10q10k10q10k.net

What changed in Ross Stores's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Ross Stores's 2024 and 2025 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 2025 report.

+207 added−213 removedSource: 10-K (2025-04-01) vs 10-K (2024-04-02)

Top changes in Ross Stores's 2025 10-K

207 paragraphs added · 213 removed · 187 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

52 edited+6 added−1 removed30 unchanged
Biggest changeOur merchandise offerings include, but are not limited to, apparel, footwear, accessories, small furniture, home accents, bed and bath, beauty, toys, luggage, gourmet food, cookware, jewelry and watches, and pet accessories. Purchasing.
Biggest changeOur merchandise offerings include apparel, footwear, home accents and furniture, bed and bath, beauty, accessories, toys, gourmet food, luggage, electronics, pet accessories, jewelry and watches, and cookware. Purchasing. We have a large network of merchandise vendors and manufacturers for both Ross and dd’s DISCOUNTS, and believe we have adequate sources of first-quality merchandise to meet our requirements.
Our buyers use a number of methods that enable us to offer our customers brand name and designer merchandise at strong discounts every day relative to department and specialty stores for Ross, and moderate department and discount stores for dd’s DISCOUNTS.
Our buyers use a number of methods that enable us to offer our customers brand name and designer merchandise at strong discounts every day relative to department and specialty stores for Ross, and to moderate department and discount stores for dd’s DISCOUNTS.
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.
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. Talent development.
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.
The professional growth and retention 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.
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.
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. 8 Ms.
Upon receipt, merchandise can be shipped to stores in-season or can be stored in our warehouses as packaway merchandise. Packaway merchandise is purchased with the intent that it will be stored in our warehouses until a later date, which may even be the beginning of the same selling season in the following year.
Upon receipt, merchandise can be shipped to stores in-season or can be stored in our warehouses as “packaway” merchandise. Packaway merchandise is purchased with the intent that it will be stored in our warehouses until a later date, which may even be the beginning of the same selling season in the following year.
Community and social impact. We provide our associates the opportunity to give back to their communities and make a social impact through various programs such as our matching gift program, volunteer time off for eligible associates, and a scholarship program for our associates and their dependents.
We provide our associates the opportunity to give back to their communities and make a social impact through various programs such as our matching gift program, volunteer time off for eligible associates, and a scholarship program for our associates and their dependents.
ITEM 1. BUSINESS Ross Stores, Inc. and its subsidiaries (“we” or the “Company”) operate two brands of off-price retail apparel and home fashion stores—Ross Dress for Less ® (“Ross”) and dd’s DISCOUNTS ® .
ITEM 1. BUSINESS Ross Stores, Inc. and its subsidiaries (“we”, “our”, or the “Company”) operate two brands of off-price retail apparel and home fashion stores—Ross Dress for Less ® (“Ross”) and dd’s DISCOUNTS ® .
Pricing. We sell brand name merchandise at Ross that is priced 20% to 60% below most department and specialty store regular prices. At dd’s DISCOUNTS, we sell more moderate brand name merchandise that is priced 20% to 70% below most moderate department and discount store regular prices.
We sell brand name merchandise at Ross that is priced 20% to 60% below most department and specialty store regular prices. At dd’s DISCOUNTS, we sell more moderate brand name merchandise that is priced 20% to 70% below most moderate department and discount store regular prices.
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.
We have no associates who 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 not only in delivering great values to our customers but also in evolving and strengthening the culture at Ross.
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.
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 2024, we continued our emphasis on this important sourcing strategy in response to compelling opportunities available in the marketplace.
Our buyers review specified departments in our stores for possible markdowns based on the rate of sale on a weekly basis, as well as at the end of fashion seasons, to promote faster turnover of merchandise inventory and to accelerate the flow of fresh product.
Our buyers review their departments in our stores for possible markdowns based on the rate of sale on a weekly basis, as well as at the end of fashion seasons, to promote faster turnover of merchandise inventory and to accelerate the flow of fresh product to our stores.
We sell recognizable brand name merchandise that is on trend and fashionable in each category. New merchandise typically is received from three to six times per week at both Ross and dd’s DISCOUNTS stores. Our buyers review their merchandise assortments on a weekly basis, enabling them to respond to selling trends and purchasing opportunities in the market.
We aim to sell recognizable brand name merchandise that is on trend and fashionable in each category. New merchandise typically is received from three to six times per week at both Ross and dd’s DISCOUNTS stores. Our buyers review their merchandise assortments on a weekly basis, enabling them to respond to selling trends and buying opportunities in the market.
Where the size of the market and real estate opportunities permit, our real estate strategy is to cluster Ross stores with the objective to increase our market penetration and to benefit from economies of scale in advertising, distribution, field management, and other overhead.
Where the size of the market and real estate opportunities permit, our real estate strategy is to cluster Ross stores with the objective to increase our market penetration and to benefit from economies of scale in advertising, distribution, field management, and other costs.
We face a challenging and rapidly changing macroeconomic and retail environment that creates intense competition for our business from online retailers, department stores, specialty stores, discount stores, warehouse stores, other off-price retailers, and manufacturer-owned outlet stores, many of which are units of large national or regional chains that have substantially greater resources.
We face a challenging and rapidly changing macroeconomic and retail environment that creates intense competition for our business from online retailers, department stores, specialty stores, discount stores, warehouse stores, other off-price retailers, and manufacturer-owned outlet stores, many of which are units of large national or regional chains that have substantial resources.
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.
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. 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 2023, 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 2024, we had over 800 merchants for Ross and dd’s DISCOUNTS combined.
Prior to this role, he served as President, Operations and Technology from 2019 to 2022; Group Executive Vice President, Supply Chain, Merchant Operations, and Technology from 2014 to 2019; and Executive Vice President, Supply Chain, Allocation, and Chief Information Officer from 2010 to 2014.
Prior to his current role, he served as President, Operations and Technology from 2019 to 2022; Group Executive Vice President, Supply Chain, Merchant Operations, and Technology from 2014 to 2019; and Executive Vice President, Supply Chain, Allocation, and Chief Information Officer from 2010 to 2014.
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.
We also operate 355 dd’s DISCOUNTS stores in 22 states as of February 1, 2025. 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.
Both our Ross and dd’s DISCOUNTS brands target value-conscious customers. The decisions we make, from merchandising, purchasing, and pricing, to the locations of our stores, are based on these customer profiles. We believe that both brands derive a competitive advantage by offering a wide assortment of product within each of our merchandise categories, in organized and easy-to-shop store environments.
The decisions we make, from merchandising, purchasing, and pricing, to the locations of our stores, are based on these customer profiles. We believe that both brands derive a competitive advantage by offering a wide assortment of product within each of our merchandise categories, in organized and easy-to-shop in-store environments.
Our merchandising strategy incorporates a combination of off-price buying techniques to purchase advance-of-season, in-season, and past-season merchandise for both Ross and dd’s DISCOUNTS. We believe merchandise with nationally recognized name brands sold at compelling discounts will continue to be an important determinant of our success. We generally leave the brand name label on the merchandise we sell.
Our merchandising strategy incorporates a combination of off-price buying techniques to purchase advance-of-season, in-season, and past-season merchandise for both Ross and dd’s DISCOUNTS. We believe merchandise with nationally recognized name brands sold at compelling discounts will continue to be an important determinant of our success.
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.
Brinkley has served as President, Operations since 2023. 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.
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.
Human Capital As of February 1, 2025, we had approximately 107,000 total a ssociates, which includes both full- and part-time associates in our stores, distribution centers, and buying and corporate offices. Over 85% of these associates worked in our retail stores. Additionally, we hire temporary associates, especially during peak seasons.
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.
As of February 1, 2025 and February 3, 2024, packaway accounted for approximately 41% and 40% of total inventories, respectively. 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 merchandising strategy is reflected in our advertising, which emphasizes a strong value message. Our stores offer a treasure-hunt shopping experience where customers can find great savings every day on a broad assortment of brand name bargains for the family and the home. 3 Merchandising.
