net of accounts payable .
Future impact from inflation, interest rate increases, ongoing military conflicts and economic sanctions, the COVID-19 pandemic, climate change, and other economic, regulatory, and industry trends that could potentially impact revenue, profitability, operating conditions, and growth are difficult to predict.
Future impact from inflation, high interest rates and interest rate increases, ongoing military conflicts and economic sanctions, public health crises, climate change, and other economic, regulatory, and industry trends that could potentially impact our revenue, profitability, operating conditions, and growth are difficult to predict.
For comparisons of fiscal 2021 to both fiscal 2019 and fiscal 2020, refer to our Annual Report on Form 10-K for fiscal 2021. 24 Results of Operations The following table summarizes the financial results for fiscal 2022, 2021, and 2020: 2022 2021 2020 Sales Sales (millions) $ 18,696 $ 18,916 $ 12,532 Sales (decline) growth (1.2)% 50.9% (21.9)% Comparable store sales (decline) growth (4)% 1 13% 2 n/a 3 Costs and expenses (as a percent of sales) Cost of goods sold 74.6% 72.5% 78.5% Selling, general and administrative 14.8% 15.2% 20.0% Interest expense, net 0.0% 0.4% 0.7% Earnings before taxes (as a percent of sales) 10.6% 11.9% 0.8% Net earnings (as a percent of sales) 8.1% 9.1% 0.7% 1 Comparable stores are stores open for more than 14 complete months. 2 Amount shown is for fiscal 2021 compared to fiscal 2019.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for fiscal 2022. 26 Results of Operations The following table summarizes our financial results for fiscal 2023, 2022, and 2021: 2023 2022 2021 Sales Sales (millions) $ 20,377 $ 18,696 $ 18,916 Sales growth (decline) 9.0% (1.2)% 50.9% Comparable store sales growth (decline) 5% 1 (4)% 1 13% 2 Costs and expenses (as a percent of sales) Cost of goods sold 72.7% 74.6% 72.5% Selling, general and administrative 16.0% 14.8% 15.2% Interest (income) expense, net (0.8)% 0.0% 0.4% Earnings before taxes (as a percent of sales) 12.1% 10.6% 11.9% Net earnings (as a percent of sales) 9.2% 8.1% 9.1% 1 Comparable stores are stores open for more than 14 complete months. 2 Amount shown is for fiscal 2021 compared to the fiscal year ended February 1, 2020 (“fiscal 2019”).
Net earnings as a percentage of sales for fiscal 2021 were higher compared to fiscal 2020 primarily due to lower cost of goods sold, lower SG&A expenses, and lower interest expense, partially offset by higher taxes on earnings. Earnings per share. Diluted earnings per share in fiscal 2022 was $4.38 compared to $4.87 in the prior year.
Net earnings as a percentage of sales for fiscal 2023 was higher than in fiscal 2022 primarily due to lower cost of goods sold and higher interest income, partially offset by higher SG&A expenses. Earnings per share. Diluted earnings per share in fiscal 2023 was $5.56 compared to $4.38 in the prior year.
Our effective tax rate represents the applicable combined federal and state statutory rates reduced by the federal benefit of state taxes deductible on federal returns.
Our effective tax rate for fiscal 2023, 2022, and 2021 was approximately 24%. Our effective tax rate represents the applicable combined federal and state statutory rates reduced by the federal benefit of state taxes deductible on federal returns.
($ millions) 2022 2021 2020 Cash provided by operating activities $ 1,689.4 $ 1,738.8 $ 2,245.9 Cash used in investing activities (654.1) (557.8) (405.4) Cash (used in) provided by financing activities (1,405.4) (1,152.4) 1,701.9 Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents $ (370.1) $ 28.6 $ 3,542.4 Operating Activities Net cash provided by operating activities was $1.7 billion in fiscal 2022.
($ millions) 2023 2022 2021 Cash provided by operating activities $ 2,514.5 $ 1,689.4 $ 1,738.8 Cash used in investing activities (762.8) (654.1) (557.8) Cash used in financing activities (1,428.5) (1,405.4) (1,152.4) Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents $ 323.2 $ (370.1) $ 28.6 29 Operating Activities Net cash provided by operating activities was $2.5 billion in fiscal 2023.
