Ross Stores' Expansion Strategies: A Closer Look

Market Selection Criteria and Rationale

Ross Stores prioritizes market selection based on market penetration, local demographics, competition, expected profitability, and overhead leverage. They focus on offering branded products, great values, and broader assortments to attract customers and gain market share, ensuring customer satisfaction through strategic product selection and pricing.

"And then just higher level, as you think about the challenges of the environment, but also perhaps the potential trade down into your business as you think about the market share, I guess how do you assess prioritizing the assortment of sharply priced brands versus maybe some better brands that are a little bit higher priced but still great value to bring people in?" --- (ROST, earning call, 2025/Q1)

"It's not. It's a strategy we want to execute. And so we've put together, again, all the metrics based off of what we want, the products we want on the floor, the values we want on the floor, and so that we're satisfying the customer because that is the gains to market share. So right now, it's built up bottom up." --- (ROST, earning call, 2025/Q1)

"And so if we get more branded, have unbelievable values and get broader in assortments, that I would imagine would be the combination we need to gain more market share." --- (ROST, earning call, 2025/Q1)

"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." --- (ROST, sec filing, 2023/Q4)

Store Formats and Customer Segmentation

Ross Stores operates 352 dd's DISCOUNTS stores across 22 states, offering moderately-priced, first-quality, in-season name brand apparel, accessories, footwear, and home fashions. These stores provide significant savings of 20% to 70% off regular prices, targeting budget-conscious customers seeking branded products at sharp prices.

"The Company also operates 352 dd's DISCOUNTS® stores in 22 states 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." --- (ROST, press release, 2024/05/09)

"[Operator Instructions] Before we get started, on behalf of Ross Stores, I would like to note that the comments made on this call will contain forward-looking statements regarding expectations about future growth and financial results, including sales and earnings forecasts, new store openings and other matters that are based on the company's current forecast of aspects of its future business." --- (ROST, earning call, 2025/Q1)

"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." --- (ROST, sec filing, 2023/Q4)

"We also operate 352 dd’s DISCOUNTS stores in 22 states as of May 4, 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." --- (ROST, sec filing, 2024/Q1)

"Barbara Rentler: Well -- look, if the merchants are getting better deals, we're passing it along to the customer because we really believe that offering her good quality, branded products at sharp prices is very important for us to be able to really satisfy the customer when she's really under -- she's under pressure." --- (ROST, earning call, 2025/Q1)

Competitive Positioning in Discount Retail

Ross Stores' dd's DISCOUNTS brand outperformed its main brand, indicating strong value perception among shoppers. Competitors like TJX leverage pricing and buying power, while Dollar General and Dollar Tree focus on affordability and product variety, highlighting the competitive landscape Ross Stores navigates.

"So, we're always monitoring that in addition to looking at the true numbers, but our customers perceive our values as extremely strong relative to competition, which I believe gives us a merchandise margin to your question, the ability to continue to leverage our pricing and our buying power." --- (TJX, earning call, 2025/Q1)

"Make your return to the classroom affordable with 100+ back-to-school items priced at $1 or less; 30% discount for educators As students, parents and teachers prepare for back-to-school season, Dollar General serves as a one-stop-shop, offering a wide array of school essentials while prioritizing quality and affordability." --- (DG, press release, 2024/07/15)

"dd's DISCOUNTS sales trends in the first quarter were ahead of Ross as shoppers responded favorably to its improved value offering." --- (ROST, earning call, 2025/Q1)

"And the consumer is moving more to refrigerated and frozen product. Now, on the Dollar Tree side, we now have 5,700 stores that have multi-priced frozen food in them." --- (DLTR, earning call, 2024/Q1)

"Ernie Herrman: Sure, Paul. So on the competition for deals, you're talking about kind of at the market vendor level could be other retailers competing with us. Is that? Paul Lejuez: Correct. Yes. Overall. Look at the deals." --- (TJX, earning call, 2025/Q1)

Financial Investments and Capital Expenditures

Ross Stores plans to fund increased capital expenditures in fiscal 2024 with available cash, focusing on new distribution centers, IT systems, and store improvements. Historical data shows significant investments, with $762.8 million spent in fiscal 2023. Forward-looking statements also highlight continued investments in new store growth and sustainability targets.