Our merchandising strategy is reflected in our marketing, which emphasizes a strong value message. Our stores offer a “treasure-hunt” shopping experience where customers can find great savings every day on a broad assortment of brand name bargains for the family and the home. Merchandising.
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.
Ross is the largest off-price apparel and home fashion chain in the United States, with 1,831 locations in 43 states, the District of Columbia, and Guam, as of February 1, 2025.
Diversity, equality, and inclusion. We care about our associates and the communities we serve. We are committed to building diverse teams and an inclusive culture that respects, values, and celebrates the diversity of backgrounds, identities, and ideas of those who work and shop with us. We are focused on executing strategies to support our commitment to diversity, equality, and inclusion.
We are committed to building diverse teams and an inclusive culture that respects, values, and celebrates the diversity of backgrounds, identities, and ideas of those who work and shop with us. We are focused on executing strategies to support our commitment to diversity, equality, and inclusion. Community and social impact.
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.
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 1, 2025, we operated a total of 2,186 stores, comprised of 1,831 Ross stores and 355 dd’s DISCOUNTS stores.
Among the factors which have enabled us to do this are: labor costs that are generally lower than full-price department and specialty stores due to a store design that creates a self-service retail format and due to the utilization of labor saving technologies; economies of scale with respect to general and administrative costs resulting from centralized merchandising, marketing, and purchasing decisions; and flexible store layout criteria which facilitate conversion of existing buildings to our formats. 5 Information Systems We continue to invest in new information systems and technology to provide a platform for growth over the next several years.
Among the factors which have enabled us to do this are: labor costs that are generally lower than full-price department and specialty stores, due to a store design that creates a self-service retail format and due to the utilization of labor saving technologies; economies of scale with respect to general and administrative costs resulting from centralized merchandising, marketing, and purchasing decisions; and flexible store layout criteria which facilitate conversion of existing buildings to our formats.
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.
Our fiscal years ended February 1, 2025, February 3, 2024, and January 28, 2023 are referred to as fiscal 2024, fiscal 2023, and fiscal 2022, respectively. Fiscal 2023 was a 53-week year. Fiscal 2024 and 2022 were each 52-week years.
Our ongoing objective is to strengthen our ability to procure the most desirable brands and fashions at competitive discounts. 4 The off-price buying strategies utilized by our experienced team of merchants enable us to purchase Ross merchandise at net prices that are lower than prices paid by department and specialty stores, and to purchase dd’s DISCOUNTS merchandise at net prices that are lower than prices paid by moderate department and discount stores.
The off-price buying strategies utilized by our experienced team of merchants enable us to purchase Ross merchandise at net prices that are lower than prices paid by department and specialty stores, and to purchase dd’s DISCOUNTS merchandise at net prices that are lower than prices paid by moderate department and discount stores. 4 Pricing.
We are dedicated to providing our associates with competitive pay and benefits, a safe working environment, recognition for achievements, channels to share opinions and ideas, opportunities to give back, support for educational advancement, and merchandise and other discounts. We are also continuing to invest in our associates with programs that assist with physical, emotional, and financial wellness.
We are dedicated to providing our associates with competitive pay and benefits, a safe working environment, recognition for achievements, channels to share opinions and ideas, opportunities to give back, support for educational advancement, and merchandise and other discounts.
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.
The term of office is at the discretion of our Board of Directors. Name Age Position Michael Balmuth 74 Executive Chairman James G. Conroy 55 Chief Executive Officer Michael J.
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.
Previously, he served as Strategic Advisor of the Company from 2021 to 2023, Chairman of the Board and Senior Advisor from 2019 to 2021, and Executive Chairman from 2014 to 2019.
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.
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. He will leave his officer position on March 31, 2025, at which time he will transition to an advisor role.
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.
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. Ms. Sykes has served as President and Chief Merchandising Officer – dd’s DISCOUNTS since December 2024.
Hartshorn has served as Group President and Chief Operating Officer since 2019 and a member of the Board of Directors since 2021.
Conroy held several roles with consumer, entertainment, and consulting companies. Mr. Hartshorn has served as Group President and Chief Operating Officer since 2019 and a member of the Board of Directors since 2021.
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.
We continue to shift our marketing and advertising towards digital channels, including social media, digital video, and digital audio, to reflect changes in media consumption. Our social media strategy includes influencer marketing and user generated content. We believe that a mix of channels and marketing strategies is important to effectively reach our customers.
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.
Fleming has served as President and Chief Merchandising Officer – Ross Dress for Less since December 2024. She held the corresponding role at dd’s DISCOUNTS earlier in that year. 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.
We have established merchandise assortments that we believe are attractive to our target customers. Although we may offer fewer classifications of merchandise than most department stores, we generally offer a large selection within each classification, with a wide assortment of vendors, labels, prices, colors, styles, and fabrics within each size or item.
We generally leave the brand name label on the merchandise we sell. 3 We establish merchandise assortments that we believe are attractive to our target customers. We generally offer a large selection within each classification of our merchandise, with a wide assortment of vendors, labels, prices, colors, styles, and fabrics within each size or item.
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.
Orvos has served as Executive Vice President and Chief Financial Officer since 2021. He will leave his officer position at the end of September 2025 when he retires from the Company. Mr. Orvos joined Ross in 2021 as Group Senior Vice President, Supply Chain Administration. Prior to joining Ross, Mr.
We have a large network of merchandise vendors and manufacturers for both Ross and dd’s DISCOUNTS and believe we have adequate sources of first-quality merchandise to meet our requirements. We purchase the vast majority of our merchandise directly from manufacturers. We believe our ability to effectively execute certain off-price buying strategies is a key factor in our success.
We purchase the majority of our merchandise directly from manufacturers. We believe our ability to effectively execute certain off-price buying strategies is a key factor in our success.
By purchasing later in the merchandise buying cycle than department, specialty, and discount stores, we are able to take advantage of imbalances between retailers’ demand for products and manufacturers’ supply of those products.
By purchasing later in the merchandise buying cycle than department, specialty, and discount stores, we are able to take advantage of imbalances between retailers’ demand for products and manufacturers’ supply of those products. We typically do not require that vendors or manufacturers provide promotional allowances, co-op advertising allowances, return privileges, drop shipments to stores, or delayed deliveries of merchandise.
The typical dd’s DISCOUNTS store is located in an established shopping center in a densely populated urban or suburban neighborhood, and its target customers typically come from households with more moderate incomes than Ross customers. The merchant, store field, and distribution operations for Ross and dd’s DISCOUNTS are separate. The two chains share certain corporate and support services.
The typical dd’s DISCOUNTS store is located in an established shopping center in a densely populated urban or suburban neighborhood, and its target customers typically come from households with lower to more moderate incomes. Both our Ross and dd’s DISCOUNTS brands target value-driven customers.
These distribution centers are large, highly automated, and built to suit our specific off-price business model. We also operate warehouse facilities for packaway storage. We utilize a combination of owned, leased, and third-party cross-dock facilities to distribute merchandise from distribution centers to stores on a regional basis.
We also operate warehouse facilities for packaway storage. We utilize a combination of owned, leased, and third-party cross-dock facilities to distribute merchandise from distribution centers to stores on a regional basis. Shipments are made by contract carriers to the stores three to six times per week depending on location.
Current initiatives include continued enhancements to our stores, supply chain, merchandising, and cybersecurity systems. These initiatives support future growth, the execution and achievement of our plans, ongoing stability, and compliance. Distribution We operate distribution processing facilities where we receive and ship all of our merchandise to our stores.
These initiatives are intended to support future growth, the execution and achievement of our plans, efficiency improvement, ongoing stability, and compliance. 5 Distribution We operate distribution processing facilities where we receive and ship all of our merchandise to our stores. These distribution centers are large, highly automated, and built to suit our specific off-price business model.
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.
