Ross Stores (ROST) Financials

Ross Stores has demonstrated steady financial performance over the past two years, exhibiting solid revenue growth, stable profitability, and strong cash flow generation.

Key positive trends:

• Operating revenues have grown consistently from approximately $4.49 billion in Q1 2023 to $5.53 billion in Q2 2025, indicating ongoing top-line expansion.
• Net income has also increased steadily, from $371 million in Q1 2023 to about $508 million in Q2 2025, reflecting effective cost control and operational efficiency.
• Gross profit margins have remained healthy and stable, with total gross profit increasing from roughly $1.2 billion to $1.53 billion over the same period.
• Cash flow from operating activities is robust and growing, with $409 million in Q1 2025 rising to $668 million in Q2 2025, supporting ongoing capital investments and shareholder returns.
• Ross continues to invest prudently in property, plant, and equipment, with steady capital expenditures around $200 million quarterly, supporting store expansions and technology.
• Share repurchases total over $276 million in Q2 2025 and sizable dividends are paid consistently, indicating a shareholder-friendly capital allocation strategy.
• The balance sheet remains strong with significant cash reserves (around $3.85 billion in Q2 2025) and manageable long-term debt of approximately $1 billion, supporting financial flexibility.
• While liabilities have increased somewhat, total common equity has also grown from about $4.3 billion in early 2023 to $5.7 billion in Q2 2025, improving the equity base.

Neutral factors:

• Inventories have increased but remain aligned with revenue growth, reflecting business scale rather than overstock issues.
• Operating expenses, including selling, general and administrative costs, have risen but at a controlled pace consistent with revenue increases.

Potential concerns:

• There has been a notable increase in short-term debt from zero in Q2 2023 to nearly $500 million in Q2 2025, which could pressure liquidity if not managed carefully.
• Changes in operating assets and liabilities have resulted in some negative impacts to operating cash flow in recent quarters (e.g., -$9.9 million in Q2 2025), signaling working capital pressure.

Overall, Ross Stores exhibits a healthy financial profile with consistent revenue and earnings growth, strong cash flow, substantial investing in the business, and disciplined capital returns. The balance sheet is solid, though the rise in short-term debt deserves monitoring. Retail investors should find Ross Stores an operationally strong company with a steady track record of shareholder value creation.