Store Count 2022 2021 2020 Ross Beginning of the period 1,628 1,585 1,546 Opened in the period 71 44 50 Closed in the period (6) 1 (1) (11) Total Ross stores end of period 1,693 1,628 1,585 dd’s DISCOUNTS Beginning of the period 295 274 259 Opened in the period 28 21 16 2 Closed in the period (1) — (1) Total dd’s DISCOUNTS stores end of period 322 295 274 Total stores end of period 2,015 1,923 1,859 1 Includes the temporary closure of a store impacted by a weather event. 2 Includes the reopening of a store previously temporarily closed due to a weather event. 25 The total selling square footage as of January 28, 2023, January 29, 2022, and January 30, 2021 was 41.4 million, 39.9 million, and 38.8 million, respectively.
The following table summarizes the stores opened and closed during fiscal 2023, 2022, and 2021: Store Count 2023 2022 2021 Ross Dress for Less Beginning of the period 1,693 1,628 1,585 Opened in the period 72 1 71 44 Closed in the period (1) (6) 2 (1) Total Ross Dress for Less stores end of period 1,764 1,693 1,628 dd’s DISCOUNTS Beginning of the period 322 295 274 Opened in the period 25 28 21 Closed in the period (2) (1) — Total dd’s DISCOUNTS stores end of period 345 322 295 Total stores end of period 2,109 2,015 1,923 1 Includes the reopening of a store previously temporarily closed due to a weather event. 2 Includes the temporary closure of a store impacted by a weather event. 27 The total selling square footage as of February 3, 2024, January 28, 2023, and January 29, 2022 was 42.8 million, 41.4 million, and 39.9 million, respectively.
W e are closely monitoring market share trends for the off-price industry and we believe our share gains will continue to grow through continued focus on bringing value and convenience to our consumers.
We are closely monitoring market share trends for the off-price industry and we believe our share gains will continue to grow through continued focus on bringing value and convenience to our customers, despite the ongoing uncertainty in the current macroeconomic and geopolitical environments.
Ross is the largest off-price apparel and home fashion chain in the United States, with 1,693 locations in 40 states, the District of Columbia, and Guam, as of January 28, 2023.
Ross is the largest off-price apparel and home fashion chain in the United States, with 1,764 locations in 43 states, the District of Columbia, and Guam, as of February 3, 2024.
We believe our merchandising and operational strategies enable us to deliver the most competitive bargains available to meet our customers’ ongoing demand for name brand fashions for the family and home at compelling discounts every day.
We believe our merchandising and operational strategies enable us to deliver the most competitive bargains available to meet our customers’ ongoing demand for quality branded goods for the family and home at compelling discounts every day. Our merchandising strategies include offering a wide assortment of quality branded bargains for our customers.
On February 28, 2023 , our Board of Directors declared a quarterly cash dividend of $0.335 per common share, payable on March 31, 2023. Our Board of Directors declared a cash dividend of $0.310 per common share in March, May, August, and November 2022 and a cash dividend of $0.285 per common share in March, May, August, and November 2021.
Our Board of Directors declared a cash dividend of $0.3350 per common share in February, May, August, and November 2023. Our Board of Directors declared a cash dividend of $0.3100 per common share in March, May, August, and November 2022 and a cash dividend of $0.2850 per common share in March, May, August, and November 2021.
Forward-Looking Statements Our Annual Report on Form 10-K for fiscal 2022, and information we provide in our Annual Report to Stockholders, press releases, and other investor communications including those on our corporate website, may contain a number of forward-looking statements regarding, without limitation, projected sales, costs and earnings, planned new store growth, capital expenditures, the continuing challenges from the COVID-19 pandemic and related economic disruptions and our plans and responses to them, sustainability and carbon reduction targets, and other matters.
Recent Accounting Pronouncements Refer to Note A: Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements for a discussion of recent accounting pronouncements and their impact to our Consolidated Financial Statements. 33 Forward-Looking Statements Our Annual Report on Form 10-K for fiscal 2023, and information we provide in our Annual Report to Stockholders, press releases, and other investor communications including those on our corporate website, may contain a number of forward-looking statements regarding, without limitation, projected sales, costs, earnings, planned new store growth, capital expenditures, sustainability and carbon reduction targets, and other matters.