The Ross and dd’s DISCOUNTS buying organizations are separate and distinct, with each organization led by its own chief merchandising officer with a team of merchandise management, buyers, and assistant buyers. Ross and dd’s DISCOUNTS buyers have on average over seven years of experience, including merchandising positions with other retailers.
Shipments are made by contract carriers to the stores three to six times per week depending on location. We believe that our distribution centers and warehouses with their current expansion capabilities will provide adequate processing and storage capacity to support our near term store growth plans.
We believe that our distribution centers and warehouses with their current expansion capabilities will provide adequate processing and storage capacity to support our near term store growth plans. Information on the size and locations of our distribution centers and warehouse facilities is found in ITEM 2. PROPERTIES.
Information on the size and locations of our distribution centers and warehouse facilities is found in ITEM 2. PROPERTIES. Marketing and Advertising We use a variety of marketing and advertising media to communicate our value proposition to customers—savings off the same brands carried at department or specialty stores every day.
Marketing and Advertising We use a variety of marketing and advertising media to communicate our value proposition to customers—savings off the same brands carried at department or specialty stores every day. This includes a mix of traditional and streaming television, digital channels, and new store grand openings.
Unlike most department and specialty stores, we typically do not require that vendors or manufacturers provide promotional allowances, co-op advertising allowances, return privileges, drop shipments to stores, or delayed deliveries of merchandise. For most orders, delivery is made to one of our distribution centers. These flexible requirements further enable our buyers to obtain significant discounts on purchases.
For most orders, delivery is made to one of our distribution centers. These flexible requirements further enable our buyers to obtain significant discounts on purchases.
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.
Hartshorn 57 Group President, Chief Operating Officer Michael Kobayashi 60 President, Chief Capability Officer Karen Fleming 58 President, Chief Merchandising Officer – Ross Dress for Less Karen Sykes 64 President, Chief Merchandising Officer – dd’s DISCOUNTS Stephen Brinkley 52 President, Operations Adam Orvos 60 Executive Vice President, Chief Financial Officer Mr.
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.
Previously, she served as Executive Vice President of Merchandising at Ross Dress for Less since 2022. From 2018 to 2022, Ms. Sykes served as Group Senior Vice President of Merchandising. She served as Senior Vice President of Merchandising from 2010 to 2018. Before this, she held various merchandising positions since joining the Company in 1992. Mr.
Removed
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.
Added
We expect to make continued investments in our merchant organization to further develop our relationships with our manufacturers and vendors. Our ongoing objective is to strengthen our ability to procure the most desirable brands and fashions at competitive discounts.
Added
Information Systems We continue to invest in new information systems and technology to provide a platform for growth over the next several years. Current initiatives include continued enhancements to our stores, supply chain, merchandising, and cybersecurity systems.
Added
We are also continuing to invest in our associates with programs that assist with physical, emotional, and financial wellness. 6 Diversity, equality, and inclusion. We care about our associates and the communities we serve.
Added
Balmuth has served as Executive Chairman since September 2023 and also rejoined our Board of Directors at that time. Prior to rejoining the Board in 2023, Mr. Balmuth had served on the Board from 1996 to 2021.
Added
Conroy joined the Company in December 2024 as Chief Executive Officer – Elect and has served as Chief Executive Officer since February 2025. Previously, he served as President and Chief Executive Officer of Boot Barn Holdings, Inc. from 2012 to November 2024. Prior to this, Mr.
Added
Conroy was with Claire’s Stores, Inc. from 2007 to 2012, where he served as Chief Operating Officer and Interim Co-Chief Executive Officer in 2012, President from 2009 to 2012, and Executive Vice President from 2007 to 2009. From 2001 to 2007, Mr. Conroy served in various consulting roles, including with Kurt Salmon Associates and Deloitte Consulting. Previously, Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

49 edited+3 added−16 removed58 unchanged
Biggest changeNew stores may not achieve the same sales or profit levels as our existing stores and adding stores to existing markets may adversely affect the sales and profitability of other existing stores. If we cannot acquire sites on attractive terms, it could limit our ability to grow or adversely affect the economics of our new stores in various markets.
Biggest changeIf we cannot acquire sites on attractive terms, it could limit our ability to grow or adversely affect the economics of our new stores in various markets. 12 To achieve growth, we need to expand in existing markets and enter new geographic markets.
The retail industry is highly competitive and the marketplace is highly fragmented, as many different retailers compete for market share by utilizing a variety of store and online formats and merchandising strategies. We expect competition to increase in the future. There are limited economic barriers for others to enter the off-price retail sector.
The retail industry is highly competitive and the marketplace is fragmented, as many different retailers compete for market share by utilizing a variety of store and online formats and merchandising strategies. We expect competition to increase in the future. There are limited economic barriers for others to enter the off-price retail sector.
Failure to correctly anticipate and match the trends, preferences, and demands of our customers could adversely affect our business, financial condition, and operating results. Adverse and/or unseasonable weather may affect shopping patterns and consumer demand for seasonal apparel and other merchandise, and may result in temporary store closures and disruptions in deliveries of merchandise to our stores.
Failure to correctly anticipate and match the trends, preferences, and demands of our customers could adversely affect our business, financial condition, and operating results. Adverse or unseasonable weather may affect shopping patterns and consumer demand for seasonal apparel and other merchandise, and may result in temporary store closures and disruptions in deliveries of merchandise to our stores.
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 may find it more difficult in new markets to hire, motivate, and retain qualified associates. We are subject to risks associated with importing and selling merchandise produced in other countries.
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.
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.
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.
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 stock repurchases and dividends. Disruptions to our operations may occur, nationally, regionally, or in specific locations.
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.
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 16 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.
Although such changes would have implications across the entire industry, we may fail to effectively adapt and to manage the adjustments in strategy that would be necessary in response to those changes.
Although such changes would have implications across the entire industry, we may fail to effectively adapt and manage the adjustments in strategy that would be necessary in response to those changes.
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.
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 imposition of import or other restrictions such as product detention, war, acts of terrorism, natural disasters, or public health issues could adversely affect our business.
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.
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 (“AI”), and remote access increases these risks.
Our advertising and other promotional programs may not be effective or may be perceived negatively, or could require increased expenditures, any of which could adversely affect sales or increase costs. OPERATIONAL RISKS In order to achieve our planned gross margins, we must effectively manage our inventories, markdowns, and inventory shortage.
Our advertising and other promotional programs may not be effective or may be perceived negatively, or could require increased expenditures, any of which could adversely affect sales or increase costs. 13 OPERATIONAL RISKS In order to achieve our planned gross margins, we must effectively manage our inventories, markdowns, and inventory shortage.
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.
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, 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.
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.
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 will represent a value to our customers.
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.
RISK FACTORS Our fiscal 2024 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 11 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 inventory, the amount of high quality merchandise available to us could be materially reduced.
In addition to the general uncertainty and overall risk from potential changes in U.S. laws and policies, as we make business decisions in the face of uncertainty as to potential changes, we may incorrectly anticipate the outcomes, miss out on business opportunities, or fail to effectively adapt our business strategies and manage the adjustments that are necessary in response to those changes.
In addition to the general uncertainty and overall risk from potential changes in laws and policies, as we make business decisions in the face of uncertainty as to potential changes, we may incorrectly anticipate the outcomes, miss out on business opportunities, or fail to effectively adapt our business strategies and manage the adjustments that are necessary in response to those changes.
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.
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. A natural or man-made disaster in a region where we have a concentration of stores, offices, or a distribution center could harm our business.
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.
Risks in importing and selling such merchandise include tariffs and quotas, economic and supply chain 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, geopolitical conflict (including wars and fears of war), political unrest, natural disasters, regulations to address climate change, and trade restrictions.
Changes in U.S. tariffs, quotas, trade relationships, or tax provisions that reduce the supply or increase the relative cost of goods produced in other countries could increase our cost of goods and/or increase our effective tax rate.
