Ross Stores runs two chains of physical retail stores: Ross Dress for Less and dd's DISCOUNTS. Both chains do the same basic thing, they buy brand-name clothing, shoes, and home goods at a discount and pass those savings on to shoppers. Ross targets middle-income households, offering prices 20% to 60% below what department stores charge. dd's DISCOUNTS goes after lower-income shoppers, with prices 20% to 70% below moderate department and discount stores. Every single sale happens inside one of the company's 2,267 physical stores. There are no subscriptions, no online-only sales, and no licensing fees. Revenue comes in one transaction at a time, across a fixed number of locations. The diagram below traces where the money goes.
Five years of numbers tell a clear story about where Ross has been. Revenue climbed from $18.9 billion in fiscal 2022 to $22.8 billion in fiscal 2026. That is not explosive growth, but it is steady and consistent. The business stumbled briefly in fiscal 2023, when revenue dipped to $18.7 billion, but recovered quickly.
Gross margin tells a more nuanced story. It dropped from 27.5% in fiscal 2022 to 25.4% in fiscal 2023, which was the worst year in this five-year window. It then recovered to about 27.4% in fiscal 2024 and has held roughly steady since. The margin did not expand meaningfully even as revenue grew. That means the company is selling more, but not necessarily keeping more of each dollar. Operating cash flow is the bright spot. It grew from $1.7 billion in fiscal 2022 all the way to $3.0 billion in fiscal 2026. Free cash flow, which is what is left after spending on new stores and infrastructure, rose from $1.2 billion to $2.2 billion over the same period.
The balance sheet is in an unusual position. Ross carries more cash than debt. Net debt has been negative every year in this window, meaning the company holds more cash than it owes. In fiscal 2026, net debt was negative $3.1 billion. The company used that cash position to repay $700 million of debt in April 2025 and $250 million in September 2024, while still ending the year with $4.6 billion of unrestricted cash. It also spent $1.05 billion repurchasing its own shares in fiscal 2025 and paid $528 million in dividends. This is a business generating far more cash than it needs to run itself.
Store count growth is steady but not dramatic. The company opened 90 net new stores in fiscal 2025 and plans to open about 110 in fiscal 2026. That is roughly 5% annual growth in locations. Ross entered Puerto Rico and the New York Metro area in fiscal 2025, which are meaningful new markets. The company now operates 45.1 million square feet of selling space across all its stores.
Comparable store sales grew 5% in fiscal 2025, which was the best result in the five-year window and came from a 3% increase in the average amount customers spent per visit and a 2% increase in the number of transactions. That combination matters because it suggests both more shoppers and bigger baskets, not just one or the other. In fiscal 2024, comp sales grew 3%, and in fiscal 2023 they grew 5%. The business has not had a down year for comp sales in this period.
Now for the risks. They are specific and documented, not generic. The single biggest near-term threat is tariffs. More than half of what Ross and dd's DISCOUNTS sell comes from China. The U.S. government has raised tariffs on Chinese goods, and the company already felt this in fiscal 2025: tariff-related costs reduced earnings by an estimated $0.16 per share. If tariffs increase further or stay elevated, the cost of buying merchandise goes up, and that squeezes the margins that the whole business model depends on.
The second major risk is merchandise availability. The entire off-price model depends on other retailers and manufacturers having excess inventory they want to get rid of cheaply. If brands clean up their supply chains and produce only what they can sell at full price, there is less surplus for Ross to buy at a discount. The company cannot force vendors to have overruns. If the supply of discounted merchandise dries up, the treasure-hunt experience that drives customer traffic disappears.
Geographic concentration is a third documented risk. Nearly half of all Ross and dd's DISCOUNTS stores are in just three states: California, Texas, and Florida. The company's main distribution centers and corporate headquarters are also in California. A serious earthquake, wildfire, or hurricane in any of these states could shut down a large portion of the store network and the distribution system at the same time. That is not a remote scenario for California or Florida. Finally, cybersecurity is a real and documented threat. The company processes credit card data and personal information across thousands of store terminals. A successful cyberattack could steal customer data, disrupt store operations, and lead to lawsuits and regulatory fines.