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Ross Stores Inc ROST

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Soft Profitability To End Fiscal 2020 for Ross Does Not Change Our Long-Term View; Shares Rich

Zain Akbari, CFA Equity Analyst

Analyst Note

| Zain Akbari, CFA |

We do not plan a large change for our $94 per share valuation of narrow-moat Ross in the wake of its fourth-quarter earnings announcement. Despite lackluster profitability in the year’s closing period, we still direct investors’ attention to the long term considering the ongoing but transitory effects of the pandemic. While we continue to have a favorable view of the company and its long-term prospects (calling for mid-single-digit percentage top-line growth and low-teens operating margins), 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 1,850 stores (at the end of fiscal 2020) 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 2020, 28% of sales came from home accents (including bed and bath), 23% from the ladies' department, 14% from each of men’s and accessories, 12% from 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 Jan 31, 2021
Fiscal Year End Jan 29, 2022
Stock Type Cyclical
Employees 93,700

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