Changes in tariffs, quotas, trade relationships, or tax provisions that reduce the supply or increase the relative cost of goods produced in other countries could increase our cost of goods and/or increase our effective tax rate.
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.
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 continually work to identify customer trends and preferences, and to obtain merchandise inventory to meet anticipated customer needs.
We purchase the majority of our inventory based on our sales plans. If our actual demand is lower than our sales plans, we may experience excess inventory levels and need to take markdowns on excess or slow-moving inventory, resulting in decreased profit margins.
We purchase the majority of our inventory based on our sales plans. If our actual demand is lower than our sales plans at our intended price points, we may experience excess inventory levels and need to take markdowns on excess or slow-moving inventory, resulting in decreased profit margins.
We also buy products that originate from foreign sources indirectly through domestic vendors and manufacturers’ representatives. Although our foreign purchases of merchandise are negotiated and paid for in U.S. dollars, decreases in the value of the U.S. dollar relative to foreign currencies could increase the cost of products we purchase from overseas vendors.
We also buy products that originate from foreign sources indirectly through domestic vendors and manufacturers’ representatives. Although our foreign purchases of merchandise are negotiated and paid for in U.S. dollars, tariffs or other import duties, or decreases in the value of the U.S. dollar relative to foreign currencies could increase the cost of products we purchase from overseas vendors.
To achieve growth, we need to expand in existing markets and enter new geographic markets. Our growth strategy is based on successfully expanding our off-price model in current markets and in new geographic regions. There are significant risks associated with our ability to continue to expand our current business and to enter new markets.
Our growth strategy is based on successfully expanding our off-price model in current markets and in new geographic regions. There are significant risks associated with our ability to continue to expand our current business and to enter new markets.
Because of the distinctive nature of our off-price model, we must also attract, train, and retain our key associates across the Company, especially within our buying organization. The loss of one or more of our key personnel or the inability to effectively identify a suitable successor for a key role could have a material adverse effect on our business.
Because of the distinctive nature of our off-price model, we must also attract, train, and retain our key associates across the Company, especially within our buying organization. The loss of one or more of our key personnel or the inability to effectively identify and successfully transition suitable successors for key roles could have a material adverse effect on our business.
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.
Although we use a variety of marketing and advertising mediums to attract customers to our stores, particularly through a mix of traditional and streaming television, digital channels (including social media), and new store grand openings, our competitors may spend more or use different approaches, which could provide them with a competitive advantage.
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.
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 or tariff costs, trade relationships or tax policies, geopolitical conflicts, natural disasters, or public health issues, that reduce the supply or increase the relative cost of imported goods, could also result in disruptions to our supply relationships.
Changes in U.S. tax or trade policy regarding apparel and home-related merchandise produced in other countries could adversely affect our business. A predominant portion of the apparel and other goods we sell is originally manufactured in other countries. The U.S. government has at times indicated a willingness to significantly change existing trade policies, including those with China.
Changes and uncertainty in U.S. trade or tax policy regarding apparel and home-related merchandise produced in other countries could adversely affect our business. A predominant portion of the apparel and other goods we sell is originally manufactured in other countries. The U.S. government has indicated a willingness to significantly change existing trade policies.
Actual results may differ and our costs may exceed the reserves we establish in estimating the probable outcomes. In addition, applicable accounting principles and interpretations may change from time to time, and those changes could have material effects on our reported operating results and financial condition.
Actual results may differ, and our costs may exceed the reserves we establish in estimating the probable outcomes. In addition, applicable accounting principles and interpretations may change from time to time, and those changes could have material effects on our reported operating results and financial condition. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable. 17
Shortages, delays, or disruptions in the availability to us of high quality, value-priced merchandise would likely have a material adverse effect on our sales and margins.
Cost increases, shortages, delays, or disruptions in the availability to us of high quality, value-priced merchandise could have a material adverse effect on our sales and margins.
We depend on the integrity, continuous availability, and consistent operations of these systems to process transactions in our stores, track inventory flow, manage merchandise allocation and distribution logistics, generate performance and financial reports, and support merchandising decisions.
Various information systems are critical to our ability to operate and to manage key aspects of our business. We depend on the integrity, continuous availability, and consistent operations of these systems to process transactions in our stores, track inventory flow, manage merchandise allocation and distribution logistics, generate performance and financial reports, and support merchandising decisions.
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.
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. 14 Disruptions in our supply chain or in our information systems could impact our ability to process sales and to deliver product to our stores in a timely and cost-effective manner.
Similarly, our responses to events or crises and our position (or perceived lack of position) on environmental, social, and governance (“ESG”) matters, such as sustainability, corporate social responsibility, diversity, equality, and inclusion (“DE&I”), responsible sourcing, and any perceived lack of transparency about those matters could harm our reputation.
Similarly, our responses to events or crises and our position (or perceived lack of position) on environmental, social, and governance (“ESG”) matters, such as sustainability, corporate social responsibility, diversity, equality, and inclusion (“DE&I”), responsible sourcing, and any perceived lack of transparency about those matters could harm our reputation, receive negative feedback from stakeholders, including our customers and investors, and could adversely affect our sales.
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.
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.
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.
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.
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.
Elevated inflation, including increased fuel and energy costs, food prices, interest rates, and housing costs, wage rates, unemployment levels, availability of consumer credit, consumer debt levels, income tax rates and the timing of tax refunds, and various government policies and practices (including immigration), 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.
Risks and uncertainties that apply to both Ross and dd’s DISCOUNTS include, without limitation, the following: MACROECONOMIC AND RETAIL INDUSTRY BUSINESS RISKS We are subject to impacts from the macroeconomic environment, financial and credit markets, and geopolitical conditions that affect consumer confidence and consumer disposable income, and also increase our costs.
Risks and uncertainties that apply to both Ross and dd’s DISCOUNTS include, without limitation, the following: MACROECONOMIC AND RETAIL INDUSTRY BUSINESS RISKS We are subject to impacts from changes in the macroeconomic environment, financial and credit markets, geopolitical conditions, and government regulation or policy.
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.
Elevated inflation, government policy and regulatory changes (including trade and tariff changes and threats of changes), geopolitical conflicts, bank failures, public health crises, and other potential, adverse developments and related uncertainties, could reduce demand for our merchandise, disrupt our buying patterns, increase our cost of goods, freight, and payroll, decrease our inventory turnover, cause greater markdowns, and negatively affect our sales and margins.
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.
The harm may be immediate, without affording us an opportunity for redress or correction. 15 To support our continuing operations, our new store and distribution center growth plans and other capital investment plans, our stock repurchase program, our debt repayments, and our quarterly dividends, we must maintain sufficient liquidity.
Our inability to continually attract, train, and retain associates with the retail talent necessary to execute our off-price retail strategies along with labor shortages, increased turnover, or increased labor costs could adversely affect our operating results. Like other retailers, we face challenges in recruiting and retaining sufficient talent in our buying organization, management, stores, distribution centers, and other key areas.
Our inability to continually attract, train, and retain associates with the retail talent necessary to execute our off-price retail strategies, as well as labor shortages, increased turnover, or increased labor costs could adversely affect our operating results.
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.
Continuing inflation, tariff increases (or threats of increases), potential supply chain disruptions, and other external events may have significant negative effects on our costs, and also on consumer confidence, shopping behavior, and spending, which may adversely affect our sales and profitability.
Maintaining an overall pricing differential to department and specialty stores is also key to our ability to attract customers and sustain our sales and gross margins. Our opportunistic buying places considerable discretion with our merchants, who are in the marketplace continually and who are generally purchasing merchandise for the current or upcoming season.
Our opportunistic buying places considerable discretion with our merchants, who are in the marketplace continually and who are generally purchasing merchandise for the current or upcoming season.
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.
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.
Our retail competitors constantly adjust their pricing, business strategies, and promotional activity (particularly during holiday periods) in response to changing market conditions or their own financial condition.
