Ross Stores, Inc. 2021 Annual Report
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THERE’S ALWAYS
A NEW BARGAIN
Ross Stores, Inc.
5130 Hacienda Drive
Dublin, CA 94568-7579
(925) 965-4400
www.rossstores.com
Sustainable Choice. Reduce, Reuse & Recycle.
To minimize our environmental impact, the Ross Stores
2021 Annual Report was printed on paper containing
fibers from environmentally appropriate, socially
beneficial and economically viable forest resources.
2021
2021
THERE’S ALWAYS
A NEW BARGAIN
We launched our off-price business almost four decades ago based
on the premise that everyone always loves a new bargain. Since then,
we have met customer wants and needs by consistently offering
outstanding value on a wide array of fresh name brand fashions in
convenient and easy-to-shop stores.
We accomplish this through our two off-price apparel and home
fashion chains, Ross Dress for Less® (“Ross”) and dd’s DISCOUNTS®.
The first Ross Dress for Less locations opened in 1982, and today,
Ross is the largest off-price apparel and home fashion chain in the
U.S. with 1,628 stores in 40 states, the District of Columbia, and
Guam. We launched dd’s DISCOUNTS in 2004 and it now operates
295 locations in 21 states.
Ross offers name brand apparel, accessories, footwear, and home
fashions for the entire family at savings of 20% to 60% off department
store and specialty store regular prices every day. dd’s DISCOUNTS
features more moderately-priced assortments at savings of 20%
to 70% off moderate department and discount store prices every
day. With the continued careful execution of our off-price strategies,
we remain confident in our prospects for ongoing profitable market
share gains.
2021 Annual Report | 1
MERCHANDISE MIX
9%
12%
26%
Home Accents, Bed and Bath
Ladies
Men’s
14%
Accessories, Lingerie,
Fine Jewelry, and Cosmetics
Shoes
Children’s
14%
25%
2 | Ross Stores Inc.
TO OUR
STOCKHOLDERS
We made significant progress in fiscal 2021 as we continued to
navigate through the external challenges caused by the ongoing
COVID pandemic and its effect on the macro-economic and retail
environment. Despite continued headwinds from supply chain
disruptions, higher expenses, and inflationary pressures, we are pleased
to report that both sales and earnings significantly outperformed our
expectations for the fiscal year ended January 29, 2022.
Fiscal 2021 Financial Results
Given the unprecedented effect on our business and financial
results in fiscal 2020, when all stores were closed for a portion of
the year due to the COVID-19 pandemic, our results for fiscal 2021
are presented versus fiscal 2019.
Total sales for the fiscal year ended January 29, 2022 were $18.9
billion, up from $16.0 billion for the 52 weeks ended February 1, 2020.
Comparable sales for the 2021 fiscal year grew 13% over the same
period in fiscal 2019. Earnings per share for fiscal 2021 were $4.87 on
net income of $1.72 billion, up from $4.60 per share on net earnings
of $1.66 billion in 2019.
Operating margin of 12.3% in fiscal 2021 was down 110 basis points
from 13.4% in 2019 mainly due to expense headwinds from higher
wages, supply chain, and COVID-related costs.
2021 Annual Report | 3
dd’s DISCOUNTS 2021 Performance
Similar to Ross, while dd’s DISCOUNTS posted healthy sales gains
in fiscal 2021, its profitability was also impacted by cost pressures
related to wages, supply chain, and COVID.
Continued Expansion with Higher Long-Term Store Potential
During 2021 we opened a total of 64 net new stores, consisting of
43 Ross Dress for Less and 21 dd’s DISCOUNTS. We ended the year
with a total of 1,923 locations in 40 states, the District of Columbia,
and Guam.
Looking ahead, given consumers’ increased focus on value and
convenience, we have seen favorable sales trends in both our new
and in-fill market stores. As a result, along with the large number
of brick-and-mortar retail closures and bankruptcies over the last
several years, we now believe that Ross Dress for Less can expand
4 | Ross Stores Inc.
to about 2,900 locations, up from our prior target of 2,400, and that
dd’s DISCOUNTS can eventually become a chain of approximately
700 stores versus our previous projection of 600. This represents
an overall 20% increase in our forecasted potential to 3,600 stores,
providing substantial runway for expansion relative to our year-end
store count of 1,923 locations.
