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Ross Stores Inc ROST

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Stewardship

PREMIUM

Ross’ Solid Quarter Suggests Off-Price’s Appeal Endures, but Near-Term Should Be Choppy; Shares Rich

Zain Akbari, CFA Equity Analyst

Analyst Note

| Zain Akbari, CFA |

Our $88 per share valuation of narrow-moat Ross should rise by a mid-single-digit percentage after it saw better third-quarter results than we had expected. Still, the near term carries much risk, and while we continue to expect mid-single-digit percentage top-line growth and low-teens operating margins long term, we suggest prospective investors await a larger margin of safety.

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Company Profile

Business Description

Ross Stores is a leading American off-price apparel and home fashion retailer, operating over 1,800 stores (at the end of fiscal 2019) across the Ross Dress for Less and dd's Discounts banners. Ross offers a variety of name-brand products and targets undercutting conventional retailers' regular prices by 20%-70%. The company uses an opportunistic, flexible merchandising approach; together with a relatively low-frills shopping environment centered on a treasure-hunt experience, Ross maximizes inventory turnover and traffic, enabling its low-price approach. In fiscal 2019, 26% of sales came from the ladies' department, 25% from home accents (including bed and bath), 14% from men’s, 13% from each of accessories and shoes, and 9% from children's. All sales were made in the United States.

Contact
5130 Hacienda Drive
Dublin, CA, 94568-7579
T +1 925 965-4400
Sector Consumer Cyclical
Industry Apparel Retail
Most Recent Earnings Jul 31, 2020
Fiscal Year End Feb 1, 2021
Stock Type Cyclical
Employees 92,500

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