ROSS STORES, INC. (ROST)·Q4 2025 Earnings Summary

Executive Summary

• Q4 2025 delivered $5.91B revenue, diluted EPS of $1.79, and 3% comparable sales, with operating margin at 12.4% (flat YoY); results were “at the high end of expectations,” aided by holiday execution and branded assortments .
• Both quarter and FY had a $0.14 EPS one-time benefit from a packaway facility sale; prior-year Q4 included a 14th week ($308M sales, ~$0.20 EPS), affecting YoY comparisons .
• FY25 guidance turned cautious: Q1 comps down 3% to flat with EPS $1.33–$1.47, and FY comps down 1% to up 2% with EPS $5.95–$6.55; operating margin guided to 11.5%–12.2% (vs 12.2% FY24) .
• Shareholder return catalysts: dividend raised 10% to $0.405 and buybacks of 1.7M shares ($262M) in Q4; $1.05B repurchases in FY24, ending with $4.7B cash .

What Went Well and What Went Wrong

What Went Well

• Holiday execution and branded assortments: “Sales were driven by our customers' positive responses to the improved assortments of quality branded bargains…during the critical holiday selling season” .
• Category and geography strength: best performing areas were cosmetics and children; strongest regions were the Pacific Northwest and Texas; dd’s DISCOUNTS posted healthy sales gains above Ross throughout 2024 .
• Strategic and financial positioning: $4.7B cash, ongoing buybacks/dividend increase, and visibility on store growth (~90 openings planned in FY25) support long-term expansion .

What Went Wrong

• Late-January into February softness: management cited unseasonable weather and macro/geopolitical volatility impacting customer traffic; tone turned cautious with wider comp ranges due to visibility .
• Merchandise margin pressure: planned declines from higher penetration of branded goods; Q4 merch margin down ~85bps; FY25 merch margin guided “relatively neutral” (Q1 down slightly) .
• Footwear underperformed in Q4 (comp-eroding), and operating leverage faces headwinds from sales deleverage and packaway timing in Q1 .

Financial Results

Notes: Q4 2024 included 14 weeks with ~$308M sales and ~$0.20 EPS benefit; Q4 2025 and FY 2024 both had a ~$0.14 EPS benefit from a packaway facility sale .

Margin drivers (bps YoY change)

KPI snapshot

Segment/store composition (FY24 year-end)

Shareholder returns and liquidity

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Fourth quarter sales and earnings results were at the high end of our expectations…improved assortments of quality branded bargains…during the critical holiday selling season.”
• “Fourth quarter operating margin of 12.4% was flat to last year…packaway facility sale contributed about 105 basis points…prior year’s period benefited…by about 80 basis points” .
• “Sales trends began softening later in January and into February…we believe it is prudent to take a cautious approach in forecasting our business” .
• “We anticipate…more opportunities for closeout merchandise…to deliver even greater values on branded goods in future quarters” .
• “dd’s posted healthy sales gains…above Ross…we are going to start rebuilding that pipeline for expanded growth in the near future” .

Q&A Highlights

• Guidance visibility and weather: Wider comp range reflects limited visibility; embedded assumption of trend improvement as weather normalized in February .
• Merch margin and tariffs: FY25 merch margin guided neutral; Q1 down slightly; small direct tariff exposure; focus on maintaining value vs traditional retailers .
• Freight and CapEx: Domestic freight expected to be a margin tailwind vs last year subject to fuel; ocean spot rates down; CapEx ~$855M with supply chain facility investments and merchant tooling/data .
• dd’s performance: dd’s outperformed Ross in Q4 and FY24; newer markets improving; growth pipeline to rebuild (more into 2026) .
• Marketing/store environment: CEO sees opportunities to enhance marketing and store experience with prudent ROI; no abrupt strategic changes .

Estimates Context

• Street consensus (S&P Global) for EPS and revenue was unavailable at time of analysis due to data access limits; therefore, beat/miss vs consensus cannot be assessed. Management indicated results were at the high end of internal expectations .
• Where estimate comparisons would typically appear, we note the absence and anchor on company guidance and actuals; future revisions likely reflect lower near-term comps and EPS ranges guided by management .
• Values retrieved from S&P Global were unavailable at time of request.*

Key Takeaways for Investors

• Holiday-driven strength and branded value strategy supported solid Q4; however, late-quarter macro/weather softness led to cautious FY25 outlook (lower comps and EPS ranges), which can pressure near-term sentiment .
• Margin trajectory: Q4 12.4% operating margin aided by one-time gain; FY25 margin guide implies modest deleverage on sales and distribution costs, offset by efficiency initiatives; merch margin neutral for the year .
• Sourcing environment is constructive for off-price: volatility and mainstream retailer softness are increasing closeout opportunities, potentially supportive of value proposition and traffic over time .
• dd’s DISCOUNTS is a relative bright spot with healthy sales gains and expansion potential in newer markets, offering a multi-year growth lever .
• Capital deployment remains shareholder-friendly: 10% dividend increase, ongoing buybacks, and robust cash ($4.7B) underpin return profile despite macro uncertainty .
• Watch Q1 2025 drivers: sales deleverage and packaway timing weigh on margin; freight contracts and fuel path will influence transport cost tailwinds/offsets .
• Execution focus: continued enhancements in merchant tools, enterprise data, store environment, and measured marketing investments aim to improve productivity and customer experience without sacrificing margins .