We compete for customers, associates, store locations, and merchandise with other off-price retailers, traditional department stores, mass merchandisers, specialty stores, online and catalog businesses, and other local, regional, and national retailers. Our retail competitors constantly adjust their pricing, business strategies, and promotional activity (particularly during holiday periods) in response to changing market conditions or their own financial condition.
These initiatives might not provide us with the anticipated benefits, or may provide them on a delayed schedule or at a higher cost.
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.
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.
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 and trade policy. Consumer spending levels and shopping behaviors for the merchandise we sell are affected by many external macroeconomic factors.
STRATEGIC RISKS We depend on the market availability, quantity, and quality of attractive brand name merchandise at desirable discounts, and on the ability of our buyers to purchase merchandise to enable us to offer customers a wide assortment of merchandise at competitive prices. Opportunistic buying, lean inventory levels, and frequent inventory turns are critical elements of our off-price business strategy.
If sales in a certain period are lower than our plans, we may not be able to adjust operating expenses concurrently, which could adversely affect our operating results. 11 STRATEGIC RISKS We depend on the market availability, quantity, and quality of attractive brand name merchandise at desirable discounts, and on the ability of our buyers to source and purchase merchandise to enable us to offer customers a wide assortment of merchandise at competitive prices.
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.
We also may have insufficient inventory to meet customer demand, leading to lost sales opportunities. 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.
Although our off-price business is historically subject to less seasonality than traditional retailers, we may still experience unexpected decreases in sales from time to time, which could result in increased markdowns and reduced margins. Significant operating expenses, such as rent expense and associate wages, do not adjust proportionately with our sales.
We may experience unexpected decreases in sales from time to time, which could result in increased markdowns and reduced margins.
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
These risks could adversely affect our revenues and expenses, increase our effective tax rates, and reduce our profitability and market share. 10 Competitive pressures in the apparel and home-related merchandise retailing industry are high.
Removed
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.
Added
Opportunistic buying, lean inventory levels, and frequent inventory turns are critical elements of our off-price business strategy. Maintaining an overall pricing differential to our competitors is also key to our ability to attract customers and sustain our sales and gross margins.
Removed
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.
Added
Like other retailers, we face challenges in recruiting and retaining sufficient talent in our buying organization, management, stores, distribution centers, and other key areas. Many of our retail store associates are in entry level or part-time positions with elevated rates of turnover.
Removed
The 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.
Added
New stores may not achieve the same sales or profit levels as our existing stores and adding stores to existing markets may adversely affect the sales and profitability of other existing stores.
Removed
Such impacts have in the past, and may in the future, adversely affect our profitability, cash flows, financial results, and our capital resources.
Removed
We compete for customers, associates, store locations, and merchandise with many other local, regional, and national retailers, traditional department stores, upscale mass merchandisers, other off-price retailers, specialty stores, internet and catalog businesses, and other forms of retail commerce.
Removed
If sales in a certain period are lower than our plans, we may not be able to adjust these operating expenses concurrently, which could adversely affect our operating results.
Removed
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.
Removed
Inflation may continue to cause our costs to purchase inventory to be higher than we planned, and we may not be able to sell the inventory to our customers at correspondingly increased prices, resulting in decreased profit margins. We also may have insufficient inventory to meet customer demand, leading to lost sales opportunities.
Removed
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.
Removed
Disruptions in our supply chain or in our information systems could impact our ability to process sales and to deliver product to our stores in a timely and cost-effective manner. Various information systems are critical to our ability to operate and to manage key aspects of our business.
Removed
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
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.
Removed
While they have generally been peaceful, in some locations they have been accompanied by violence, damage to retail stores, and the loss of merchandise.
Removed
While generally subject to coverage by insurance, the repairs of damage to our stores and replacement of lost merchandise may increase our costs and temporarily disrupt store operations, and we may incur increased operating costs for additional security.
Removed
Governmental authorities in affected cities and regions may take action in an effort to protect people and property while permitting lawful and non-violent protests, including curfews and restrictions on business operations, which may be disruptive to our operations.
Removed
These activities, governmental responses, and resulting media coverage may also harm consumer confidence and perceptions of personal well-being and security, which may negatively affect shopping behavior and our sales.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed9 unchanged
Biggest changeOur cybersecurity program and practices are also evaluated through various internal and third-party audits and assessments, with the results reported to the Audit Committee. Our CIO and CISO are principally responsible for assessing and managing our material risks from cybersecurity threats, reporting to our CCO.
Biggest changeOur cybersecurity program and practices are also evaluated through various internal and third-party audits and assessments, with the results reported to the Audit Committee. Our CIO and CISO are principally responsible for assessing and managing our material risks from cybersecurity threats.
Together, our CIO and CISO have decades of experience in cybersecurity and in retail, including leadership experience in cybersecurity risk management, incident response and recovery, compliance, governance, IT systems and technology, and overall cyber defense methodologies.
Together, our CIO and CISO have decades of experience in cybersecurity and in retail, including leadership experience in cybersecurity risk management, incident response and recovery, compliance, governance, IT systems and technology, and overall cyber defense methodologies. 18
The Audit Committee receives quarterly cybersecurity reports and engages directly with our management team, including our Chief Capability Officer (CCO), Chief Information Officer (CIO) and Chief Information Security Officer (CISO), on cybersecurity risk management and related risk topics, including incident response and recovery protocols, associate trainings and awareness, recent Company and industry developments, and our related compliance programs and practices.
The Audit Committee receives quarterly cybersecurity reports and engages directly with our management team, including our Chief Information Officer (CIO) and Chief Information Security Officer (CISO), on cybersecurity risk management and related risk topics, including incident response and recovery protocols, associate trainings and awareness, recent Company and industry developments, and our related compliance programs and practices.
As of April 1, 2024, to our knowledge, our business strategy, results of operations, and financial condition have not been materially affected by risks from cybersecurity threats or previously identified cybersecurity incidents, but there is no assurance that we will not be materially affected in the future by such risks or future incidents.
As of the date of this filing, to our knowledge, our business strategy, results of operations, and financial condition have not been materially affected by risks from cybersecurity threats or previously identified cybersecurity incidents, but there is no assurance that we will not be materially affected in the future by such risks or future incidents.

Item 2. Properties

Properties — owned and leased real estate

6 edited+0 added−0 removed1 unchanged
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.
Biggest changeState/Territory February 1, 2025 February 3, 2024 Alabama 30 27 Arizona 91 89 Arkansas 11 10 California 476 463 Colorado 43 42 Delaware 4 4 District of Columbia 2 2 Florida 248 244 Georgia 70 70 Guam 3 3 Hawaii 19 21 Idaho 12 12 Illinois 104 102 Indiana 36 33 Iowa 9 9 Kansas 15 15 Kentucky 19 17 Louisiana 24 24 Maryland 35 32 Michigan 16 8 Minnesota 4 1 Mississippi 12 12 Missouri 32 31 Montana 6 6 Nebraska 10 8 Nevada 43 43 New Jersey 22 21 New Mexico 23 22 New York 7 4 North Carolina 56 53 North Dakota 4 3 Ohio 27 25 Oklahoma 31 30 Oregon 31 32 Pennsylvania 64 56 South Carolina 32 31 South Dakota 2 2 Tennessee 45 45 Texas 312 304 Utah 27 27 Virginia 44 43 Washington 48 48 West Virginia 4 4 Wisconsin 29 28 Wyoming 4 3 Total 2,186 2,109 19 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 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.
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 — 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.
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.
Nearly all of our stores are leased. The majority of our new stores have unexpired original lease terms ranging from three years 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 1, 2025.
See additional discussion under “Distribution” in ITEM 1. BUSINESS. 21
See additional discussion under “Distribution” in ITEM 1. BUSINESS. 20
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.
ITEM 2. PROPERTIES At February 1, 2025, we operated a total of 2,186 stores, of which 1,831 were Ross stores in 43 states, the District of Columbia, and Guam, and 355 were dd’s DISCOUNTS stores in 22 states. See additional discussion under “Stores” in ITEM 1. BUSINESS.
