10-KPeriod: FY2006

ROSS STORES, INC. Annual Report, Year Ended Jan 28, 2006

Filed April 12, 2006For Securities:ROST

Summary

Ross Stores, Inc.'s 2006 10-K filing highlights a company with a robust off-price retail model focused on value-conscious consumers. The company operates two distinct chains: Ross Dress for Less, targeting middle-income households, and dd's DISCOUNTS, aimed at lower-income households. Ross Stores emphasizes offering brand-name and designer merchandise at significant discounts (20-60% below department store prices) through opportunistic purchasing and efficient operations. The company demonstrates consistent growth in store count and sales, reflecting strong demand for its value proposition. Key strategic objectives include maintaining recognizable brands at low prices, tailoring merchandise to regional preferences, and optimizing store growth. Investments in information systems and operational efficiencies are ongoing to further enhance customer experience and profitability. The company also actively engages in share repurchases and dividend payments, indicating a commitment to returning value to shareholders.

Key Highlights

  • 1Ross Stores operates 734 locations (714 Ross stores, 20 dd's DISCOUNTS) offering branded merchandise at 20-60% below department store prices.
  • 2The company continues to expand its store base, with 86 new Ross stores opened in the fiscal year 2005, indicating a focus on market penetration.
  • 3Sales for fiscal year 2005 increased by 17% to $4.94 billion, driven by new store openings and a 6% increase in comparable store sales.
  • 4The off-price sector is growing faster than total apparel sales, with Ross Stores benefiting from the ongoing consumer demand for value.
  • 5Investments in information systems and operational enhancements are being made to improve merchandising, inventory management, and overall efficiency.
  • 6The company actively repurchased shares, authorizing a new $400 million program for 2006-2007, and consistently paid dividends, signaling confidence in financial health.
  • 7Merchandise inventory represents a significant asset, with a notable portion (41%) being 'packaway' inventory purchased for future sale at favorable prices.

Frequently Asked Questions

Ross Stores operates as an off-price retailer, offering first-quality, in-season, brand-name and designer apparel, accessories, footwear, and home fashions at everyday savings of 20% to 60% below department and specialty store prices. Their strategy centers on opportunistic purchasing, efficient operations, and store growth to cater to value-conscious consumers.

The company employs various off-price buying techniques, including purchasing advance-of-season, in-season, and past-season merchandise. A significant portion of their inventory consists of 'packaway' merchandise (41% as of January 28, 2006), which is purchased opportunistically from manufacturer overruns and canceled orders to be stored and sold later at a discount. They maintain relationships with approximately 4,700 vendors.

Ross Dress for Less targets value-conscious men and women, primarily in middle-income households, offering brand-name and designer merchandise. dd's DISCOUNTS is a newer concept targeting lower-income households with a moderately-priced assortment of first-quality, in-season, name-brand apparel and home fashions, generally at even deeper discounts (20-70% off). While sharing some similarities, dd's DISCOUNTS features a different mix of brands at lower average price points.

Ross Stores plans to continue opening additional stores, primarily in existing regions, to increase market penetration and leverage overhead expenses. They also evaluate opportunistic real estate acquisitions and consider new market entry. Investments in information systems are ongoing to enhance merchandising capabilities and tailor offerings to local customer preferences.