As of January 28, 2023, we had approximately $2.5 billion of outstanding unsecured Senior Notes. Refer to Note D: Debt in the Notes to Consolidated Financial Statements for additional information. Other financing activities. In March 2019, our Board of Directors approved a two-year $2.55 billion stock repurchase program through fiscal 2020.
As of February 3, 2024, we had approximately $2.5 billion of outstanding unsecured Senior Notes. Refer to Note D: Debt in the Notes to Consolidated Financial Statements for additional information. Other financing activities. In May 2021, our Board of Directors authorized a program to repurchase up to $1.5 billion of the Company’s common stock through fiscal 2022.
In May 2021, our Board of Directors authorized a program to repurchase up to $1.5 billion of our common stock through fiscal 2022. In March 2022, our Board of Directors approved a new two-year program to repurchase up to $1.9 billion of our common stock through fiscal 2023.
In March 2024, our Board of Directors approved a new two-year program to repurchase up to $2.1 billion of the Company’s common stock through fiscal 2025.
The standby letters of credit are collateralized by restricted cash and the collateral trust consists of restricted cash, cash equivalents, and investments. Trade letters of credit. We had $7.6 million and $19.3 million in trade letters of credit outstanding at January 28, 2023 and January 29, 2022, respectively .
As of February 3, 2024 and January 28, 2023, we had $2.2 million and $2.6 million, respectively, in standby letters of credit outstanding and $60.8 million and $57.8 million, respectively, 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.
Cost of goods sold in fiscal 2022 increased $0.2 billion compared to the prior year mainly due to higher ocean and domestic freight costs, increased distribution costs, and higher merchandise markdowns, partially offset by lower comparable store sales and lower buying costs. Cost of goods also increased due to the opening of 92 net new stores during fiscal 2022.
Cost of goods sold in fiscal 2023 increased $0.9 billion compared to the prior year mainly due to the 5% comparable store sales increase, higher sales from the opening of 94 net new stores during fiscal 2023, higher incentive compensation expense, and the impact of the 53rd week, partially offset by lower ocean and domestic freight costs.
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 facility, and other credit sources to meet our capital and liquidity requirements, including for lease and interest payment obligations.
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 facility, and other credit sources to meet our capital and liquidity requirements. During fiscal 2023, fiscal 2022, and fiscal 2021, our liquidity and capital requirements were provided by available cash and cash flows from operations.
The decrease in cash flow from operating activities in fiscal 2021 compared to fiscal 2020 was primarily driven by lower accounts payable leverage (defined as accounts payable divided by merchandise inventory) , partially offset by higher net earnings in the year. 28 Accounts payable leverage was 99%, 105%, and 150% as of January 28, 2023, January 29, 2022, and January 30, 2021, respectively.
The increase in cash flow from operating activities in fiscal 2023 compared to fiscal 2022 was primarily driven by higher current year incentive compensation accruals combined with lower incentive compensation payments and higher net earnings, partially offset by lower accounts payable leverage (defined as accounts payable divided by merchandise inventory).
During fiscal 2022, 2021, and 2020, we also acquired 0.5 million shares in each year of treasury stock from our employee equity incentive plans, for aggregate purchase prices of approximately $48.9 million, $57.3 million, and $45.2 million, respectively.
During fiscal 2023, 2022, and 2021, we also acquired 0.5 million shares of treasury stock in each year from our employee equity incentive plans for aggregate purchase prices of approximately $48.6 million, $48.9 million, and $57.3 million, respectively. 31 On March 5, 2024 , our Board of Directors declared a quarterly cash dividend of $0.3675 per common share, payable on March 29, 2024.
The IRA made several changes to business tax provisions including a one percent excise tax on stock repurchases made after December 31, 2022. The one percent excise tax does not impact our effective tax rate. In fiscal 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law.
The IRA made several changes to business tax provisions including a one percent excise tax on stock repurchases made after December 31, 2022. The one percent excise tax does not impact our effective tax rate. Net earnings.