BUSINESS. 19 The following table summarizes the locations of our stores by state/territory as of February 3, 2024 and January 28, 2023.
The following table summarizes the locations of our stores by state/territory as of February 1, 2025 and February 3, 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

3 edited+0 added−0 removed1 unchanged
Biggest changeLike many retailers and other businesses, we have filed a lawsuit as plaintiff against various insurance companies with respect to our claims for insurance coverage for business interruption, property damage, and other losses that we have experienced as a result of the COVID-19 pandemic. Our suit was filed in Alameda County, California in December 2020.
Biggest changeLike many retailers and other businesses, we have filed a lawsuit as plaintiff against various insurance companies with respect to our claims for insurance coverage for business interruption and for other losses that we have experienced as a result of the COVID-19 pandemic. Our suit was filed in Alameda County, California in December 2020.
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
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. 21 PART II
ITEM 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.
ITEM 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 1, 2025. We are also party to various other legal and regulatory proceedings arising in the normal course of business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed4 unchanged
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.
Biggest changeInformation regarding shares of common stock we repurchased during the fourth quarter of fiscal 2024 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 (11/03/2024 - 11/30/2024) 452,426 $145.05 452,426 $1,246,900 December (12/01/2024 - 01/04/2025) 704,593 $153.01 704,593 $1,139,090 January (01/05/2025 - 02/01/2025) 592,070 $150.43 592,070 $1,050,020 Total 1,749,089 $150.08 1,749,089 $1,050,020 1 We did not acquire shares of treasury stock during the quarter ended February 1, 2025.
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.
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. 22 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.
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.
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 1,146 stockholders of record as of March 10, 2025, and the closing stock price on that date was $132.12 per share. Cash dividends.
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.
Our Board of Directors declared a cash dividend of $0.3350 per common share in February, May, August, and November 2023. Issuer purchases of equity securities.
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.
Treasury stock includes shares acquired from employees for tax withholding purposes related to vesting of restricted stock grants. In March 2024, our Board of Directors approved a two-year program to repurchase up to $2.1 billion of the Company’s common stock through January 31, 2026.
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.
On March 4, 2025, our Board of Directors declared a quarterly cash dividend of $0.4050 per common share, payable on March 31, 2025. Our Board of Directors declared a cash dividend of $0.3675 per common share in March, May, August, and November 2024.
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.
The graph is a historical representation of past performance only and is not necessarily indicative of future performance. 23 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 2019 2020 2021 2022 2023 2024 Ross Stores, Inc. 100 100 87 109 133 141 S&P 500 Index 100 117 145 133 160 203 Dow Jones Apparel Retailers 100 109 120 131 155 187 24 ITEM 6.
Refer to Note H: Stockholders’ Equity in the Notes to Consolidated Financial Statements for equity compensation plan information.
This program followed the previous two-year $1.9 billion stock repurchase program, effective at the end of fiscal 2023. Refer to Note C: Stock-Based Compensation 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

61 edited+11 added−9 removed9 unchanged
Biggest changeThe 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 $840 million.
Biggest changeOur capital expenditures over the last three years are set forth in the table below: ($ millions) 2024 2023 2022 Distribution and transportation $ 260 $ 306 $ 270 New stores 193 209 171 Existing stores 171 168 148 Information systems, corporate, and other 96 80 65 Total capital expenditures $ 720 $ 763 $ 654 Capital expenditures for fiscal 2025 are projected to be approximately $855 million.
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.
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
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.
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 2024, fiscal 2023, and fiscal 2022, our liquidity and capital requirements were provided by available cash and cash flows from operations.
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.
Discussion of fiscal 2022 items and year-to-year comparisons between fiscal 2023 and fiscal 2022 that are not included in this Annual Report on Form 10-K can be found in Part II, Item 7.
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.
Our effective tax rate for fiscal 2024, 2023, and 2022 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.
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.
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.
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.
Our merchandising strategies emphasize consistently offering a wide assortment of quality branded bargains for our customers. We believe that 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.
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.
We also operate 355 dd’s DISCOUNTS stores in 22 states as of February 1, 2025 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.
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.
Our sales mix is shown below for fiscal 2024, 2023, and 2022: 2024 1 2023 2022 Home Accents and Bed and Bath 26 % 26 % 26 % Ladies 22 % 23 % 24 % Men’s 16 % 15 % 15 % Accessories, Lingerie, Fine Jewelry, and Cosmetics 15 % 15 % 14 % Shoes 12 % 13 % 12 % Children’s 9 % 8 % 9 % Total 100 % 100 % 100 % Cost of goods sold.
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.
Other than the unrecorded contractual obligations noted above, we did not have any material off-balance sheet arrangements as of February 1, 2025. 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.
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.
Supply chain finance program. 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. A third-party financial institution administers the program.
The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the program. All outstanding payments owed under the program are recorded within Accounts payable in the Consolidated Balance Sheets.
The range of payment terms negotiated with suppliers is consistent, irrespective of whether a supplier participates in the program. All outstanding payments owed under the program are recorded within Accounts payable in the Consolidated Balance Sheets.
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.
We ended fiscal 2024 with $4.7 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 Credit Facility.
This was primarily driven by net earnings excluding non-cash expenses for depreciation, amortization, and stock-based compensation, and an increase in deferred income taxes, partially offset by merchandise inventory payments and payment of fiscal 2021 incentive bonuses . Net cash provided by operating activities was $1.7 billion in fiscal 2021 .
This was primarily driven by net earnings excluding non-cash expenses for depreciation, amortization, and stock-based compensation, and an increase in deferred income taxes, partially offset by merchandise inventory payments and payment of fiscal 2021 incentive bonuses.
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.
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 $159.2 million and $146.9 million at February 1, 2025 and February 3, 2024, respectively.
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 expect to fund capital expenditures with available cash. The increase in our planned capital expenditures for fiscal 2025 compared to fiscal 2024 is primarily driven by investments in our next distribution centers, new and existing store improvements, and various investments in our information technology systems.
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.
Ross is the largest off-price apparel and home fashion chain in the United States, with 1,831 locations in 43 states, the District of Columbia, and Guam, as of February 1, 2025.
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.
The following table summarizes our stock repurchase activity in fiscal 2024, 2023, and 2022: Fiscal Year Shares repurchased (in millions) Average repurchase price Amount repurchased (in millions) 2024 7.3 $ 144.46 $ 1,050 1 2023 8.2 $ 115.24 $ 950 1 2022 10.3 $ 92.15 $ 950 1 Amount excludes excise tax due under the Inflation Reduction Act of 2022.
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.
Our planned capital expenditures for fiscal 2025 are for costs to open new stores and improve existing stores, investments in our supply chain to support long-term growth, including construction of our next distribution centers, investments in our information technology systems, and for various other expenditures related to our stores, distribution centers, and buying and corporate offices.
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”).
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for fiscal 2023. 25 Results of Operations The following table summarizes our financial results for fiscal 2024, 2023, and 2022: 2024 2023 2022 Sales Sales (millions) $ 21,129 $ 20,377 $ 18,696 Sales growth (decline) 3.7% 9.0% (1.2)% Comparable store sales growth (decline) 1 3% 5% (4)% Costs and expenses (as a percent of sales) Cost of goods sold 72.2% 72.7% 74.6% Selling, general and administrative 15.5% 16.0% 14.8% Operating income (as a percent of sales) 12.2% 11.3% 10.7% Interest (income) expense, net (0.8)% (0.8)% 0.0% Net earnings (as a percent of sales) 9.9% 9.2% 8.1% 1 Comparable stores are stores open for more than 14 complete months.
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.
Forward-Looking Statements Our Annual Report on Form 10-K for fiscal 2024, 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.
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.
