Ross Stores Inc.ROST

Morningstar Rating

Stock Research and Analysis

by Zoe Tan

Ross Stores' focus on building out its store base and improving its merchandise assortment in accessories, home goods, and apparel has served it well for many years. Although we believe its value proposition should help it weather the current economic Read more

Bulls Say

The current economic weakness could benefit Ross as consumers "trade down" from department stores in search of brand-name merchandise at value prices.

As full-price retailers struggle in the challenging retail environment, Ross should see an increase in supply of brand-name apparel at rock-bottom prices.

Consumers enjoy the treasure hunt atmosphere of the company's stores, with rapidly changing merchandise and compelling values. This environment encourages frequent customer visits.

Ross has consistently returned value to its shareholders through aggressive share repurchases and cash dividends. Read more

Bears Say

Ross is not immune to the effects of a weak economic environment, especially if cash-strapped consumers pull back on their purchases.

In the last couple of years, Ross slowed the opening of stores in new markets to focus on improving the performance of its existing stores.

The new dd's Discounts stores will probably drag down profit margins for the next few years and could distract management.

As it grows, Ross will increasingly compete with the leader in off-price retailing, TJX Companies, which has more than three times the sales and stores. Read more

Strategy

Ross plans to slow store growth to about 50 net new stores in 2009, down from an average of 78 net new stores annually during the last five years. Additionally, the company is working to enhance its Read more

Management

Michael Balmuth is vice chairman and CEO. He has been with the company in various roles for nearly 20 years. Balmuth's total compensation was $8.2 million in 2008. Relative to the company's peers, executive compensation appears to be generous. The top Read more

Profile

Ross Stores is the nation's second-largest off-price retailer of brand-name apparel and home accessories. The company operates about 950 Ross Dress for Less stores and 50-plus Read more

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