Our capital expenditures over the last three years are set forth in the table below: ($ millions) 2022 2021 2020 New stores $ 170.9 $ 124.9 $ 81.1 Existing stores 147.6 103.3 54.8 Information systems, corporate, and other 65.4 50.3 38.3 Distribution and transportation 270.2 279.3 231.2 Total capital expenditures $ 654.1 $ 557.8 $ 405.4 Capital expenditures for fiscal 2023 are projected to be approximately $810 million.
The increase in cash used for inv esting activities in fiscal 2023 compared to fiscal 2022 was primarily due to higher capital expenditures related to the construction and build-out of new stores, the construction of distribution centers, including capital expenditures related to our new Buckeye, Arizona distribution center, and various information technology projects. 30 Our capital expenditures over the last three years are set forth in the table below: ($ millions) 2023 2022 2021 New stores $ 209.2 $ 170.9 $ 124.9 Existing stores 167.6 147.6 103.3 Information systems, corporate, and other 80.0 65.4 50.3 Distribution and transportation 306.0 270.2 279.3 Total capital expenditures $ 762.8 $ 654.1 $ 557.8 Capital expenditures for fiscal 2024 are projected to be approximately $840 million.
This new program replaced the previous $1.5 billion stock repurchase program, effective at the end of fiscal 2021 (at which time we had repurchased $650 million under the previous $1.5 billion program).
In March 2022, our Board of Directors approved a two-year program to repurchase up to $1.9 billion of the Company’s common stock through fiscal 2023. This program replaced the previously approved $1.5 billion stock repurchase program, effective at the end of fiscal 2021 (at which time we had repurchased $650 million under the previous $1.5 billion program).
The table below shows the components of interest expense, net for fiscal 2022, 2021, and 2020: ($000) 2022 2021 2020 Interest expense on long-term debt $ 84,558 $ 88,286 $ 88,544 Interest expense on short-term debt — — 7,863 Other interest expense 1,668 1,351 3,908 Capitalized interest (5,678) (14,476) (12,251) Interest income (77,706) (833) (4,651) Interest expense, net $ 2,842 $ 74,328 $ 83,413 Taxes on earnings.
In fiscal 2023, interest (income) expense, net improved by $167.0 million compared to fiscal 2022 primarily due to increased interest income from higher interest rates. 28 The table below shows the components of interest (income) expense, net for fiscal 2023, 2022, and 2021: ($000) 2023 2022 2021 Interest expense on long-term debt $ 84,596 $ 84,558 $ 88,286 Other interest expense 1,599 1,668 1,351 Capitalized interest (12,106) (5,678) (14,476) Interest income (238,207) (77,706) (833) Interest (income) expense, net $ (164,118) $ 2,842 $ 74,328 Taxes on earnings.
Total stores open at the end of fiscal 2022, 2021, and 2020 were 2,015, 1,923, and 1,859, respectively. The number of stores at the end of fiscal 2022, 2021, and 2020 increased by 5%, 3%, and 3% from the respective prior years. In fiscal 2022, we opened 99 new stores.
The number of stores at the end of fiscal 2023, 2022, and 2021 increased by 5%, 5%, and 3% from the respective prior years. In fiscal 2023, we opened 97 new stores. Looking forward to 2024, we expect to open approximately 90 new stores.
The lower dil uted earnings per share in fiscal 2022 was primarily attributab le to a 12% decrease in net earnings, partially offset by the 2% reduction in weighted-average diluted shares outstanding, largely due to stock repurchases under our stock repurchase program. Diluted earnings per share in fiscal 2021 was $4.87 compared to $0.24 in fiscal 2020.
The $1.18 increase in dil uted earnings per share in fiscal 2023 was primarily attributab le to a 24% increase in net earnings (which included a 4% impact from the 53rd week) and a 3% reduction in weighted-average diluted shares outstanding, primarily due to stock repurchases under our stock repurchase program.