Future impact from inflation, high interest rates and interest rate changes, tariffs, ongoing military conflicts and economic sanctions, extreme weather, public health events, natural disasters, climate change, and other economic, regulatory, consumer spending, and industry trends that could potentially adversely affect our revenue, profitability, operating conditions, and growth are difficult to predict.
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.
As of February 1, 2025 and February 3, 2024, we had $63.9 million and $60.8 million, respectively, held in a collateral trust. The standby letters of credit are collateralized by restricted cash and the collateral trust consists of restricted cash and cash equivalents.
The following table summarizes the stores opened and closed during fiscal 2023, 2022, and 2021: Store Count 2023 2022 2021 Ross Dress for Less Beginning of the period 1,693 1,628 1,585 Opened in the period 72 1 71 44 Closed in the period (1) (6) 2 (1) Total Ross Dress for Less stores end of period 1,764 1,693 1,628 dd’s DISCOUNTS Beginning of the period 322 295 274 Opened in the period 25 28 21 Closed in the period (2) (1) — Total dd’s DISCOUNTS stores end of period 345 322 295 Total stores end of period 2,109 2,015 1,923 1 Includes the reopening of a store previously temporarily closed due to a weather event. 2 Includes the temporary closure of a store impacted by a weather event. 27 The total selling square footage as of February 3, 2024, January 28, 2023, and January 29, 2022 was 42.8 million, 41.4 million, and 39.9 million, respectively.
The following table summarizes the stores opened and closed during fiscal 2024, 2023, and 2022: Store Count 2024 2023 2022 Ross Dress for Less Beginning of the period 1,764 1,693 1,628 Opened in the period 75 72 1 71 Closed in the period (8) (1) (6) 2 Total Ross Dress for Less stores end of period 1,831 1,764 1,693 dd’s DISCOUNTS Beginning of the period 345 322 295 Opened in the period 14 25 28 Closed in the period (4) (2) (1) Total dd’s DISCOUNTS stores end of period 355 345 322 Total stores end of period 2,186 2,109 2,015 1 Includes the reopening of a store previously temporarily closed due to a weather event. 2 Includes the temporary closure of a store impacted by a weather event.
($ 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 $2.5 billion in fiscal 2023.
($ millions) 2024 2023 2022 Cash provided by operating activities $ 2,357 $ 2,514 $ 1,689 Cash used in investing activities (637) (763) (654) Cash used in financing activities (1,859) (1,428) (1,405) Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents $ (139) $ 323 $ (370) Operating Activities Net cash provided by operating activities was $2.4 billion in fiscal 2024.
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.
The fiscal years ended February 1, 2025, February 3, 2024, and January 28, 2023 are referred to as fiscal 2024, fiscal 2023, and fiscal 2022, respectively. Fiscal 2023 was a 53-week year. Fiscal 2024 and 2022 were each 52-week years. The discussion that follows relates to fiscal 2024 and fiscal 2023.
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.
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. Earnings per share. Diluted earnings per share in fiscal 2024 was $6.32 compared to $5.56 in the prior year.
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.
The $0.76 increase in dil uted earnings per share in fiscal 2024 was primarily attributab le to a 12% increase in net earnings and a 2% reduction in weighted-average diluted shares outstanding largely due to stock repurchases under our stock repurchase program.
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 have a $1.3 billion senior unsecured revolving credit facility (“Credit Facility”). As of February 1, 2025 , 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.
Our capital expenditures include costs to build, expand, and improve distribution centers, open new stores and improve existing stores, and for various other expenditures related to our information technology systems and buying and corporate offices.
In fiscal 2024, capital expenditures were partially offset by cash proceeds from the sale of the packaway warehouse facility. Our capital expenditures include costs to build, expand, and improve distribution centers, open new stores and improve existing stores, and for various other expenditures related to our information technology systems and buying and corporate offices.
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 and a funded trust to collateralize some of our insurance obligations. As of February 1, 2025 and February 3, 2024, we had $1.8 million and $2.2 million, respectively, in standby letters of credit outstanding.
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.
Refer to Note D: Debt in the Notes to Consolidated Financial Statements for additional information. Other financing activities. In March 2024, our Board of Directors approved a two-year program to repurchase up to $2.1 billion of the Company’s common stock through January 31, 2026.
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.
Our Board of Directors declared a cash dividend of $0.3350 per common share in February, May, August, and November 2023, and a cash dividend of $0.3100 per common share in March, May, August, and November 2022. During fiscal 2024, 2023, and 2022, we paid dividends of $488.7 million, $454.8 million, and $431.3 million, respectively.
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.
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.
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).
The decrease in cash provided by operating activities in fiscal 2024 compared to fiscal 2023 was primarily driven by higher incentive compensation payments, partially offset by higher net earnings. Accounts payable leverage (defined as accounts payable divided by merchandise inventory) was 87% and 89% as of February 1, 2025 and February 3, 2024 , respectively.
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”).
Financing Activities Net cash used in financing activities was $1.9 billion, $1.4 billion, and $1.4 billion in fiscal 2024, 2023 , and 2022, respectively, primarily resulting from stock repurchases under our stock repurchase program and dividend payments. In fiscal 2024, we repaid the $250 million principal amount of the 3.375% Senior Notes in September 2024. Revolving credit facilities.
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 self-insurance and deductible liability is determined actuarially, based on claims filed and an estimate of claims incurred but not reported. 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 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.
Our responsibility is limited to making payments on the terms originally negotiated with each supplier, regardless of whether a supplier sells its receivable to a financial institution.
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.
During fiscal 2024, 2023, and 2022, we also acquired 0.6 million, 0.5 million, and 0.5 million shares of treasury stock, respectively, from our employee equity incentive plans for aggregate purchase prices of approximately $86.1 million, $48.6 million, and $48.9 million, respectively.
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.
Stores. Total stores open at the end of fiscal 2024, 2023, and 2022 were 2,186, 2,109, and 2,015, respectively. The number of stores at the end of fiscal 2024, 2023, and 2022 increased by 4%, 5%, and 5% from the respective prior years. In fiscal 2024, we opened 89 new stores.
Fiscal 2023 includes a per share benefit of approximately $0.20 from the 53rd week.
Fiscal 2024 earnings include a per share benefit of approximately $0.14 from the sale of the packaway warehouse facility. Fiscal 2023 earnings include a per share benefit of approximatel y $0.20 from the 53rd week .
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.
The table below shows the components of interest (income) expense, net for fiscal 2024, 2023, and 2022: ($000) 2024 2023 2022 Interest income $ (234,955) $ (238,207) $ (77,706) Capitalized interest expense (19,447) (12,106) (5,678) Other interest expense 1,571 1,599 1,668 Interest expense on long-term debt 81,263 84,596 84,558 Interest (income) expense, net $ (171,568) $ (164,118) $ 2,842 27 Taxes on earnings.
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.
Cost of goods sold as a percentage of sales for fiscal 2024 decreased approximately 40 basis points from fiscal 2023 primarily due to a 45 basis point decrease in buying costs mainly due to lower incentive compensation expense, a 45 basis point decrease in distribution costs, and a 30 basis point decrease in domestic freight costs.
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.
This was primarily due to the 3% increase in comparable store sales and the opening of 77 net new stores during fiscal 2024. Sales for fiscal 2023 included approximately $308 million from the additional week of sales due to the 53rd week.
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.
Cost of goods sold in fiscal 2024 increased $458.9 million compared to the prior year primarily due to the 3% comparable store sales increase and higher sales from the opening of 77 net new stores during fiscal 2024.
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.
Packaway inventory was 41% of total inventory at the end of fiscal 2024, compared to 40% at the end of fiscal 2023. Investing Activities Net cash used in investing activities was $637 million, $763 million, and $654 million in fiscal 2024, 2023, and 2022 , respectively, and was primarily related to our capital expenditures.
As a regular part of our business, packaway inventory levels will vary over time based on availability of compelling merchandise purchase opportunities in the marketplace and our decisions on the timing for release of that inventory. Packaway merchandise is purchased with the intent that it will be stored in our warehouses until a later date.
