Ross Stores Reports Record Sales Surge and New Store Expansion—Deep Discounts Ahead in 2025

Ross Stores’ surprise forecast withdrawal has thrown a spotlight on the discount chain’s ability to navigate a fast-changing tariff landscape—even as its first-quarter numbers held largely steady. First-quarter scorecard For the 13 weeks ended 3 May 2025, Ross Stores (NASDAQ: ROST) posted net income of $479 million, or $1.47 per diluted share, versus $488 million, or $1.46, a year earlier. Sales inched up 1 % to $4.99 billion, while comparable-store sales were flat, matching management’s earlier guidance. Merchandise margins slipped, reflecting higher freight and wage expenses. Guidance yanked on tariff worries Just two weeks after releasing its results, the Dublin, Calif.–based off-price giant withdrew its full-year revenue and profit outlook, citing “significant uncertainty” around prospective apparel tariffs tied to U.S.–China trade negotiations. Management warned that expanded duties on Chinese-made apparel could shave up to 70 basis points off operating margin in the back half of the fiscal year. Wall Street reaction: Stock slides The abrupt move sparked a 9.8 % one-day drop in ROST stock, erasing roughly $4 billion in market value as investors recalibrated expectations for the remainder of 2025. Analysts at Wells Fargo noted that Ross “historically flexes buying power during dislocation,” but conceded that a lack of guidance removes a key anchor for valuation models. Tariffs vs. the off-price model Ross typically thrives when brands are over-inventoried, scooping up excess product at deep discounts. Across-the-board tariffs, however, could raise Ross’s landed costs just as fast-fashion rivals shift sourcing to Vietnam, Cambodia, and Latin America. CEO Barbara Rentler told analysts the company is “actively diversifying vendor relationships” while leveraging pack-away inventory—goods purchased early and stored for later—to protect margins. What shoppers will notice In parallel with the forecast withdrawal, Ross confirmed a merchandising shake-up that prioritizes “fleet-wide value stories” such as larger in-store signage and curated “deals walls.” Shoppers should also expect more private-label basics in coming months as the chain insulates itself from vendor price hikes. Rentler insisted the company has “no plans to pass the full tariff burden to consumers,” but acknowledged isolated price lifts on certain name-brand apparel if duties persist. Store expansion keeps humming Despite macro pressures, Ross is sticking with its plan to open about 90 net new Ross Dress for Less and dd’s DISCOUNTS locations in fiscal 2025, while closing or relocating 10-15 underperforming stores. Management argues that the off-price channel’s low capital requirements and rapid payback periods remain attractive, especially in secondary and tertiary markets abandoned by department-store rivals. Digital investments accelerate Although e-commerce is still a small slice of revenue, Ross has quietly broadened its “Buy Online, Pick Up In Store” pilot to 200 locations and rolled out RFID tagging in distribution centers to speed replenishment. Executives hinted that a limited-SKU web storefront could launch sometime in 2026 if pilot metrics meet internal hurdles. Key takeaways for investors • Ross Stores’ fundamentals remain solid, but tariff exposure clouds visibility for the back half of the year. • The company’s fortress balance sheet—$5.3 billion in cash and short-term investments—gives it dry powder to buy opportunistic inventory or repurchase shares should valuations remain depressed. • Long-term growth pillars—store expansion, supply-chain technology, and a widening value gap versus department stores—are intact, but near-term volatility in gross margin and traffic may persist. Looking ahead The next catalyst is Ross Stores’ second-quarter report, due in late August. Investors will parse commentary for early tariff impacts, cost-offset strategies, and any fresh guidance. Until then, expect elevated headline risk, but also potential bargain-hunting opportunities in ROST shares if management demonstrates its historical knack for turning external shocks into margin-accretive buying sprees.