Cost of goods sold as a percentage of sales for fiscal 2022 increased approximately 210 b asis points from fiscal 2021 primarily due to a 130 basis point decline in merchandise margin primarily due to higher ocean freight costs and increased markdowns, an 85 basis point increase in distribution expenses primarily due to the timing of packaway inventory carrying costs and the deleveraging effect from the opening of our Brookshire, Texas distribution center, a 30 basis point deleverage in occupancy costs, and a 25 basis point increase in domestic freight costs primarily due to higher fuel costs.
Cost of goods sold as a percentage of sales for fiscal 2023 decreased approximately 195 basis points from fiscal 2022 primarily due to a 160 basis point increase in merchandise margin mainly due to lower ocean freight costs, a 60 basis point decrease in domestic freight costs, 25 basis points of leverage in occupancy costs, and a 20 basis point decrease in distribution costs primarily due to the timing of packaway inventory carrying costs.
The amounts settled through the program and paid to the participating financial institution were $777.5 million and $430.1 million during fiscal 2022 and 2021, respectively. Standby letters of credit and collateral trust. We use standby letters of credit outside of our revolving credit facility in addition to a funded trust to collateralize some of our insurance obligations.
Standby letters of credit and collateral trust. We use standby letters of credit outside of our revolving credit facility in addition to a funded trust to collateralize some of our insurance obligations.
Our sales mix is shown below for fiscal 2022, 2021, and 2020: 2022 1 2021 2020 Home Accents and Bed and Bath 26 % 26 % 28 % Ladies 24 % 25 % 23 % Men’s 15 % 14 % 14 % Accessories, Lingerie, Fine Jewelry, and Cosmetics 14 % 14 % 14 % Shoes 12 % 12 % 12 % Children’s 9 % 9 % 9 % Total 100 % 100 % 100 % There remains significant uncertainty in the current macroeconomic environment, driven by inflation, increasing interest rates, the continuing impacts from the Russia-Ukraine conflict, concerns of a possible recession, and the COVID-19 pandemic.
Our sales mix is shown below for fiscal 2023, 2022, and 2021: 2023 1 2022 2021 Home Accents and Bed and Bath 26 % 26 % 26 % Ladies 23 % 24 % 25 % Men’s 15 % 15 % 14 % Accessories, Lingerie, Fine Jewelry, and Cosmetics 15 % 14 % 14 % Shoes 13 % 12 % 12 % Children’s 8 % 9 % 9 % Total 100 % 100 % 100 % Cost of goods sold.
Comparable store sales for this purpose represents sales from stores that were open at the end of fiscal 2019, less stores closed in fiscal 2020 and fiscal 2021. 3 Given the temporary store closures resulting from the COVID-19 pandemic, the comparable store sales metric for fiscal 2020 is not meaningful. Stores.
Comparable store sales for this purpose represents sales from stores that were open at the end of fiscal 2019, less stores closed in fiscal 2020 and fiscal 2021. Stores. 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.
Our longer 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 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. Total stores open at the end of fiscal 2023, 2022, and 2021 were 2,109, 2,015, and 1,923, respectively.
We expect SG&A in fiscal 2023 to increase as a result of incentive compensation expenses returning to target levels. Interest expense, net .
We expect lower incentive compensation expense in fiscal 2024, which is expected to return to target levels. Interest (income) expense, net .
We belie ve our continued focus on these strategies will enable us to maximize our potential for both sales and profit growth in fiscal 2023 and beyond. The fiscal years ended January 28, 2023, January 29, 2022, and January 30, 2021 are referred to as fiscal 2022, fiscal 2021, and fiscal 2020, respectively, and were 52-week years.
The fiscal years ended January 28, 2023 and January 29, 2022 are referred to as fiscal 2022 and fiscal 2021, respectively, and were 52-week years. The discussion that follows relates to fiscal 2023 and fiscal 2022.
Our primary objective is to pursue and refine our existing off-price strategies to maintain and improve both profitability and financial returns over the long term. Over the past three years, we have faced a series of unprecedented challenges from the COVID-19 pandemic, subsequent supply chain disruptions and their related cost pressures, and ongoing inflationary headwinds.
Our primary objective is to pursue and refine our existing off-price strategies to maintain and improve both profitability and financial returns over the long term. Although inflation has moderated during the past year, the cost of essentials remains elevated and continues to pressure our low-to-moderate income customers’ discretionary spending.