The decrease in accounts payable leverage in fiscal 2024 compared to fiscal 2023 was primarily due to the timing of inventory receipts and related payments versus last year. 28 As a regular part of our business, packaway inventory levels will vary over time based on availability of compelling merchandise purchase opportunities in the marketplace and our decisions on the timing for release of that inventory to our stores.
The timing of the release of packaway inventory to our stores is principally driven by the product mix and seasonality of the merchandise, and its relation to our store merchandise assortment plans. As such, the aging of packaway varies by merchandise category and seasonality of purchase, but typically packaway remains in storage less than six months.
Packaway merchandise is purchased with the intent that it will be stored in our warehouses until a later date. The timing of the release of packaway inventory to our stores is principally driven by the product mix and seasonality of the merchandise, and its relation to our store merchandise assortment plans.
Merchandise inventory includes acquisition, transportation, pr ocessing, and storage costs related to packaway inventory. Included in the carrying value of our merchandise inventory is a provision for shortage. The shortage reserve is based on historical shortage rates as determined through our annual physical merchandise inventory counts and cycle counts.
The shortage reserve is based on historical shortage rates as determined through our annual physical inventory counts and cycle counts. Historically, our actual physical inventory count results have shown our provision for shortage to be reliable.
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 such, the aging of packaway varies by merchandise category and seasonality of purchase, but typically packaway remains in storage for less than six months. 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 affect our operating cash flow.
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.
We also evaluate our current store locations and determine store closures based on similar criteria. We continue to believe that consumers’ focus on value and convenience provide opportunities for us to gain market share.
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.
Looking forward to 2025, we expect to open approximately 90 new 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. We continually evaluate opportunistic real estate acquisitions and opportunities for potential new store locations.
We use a combination of insurance and self-insurance for a number of risk management activities, including workers’ compensation, general liability, and employee-related health care benefits. Our self-insurance and deductible liability is determined actuarially, based on claims filed and an estimate of claims incurred but not reported.
A five percent change in shortage rates as of February 1, 2025 would not have materially impacted our cost of goods sold in fiscal 2024. Insurance obligations. We use a combination of insurance and self-insurance for a number of risk management activities, including workers’ compensation, general liability, and employee-related health care benefits.
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.
Additionally, we anticipate the current retail environment will result in more opportunities for us to obtain close-out merchandise and to deliver even greater values on branded goods. We believe that staying diligently focused on executing our merchandising strategies is an important driver of our ability to gain market share in fiscal 2025 and the long term.
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 .
This was primarily driven by net earnings excluding non-cash expenses for depreciation, amortization, stock-based compensation, and the gain on sale of property (i.e., packaway warehouse facility), partially offset by the payment of fiscal 2023 incentive bonuses in fiscal 2024. Net cash provided by operating activities was $2.5 billion in fiscal 2023.
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.
Interest (income) expense, net . In fiscal 2024, interest (income) expense, net improved by $7.5 million compared to fiscal 2023. Interest (income), expense, net as a percentage of sales, was flat compared to the prior year.
Contractual 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.
We estimate that existing cash and cash equivalent balances, cash flows from operations, our bank credit facility, and trade credit are adequate to meet our operating cash needs and to fund our planned capital investments, debt repayments, interest payments, 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 February 1, 2025: Less than 1 year Greater than 1 year Total¹ ($000) Recorded contractual obligations: Senior notes $ 700,000 $ 1,524,991 $ 2,224,991 Operating leases 758,519 2,869,467 3,627,986 New York buying office ground lease 2 7,552 1,092,953 1,100,505 Unrecorded contractual obligations: Real estate obligations 3 9,026 178,204 187,230 Interest payment obligations 55,778 299,040 354,818 Purchase obligations 4 4,183,454 104,916 4,288,370 Total contractual obligations $ 5,714,329 $ 6,069,571 $ 11,783,900 1 We have a $61.3 million liability for unrecognized tax benefits that is included in Other long-term liabilities on our Consolidated Balance Sheets.
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).
This program followed the previous two-year $1.9 billion stock repurchase program, effective at the end of fiscal 2023.
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.
Operating income as a percentage of sales for fiscal 2024 increased 90 basis points compared to fiscal 2023, primarily due to lower cost of goods sold and lower SG&A expenses. In fiscal 2025, we expect operating income as a percentage of sales to be impacted by sales deleverage, higher distribution costs, and lower incentive compensation expense.
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.
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. Macroeconomic pressures and uncertainties continue to impact both consumer confidence and discretionary spending. We are closely monitoring these external factors, along with market share trends for the off-price industry.
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.
We believe that our flexible business model better positions us to navigate through uncertainty, and we plan to continue to focus on strong execution of our key initiatives. We believe that our market share gains can continue to grow through our continued focus on bringing value and convenience to our customers.
Removed
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.
Added
The total selling square footage as of February 1, 2025, February 3, 2024, and January 28, 2023 was 43.9 million, 42.8 million, and 41.4 million, respectively. 26 Sales. Sales for fiscal 2024 increased $752.3 million, or 3.7%, compared to the prior year.
Removed
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.
Added
Partially offsetting these items was a 60 basis point decrease in merchandise margin primarily due to our continued efforts to offer more sharply priced branded bargains and a 20 basis point increase in occupancy costs. Selling, general and administrative expenses. For fiscal 2024, selling, general and administrative expenses (“SG&A”) increased $15.5 million compared to the prior year.
Removed
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.
Added
In December 2024, we completed the sale of a packaway warehouse facility and recognized a pre-tax gain on sale of $61.6 million. This sale, along with lower incentive compensation expense, partially offset the increase in SG&A which was primarily driven by the opening of 77 net new stores during fiscal 2024.
Removed
We expect lower incentive compensation expense in fiscal 2024, which is expected to return to target levels. Interest (income) expense, net .
Added
SG&A as a percentage of sales for fiscal 2024 decreased 50 basis points compared to fiscal 2023, primarily due to the gain recognized from the previously mentioned packaway facility sale and lower incentive compensation expense. Operating income.
Removed
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.
Added
In September 2024, we repaid at maturity the $250 million principal amount of the 3.375% Senior Notes. As of February 1, 2025, we had $700 million principal amount of 4.600% Senior Notes that will reach maturity in 2025.
Removed
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.
Added
The decrease in cash used in investing activities in fiscal 2024 compared to fiscal 2023 was primarily due to lower capital expenditures in fiscal 2024 related to our new Buckeye, Arizona distribution center and cash proceeds from the sale of the packaway facility, partially offset by the purchase of land and the start of construction for our next distribution center.
Removed
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.
Added
Refer to Note D: Debt in the Notes to Consolidated Financial Statements for additional information. 29 Senior notes. As of February 1, 2025, we had approximately $2.2 billion of outstanding unsecured Senior Notes, of which $699.7 million was classified within Current Liabilities on our Consolidated Balance Sheet.
Removed
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.
Added
On March 4, 2025, our Board of Directors declared a quarterly cash dividend of $0.4050 per common share, payable on March 31, 2025. Our Board of Directors declared a cash dividend of $0.3675 per common share in March, May, August, and November 2024.
Removed
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.
Added
We are not a party to the agreements between the participating financial institutions and the suppliers in connection with the program, and we do not receive financial incentives from the suppliers or the financial institutions. We do not provide guarantees under the program, and our rights and obligations to our suppliers are not affected by the program.
Added
Inventory we purchase can either be shipped to stores or processed as packaway merchandise with the intent that it will be warehoused and released to stores at a later date. Merchandise inventory includes acquisition, transportation, pr ocessing, and storage costs. Included in the carrying value of our merchandise inventory is a provision for shortage.

… 1 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed1 unchanged
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.
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 1, 2025, we had no borrowings outstanding under our revolving credit facility. As of February 1, 2025, we had outstanding six 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. 34
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
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.
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 1, 2025.
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.
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 1, 2025.

Other ROST 10-K year-over-year comparisons