Ross Stores, the operator of Ross Dress for Less and dd's DISCOUNTS, executed a significant expansion in 2025, opening approximately 100 new locations according to financial reports. This growth occurred during a period of sustained pressure on traditional brick-and-mortar apparel retail. The company's net store count increased to over 2,100 locations across the United States, solidifying its position as the largest off-price apparel and home fashion chain by footprint. The expansion is a core component of a multi-year plan targeting a 5% annual unit growth rate through 2028, a strategy detailed in its investor presentations.
Context — [why this matters now]
The expansion contrasts sharply with a broader wave of retail closures. Between 2023 and 2025, major department store chains and mall-based apparel retailers announced the shuttering of over 5,000 locations in the United States. The current macro backdrop features stubborn inflation in essential categories like food and shelter, pressuring discretionary consumer wallets. The 10-year Treasury yield, a benchmark for financing costs, has fluctuated between 4.1% and 4.5% over the past 12 months.
What changed is a durable post-pandemic shift in consumer behavior favoring value. Persistent inflation has amplified a trade-down effect, where shoppers seek brand names at sharp discounts. Ross's off-price model, which acquires excess inventory directly from manufacturers and designers, is structurally positioned to benefit from this trend. The catalyst is a glut of inventory in the broader apparel supply chain, which provides Ross with a steady stream of discounted goods to fuel its rapid store rollout and maintain its price advantage.
Data — [what the numbers show]
Ross Stores reported net sales of $23.2 billion for its fiscal 2025 year, reflecting year-over-year growth of 8.1%. Comparable store sales, a key retail metric, rose 3%. The company's operating margin stood at 12.4%, notably higher than the 5-8% typical for full-price department stores. Ross's market capitalization reached approximately $56 billion as of early July 2026, significantly outpacing the performance of the SPDR S&P Retail ETF (XRT), which is up only 2% year-to-date.
| Metric | Ross Stores (2025) | Department Store Peer Avg. (2025) |
|---|
| Store Growth | +100 net new stores | Negative net growth |
| Operating Margin | 12.4% | ~7.5% |
| YTD Stock Return | +15% (est.) | -5% (est.) |
Ross ended its latest fiscal year with $5.8 billion in cash and equivalents, providing ample capital for continued expansion and share repurchases. The company allocated $1.5 billion to stock buybacks in 2025.
Analysis — [what it means for markets / sectors / tickers]
Ross's success directly pressures mid-tier department stores like Macy's (M), Kohl's (KSS), and Nordstrom (JWN). These retailers face margin compression as they resort to deeper, more frequent promotions to compete, potentially eroding earnings by 8-15% annually. Conversely, off-price peer TJX Companies (TJX) benefits from the same macro tailwinds, though its larger size may limit its relative growth rate. Suppliers like PVH Corp (PVH) and Hanesbrands (HBI) gain a valuable secondary channel for excess inventory, which can stabilize their cash flow but may dilute brand equity over time.
A key risk is that Ross's growth depends on the continued availability of high-quality branded overstock. A tightening of apparel supply chains or a shift in vendor strategy could limit this pipeline. Institutional positioning shows strong institutional ownership, with over 80% of shares held by large funds. Flow data indicates net buying in the consumer discretionary sector is concentrated in off-price and value-oriented names, while capital exits broadline retail.
Outlook — [what to watch next]
Key catalysts include Ross Stores' Q2 2026 earnings report on August 21, 2026, and the July 2026 U.S. Retail Sales report on August 15. These will provide the next read on comparable sales momentum and consumer health. Investors should monitor the company's quarterly gross margin guide, a direct indicator of its buying power in the off-price market. A sustained decline below 28% would signal competitive or sourcing pressure.
Levels to watch include Ross's stock price relative to its 200-day moving average, which has provided support during recent pullbacks. For the broader sector, watch the performance of the XRT ETF against the S&P 500; sustained underperformance would confirm the rotation away from traditional retail. The next major test for the off-price thesis will be the 2026 holiday season, a critical period for discretionary spending.
Frequently Asked Questions
How does Ross Stores' expansion affect real estate investment trusts (REITs)?
Ross's expansion is a net positive for strip-center and open-air shopping center REITs like Federal Realty Investment Trust (FRT) and Regency Centers (REG). These landlords gain a stable, value-oriented anchor tenant that drives consistent foot traffic. This contrasts with mall REITs like Simon Property Group (SPG), which face headwinds from department store vacancies. Ross's leases typically include base rent with percentage rent clauses, aligning landlord success with store performance.
What is the historical growth rate for Ross Stores vs. its competitors?
Over the past decade, Ross has achieved a compound annual growth rate (CAGR) in store count of approximately 4%, outpacing most traditional apparel retailers. For comparison, Macy's store count has shrunk at a -3% CAGR over the same period. TJX Companies, Ross's closest peer, has grown at a similar pace but from a larger base. Ross's current 5% target represents an acceleration, aiming to capitalize on a fragmented competitive landscape and available real estate.
What does "off-price" retail mean for vendor relationships?
Off-price retailers like Ross purchase merchandise directly from manufacturers and designers, often through closeout deals for overstock, canceled orders, or prior-season goods. This provides vendors with a discreet, high-volume channel to clear inventory without cannibalizing full-price sales at department stores. The relationship is symbiotic but carefully managed; major brands use strict packaging and timing to differentiate off-price goods from their primary collections.
Bottom Line
Ross Stores is capitalizing on a permanent consumer shift to value, using its scaled buying power to outgrow a contracting retail sector.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