"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." --- (ROST, sec filing, 2023/Q4)

"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." --- (ROST, sec filing, 2024/Q1)

"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." --- (ROST, sec filing, 2023/Q4)

"Investing Activities Net cash used in investing activities was $136.2 million and $167.3 million for the three month periods ended May 4, 2024 and April 29, 2023, respectively, and was related to our capital expenditures." --- (ROST, sec filing, 2024/Q1)

"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." --- (ROST, sec filing, 2023/Q4)

Future Growth Projections and Expansion Plans

Ross Stores' future growth projections and expansion plans are clouded by uncertainties such as inflation, interest rate hikes, geopolitical conflicts, and climate change. These factors make it challenging to predict revenue and profitability accurately, with actual results potentially differing significantly from current management expectations.

"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." --- (ROST, sec filing, 2023/Q4)

"Future impact from inflation, interest rate increases, ongoing military conflicts and economic sanctions, climate change, pandemics, 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." --- (ROST, sec filing, 2024/Q1)

"These forward-looking statements reflect our then-current beliefs, plans, and estimates with respect to future events and our projected financial performance and operations, and they are subject to risks and uncertainties which could cause our actual results to differ materially from management's current expectations." --- (ROST, press release, 2024/05/23)

Technology and Innovation in Expansion

Ross Stores' peers, such as Dollar Tree and TJX, are leveraging technology to enhance operational efficiency and streamline store systems. Dollar Tree focuses on investing in technology to drive sales growth and improve efficiency, while TJX adopts advanced building management software to optimize energy usage and automate maintenance tasks.

"Strategic Initiatives and Recent Developments We continue to execute on a number of strategic initiatives across the Dollar Tree and Family Dollar segments to drive productive sales growth, improve operating efficiency, invest in technology, and expand our culture of service to our associates. These initiatives include, among others, the following." --- (DLTR, sec filing, 2024/Q1)

"After an extensive review process to identify a solution to integrate all store building systems into a single, centralized platform, KODE Labs emerged as the preferred building management software solution provider due to its advanced technology and ability to streamline store systems, optimize energy usage, manage systems remotely, and prioritize and automate maintenance tasks across TJX's network of stores across the U.S. 'We selected KODE Labs because of its commitment to innovation, reliability, and scalability,' said Adam Schleyer, leader of TJX's Energy Supply and Technology team." --- (TJX, press release, 2024/06/17)

Challenges and Risks in Expansion

Ross Stores faces numerous challenges in its expansion, including execution risks, inventory management, customer trends, competition, and operational scale. Additionally, strategic initiatives may be delayed or altered, impacting financial results. Maintaining customer service and managing market conditions also pose significant risks to margins and overall business health.

"Applicable risks and uncertainties include, among others, the proposed transaction may not be consummated and may not yield the expected benefits; execution of buying strategy and inventory management; customer trends and preferences; competition; various marketing efforts; operational and business expansion; management of large size and scale; merchandise sourcing and transport; data security and maintenance and development of information technology systems; labor costs and workforce challenges; personnel" --- (TJX, press release, 2024/06/07)

"• We may not be successful in implementing or in anticipating the impact of important strategic initiatives, and our plans for implementing such initiatives may be altered or delayed due to various factors, which may have an adverse impact on our business and financial results." --- (DLTR, sec filing, 2024/Q1)

"So if we continue to execute at a high level, again, I think the health of the customer, which will be challenging, I think we'll still be able to service her." --- (ROST, earning call, 2025/Q1)

"What risk does that create to your margins in the second half of the year as you might have to respond to what's happening in the marketplace?" --- (DG, earning call, 2025/Q1)

"Applicable risks and uncertainties include, among others, execution of buying strategy and inventory management; customer trends and preferences; competition; various marketing efforts; operational and business expansion; management of large size and scale; merchandise sourcing and transport; data security and maintenance and development of information technology systems; labor costs and workforce challenges; personnel recruitment, training and retention; corporate and retail banner reputation; evolving corporate governance and public disclosure" --- (TJX, press release, 2024/05/22)