Financing Activities Net cash used in financing activities was $1.4 billion and $1.2 billion in fiscal 2022 and 2021, respectively . Net cash provided by financing activities was $1.7 billion in fiscal 2020.
This was primarily driven by net earnings excluding non-cash expenses for depreciation, amortization, and stock-based compensation. Net cash provided by operating activities was $1.7 billion in fiscal 2022.
SG&A as a perce ntage of sales for fiscal 2022 decreased by approxima tely 45 basis points compared to fiscal 2021 primarily due to lower incentive compensation expenses and lower COVID-19 costs, partially offset by higher wages and the deleveraging effect of the 4% comparable store sales decline.
The increase was primarily due to higher incentive compensation expense, higher store wages, the opening of 94 net new stores during fiscal 2023, and the impact of the 53rd week. SG&A as a percentage of sales for fiscal 2023 increased by approximately 125 basis points compared to fiscal 2022 primarily due to higher incentive compensation expense and higher store wages.
The decrease in accounts payable leverage in fiscal 2022 compared to fiscal 2021 was primarily driven by shorter payment terms. The decrease in accounts payable leverage in fiscal 2021 compared to fiscal 2020 was primarily driven by higher merchandise receipts to support higher sales and to replenish our packaway inventory.
Accounts payable leverage was 89% and 99% as of February 3, 2024 and January 28, 2023 , respectively. The decrease in accounts payable leverage in fiscal 2023 compared to fiscal 2022 was primarily driven by timing of inventory receipts and related payments versus last year.
These increases were partially offset by a 60 basis point decrease in buying costs primarily due to lower incentive compensation expenses. We expect incentive compensation expenses to return to target levels in fiscal 2023 and for domestic and ocean freight costs to decrease. 26 Selling, general and administrative expenses.
We expect this impact will be partially offset by lower incentive compensation expense, which is expected to return to target levels. Selling, general and administrative expenses. For fiscal 2023, selling, general and administrative expenses (“SG&A”) increased $508.4 million compared to the prior year.
The sales decline was partially offset by the opening of 92 net new stores during fiscal 2022. Sales for fiscal 2021 increased $6.4 billion, or 50.9%, compared to fiscal 2020.
Sales. Sales for fiscal 2023 increased $1.7 billion, or 9.0%, compared to the prior year. This was primarily due to the 5% increase in comparable store sales, the opening of 94 net new stores during fiscal 2023, and the impact of the 53rd week.
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These conditions have had significant impacts not only on our own business operations and costs but also on our customers’ household budgets and in turn their shopping behaviors. As a result, our customers are seeking even stronger values when visiting our stores.
Added
We believe staying diligently focused on executing our merchandising strategies is an important driver of our ability to gain market share in fiscal 2024 and the long term. The fiscal year ended February 3, 2024 is referred to as fiscal 2023 and was a 53-week year.
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In our fiscal 2021 Annual Report on Form 10-K, we c ompared our results of operations and financial condition to fiscal 2020 and also to the fiscal year ended February 1, 2020 (“fiscal 2019”).
Added
Discussion of fiscal 2021 items and year-to-year comparisons between fiscal 2022 and fiscal 2021 that are not included in this Annual Report on Form 10-K can be found in Part II, Item 7.
Removed
We believe the extended closure of our operations in the spring of 2020, and the significant disruptions caused by the COVID-19 pandemic throughout fiscal 2020, made fiscal 2019 a more useful and relevant basis for comparison to our fiscal 2021 performance.
Added
Partially offsetting these items was a 70 basis point increase in buying costs primarily due to higher incentive compensation expense. We expect lower merchandise margin as a percentage of sales in fiscal 2024 as we plan to offer more brands that are sharply priced throughout our stores.
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Looking forward to 2023, we expect to open approximately 100 new stores. We remain confident in our ability to expand in both new and existing regional markets over time.
Added
Fiscal 2023 includes a per share benefit of approximately $0.20 from the 53rd week.
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Sales. Sales for fiscal 2022 decreased $0.2 billion , or 1.2%, compared to the prior year.
