Ross Stores(ROST) - 2025 Q4 - Annual Report

Macroeconomic Risks - The company is facing significant risks from macroeconomic factors, including elevated inflation and potential supply chain disruptions, which could adversely affect sales and profitability[60]. - Changes in U.S. trade or tax policy regarding apparel and home-related merchandise could increase costs and reduce profitability, as a large portion of goods is sourced from overseas[63]. - Consumer spending levels are influenced by various external factors, including inflation and unemployment rates, which could affect demand for the company's merchandise[62]. - The company must navigate risks associated with importing merchandise, including tariffs and geopolitical conflicts, which could disrupt supply chains and increase costs[74]. Competitive Landscape - The competitive landscape in the retail industry is intensifying, with increased competition from both traditional and online retailers, which may negatively impact sales and margins[64]. - The company needs to secure favorable store locations based on consumer demographics to achieve planned growth, which may be challenging due to competition[72]. - Expansion into new geographic markets carries risks, including higher costs and the need for increased marketing investments to build brand awareness[73]. Operational Challenges - Labor shortages and increased turnover rates may impact the company's ability to execute its retail strategies effectively, potentially affecting operating results[69]. - Effective inventory management is crucial, as excess inventory or markdowns on slow-moving items could lead to decreased profit margins[78]. - Disruptions in the supply chain or logistics could impair the company's ability to meet customer demand, resulting in lost sales or increased costs[86]. - The company has a concentration of store locations in California, Texas, and Florida, which together account for almost 50% of its stores, making it vulnerable to regional disasters[91]. Technology and Cybersecurity - The company is making technology investments to improve information systems, but excessive technological change could disrupt operations and impact competitive positioning[84]. - The company is exposed to cybersecurity threats, including data breaches and ransomware attacks, which could disrupt operations and lead to significant legal exposure[80]. Financial Position - The company relies on strong cash flows from operations to support growth plans, capital expenditures, and shareholder returns, making liquidity essential[89]. - A hypothetical 100 basis point change in market interest rates would not materially impact the company's financial position or results[181]. - The company has no outstanding forward contracts as of February 1, 2025, to hedge against foreign currency fluctuations[178]. - The company has six series of unsecured Senior Notes with fixed interest rates, insulating it from market interest rate changes[179]. Compliance and Vendor Risks - Legal and regulatory compliance issues could result in increased costs and damage to the company's reputation, affecting sales[92]. - The company faces risks related to vendor compliance with safety and quality standards, which could lead to product recalls and increased costs[93].