Added
Financing Activities Net cash used in financing activities was $1.4 billion, $1.4 billion, and $1.2 billion in fiscal 2023, 2022 , and 2021, respectively, primarily resulting from stock repurchases under our stock repurchase programs and dividend payments. Revolving credit facilities. We have a $1.3 billion senior unsecured revolving credit facility (“Credit Facility”).
Removed
This was primarily due to a 4% decline in comparable store sales driven by escalating inflationary pressures that reduced customer demand during the fiscal year combined with the benefit in the prior year from government stimulus, as well as pent-up customer demand as COVID-19 restrictions eased.
Added
The following table summarizes our stock repurchase activity in fiscal 2023, 2022, and 2021: Fiscal Year Shares repurchased (in millions) Average repurchase price Amount repurchased (in millions) 2023 8.2 $ 115.24 $ 950 1 2022 10.3 $ 92.15 $ 950 2021 5.7 $ 114.29 $ 650 1 Amount excludes excise tax due under the Inflation Reduction Act of 2022.
Removed
This was primarily due to all store locations remaining open throughout fiscal 2021, compared to the negative impact from the COVID-19 related closures of all of our stores during a significant portion of the March 2020 to June 2020 period.
Added
We estimate that existing cash and cash equivalent balances, cash flows from operations, bank credit facility, and trade credit are adequate to meet our operating cash needs and to fund our planned capital investments, debt repayments, common stock repurchases, and quarterly dividend payments for at least the next 12 months.
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Sales for fiscal 2021 also benefited from a combination of government stimulus payments, increasing vaccination rates, diminishing COVID-19 restrictions on operations, pent-up consumer demand, and strong execution of our merchandising strategies. Sales also increased due to the opening of 64 net new stores during fiscal 2021.
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We expect these factors to continue impacting both our customers and our business in fiscal 2023.
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We intend to address the uncertain and competitive conditions within the retail climate for apparel and home goods by pursuing and refining our existing strategies, continuing to strengthen our merchant organization, diversifying our merchandise mix, and further developing our systems to improve our merchandise offerings.
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We cannot be sure our strategies and store expansion program will result in sales growth or an increase in net earnings. Cost of goods sold.
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Cost of goods sold in fiscal 2021 increased $3.9 billion compared to fiscal 2020 mainly due to higher sales, given that all our stores were open throughout fiscal 2021 , compared to the negative impact from the COVID-19 related closures of all of our stores during a significant portion of the March 2020 to June 2020 period.
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Cost of goods also increased due to the opening of 64 net new stores during fiscal 2021.
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For fiscal 2022, selling, general and administrative expenses (“SG&A”) decreased $115.2 million co mpared to the prior year. The decrease was primarily due to lower incentive compensation expenses and lower COVID-19 costs, partially offset by the opening of 92 net new stores during fiscal 2022. For fiscal 2021, SG&A increased $371.2 million compared to fiscal 2020.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest that is payable on our revolving credit facility is based on variable interest rates and is, therefore, affected by changes in market interest rates. As of January 28, 2023, we had no borrowings outstanding under our revolving credit facility. As of January 28, 2023, we have outstanding seven series of unsecured Senior Notes.
Biggest changeInterest that is payable on our revolving credit facility is based on variable interest rates and is, therefore, affected by changes in market interest rates. As of February 3, 2024, we had no borrowings outstanding under our revolving credit facility. As of February 3, 2024, we had outstanding seven series of unsecured Senior Notes.
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. 33
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. 34
ITEM 7A. 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 occasionally use forward contracts to hedge against fluctuations in foreign currency prices. We had no outstanding forward contracts as of January 28, 2023.
ITEM 7A. 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 occasionally use forward contracts to hedge against fluctuations in foreign currency prices. We had no outstanding forward contracts as of February 3, 2024.
A hypothetical 100 basis point increase or decrease in prevailing market interest rates would not have a material negative impact on our consolidated financial position, results of operations, cash flows, or the fair values of our short- and long-term investments as of and for the year ended January 28, 2023.
A hypothetical 100 basis point increase or decrease in prevailing market interest rates would not have a material negative impact on our consolidated financial position, results of operations, cash flows, or the fair values of our short- and long-term investments as of and for the year ended February 3, 2024.

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