Strong Cash Flows Fund Growth and Stock Repurchases
and Dividends
Operating cash flows helped to fund new store expansion and
additional infrastructure improvements in 2021. We invested approximately
$560 million in capital projects during the year, including $330 million for
distribution, information technology, and other projects, and $230 million
to open new locations and update existing stores. We ended the year
with about $4.9 billion in cash and $2.5 billion in long-term debt.
2021 Annual Report | 5
STORE
GROWTH
40 STATES
1,923 STORES
$18.9B ANNUAL
REVENUE
64 NET NEW
STORES IN 2021
6 | Ross Stores Inc.
In 2021 we opened 43 net new Ross Dress for Less in both established
regions as well as newer markets, including a total of 13 Ross stores
in Illinois, Indiana, Missouri, Nebraska, Wisconsin, and Ohio.
dd’s DISCOUNTS’ store growth included the addition of 21 new
locations across seven states, also in both existing and newer
markets, including Arizona, California, Florida, Georgia, Illinois,
Louisiana, and Texas.
We ended the year with 1,628 Ross Dress for Less stores in
40 states, the District of Columbia, and Guam, and 295 dd’s
DISCOUNTS in 21 states.
Ross Dress for Less
dd’s DISCOUNTS
2021 Annual Report | 7
Total Sales (in billions)
To maximize our ability to capture profitable market share, we plan
$
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9
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to make further investments over the next few years in our supply
chain to support long-term growth and in technology to further
increase efficiencies throughout the business.
In March of 2022, we announced that our Board of Directors
had recently authorized a new two-year program to repurchase
up to $1.9 billion of our common stock through fiscal 2023. This
authorization replaced the $850 million remaining under the prior
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buyback announced in May 2021. A total of $650 million of common
stock was repurchased under the previous program in 2021. The
Board also increased the Company’s quarterly cash dividend by
9% to $.31 per share.
The increases to our stock repurchase and dividend programs
reflect our ongoing commitment to enhancing stockholder value
Earnings Per Share1
and returns, confidence in our projected future cash flows as well
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2
4
17
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21
as the strength of our balance sheet.
Social Responsibility at Ross
For almost 40 years, our Associates have played an essential role in
our ability to deliver great values to our customers. As a Company,
we are committed to promoting an inclusive culture that values and
celebrates the diversity of backgrounds, identities, and ideas of our
approximately 100,000 Associates and those who shop with us.
We also recognize that ensuring an inclusive work environment where
all Associates are treated with dignity and respect is key to their ability
to grow, succeed, and contribute to the communities where they live
and work. To support this, we launched additional employee resource
groups (known at Ross as “CommUnity Networks”) to help Associates
connect with one another and support our ongoing diversity, equality,
and inclusion efforts, with more Networks to come in 2022.
8 | Ross Stores Inc.
Despite the ongoing inability to hold in-person meetings and trainings
in 2021, we maintained our commitment to associate development
with digital learning and engagement opportunities. Other ongoing
initiatives included delivering competitive wages and benefits in each
Return on Average
Stockholders’ Equity
5
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%
5
0
%
4
7
%
4
7
%
of our geographic markets, offering virtual internships, as well as
continuing education opportunities for hundreds of our Associates
and their dependents through the Stuart Moldaw Scholarship
Program. Lastly, we continued to support the communities where
3
%
we operate through local hiring and expanded philanthropic efforts,
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21
including through our foundation that furthers our charitable mission
of helping to create a brighter future for today’s youth.
To learn more about our commitments to our Associates, we invite
shareholders to read more on our website, www.rossstores.com,
in the Social Responsibility section.
Investing in a Sustainable Future
Improving the efficiency and sustainability of our operations, while
minimizing our impact on the environment also remains a top priority.
Our focus on identifying new opportunities to use less energy and
fewer natural resources dates back more than 20 years, and we
continue to make improvements on these initiatives.
Last year we continued to demonstrate our commitment to
transparency by participating in the Carbon Disclosure Project
Climate Change Questionnaire. We also published our 2020
Corporate Social Responsibility Report, which includes our
sustainability efforts and accomplishments. In the report, we share
the progress we made towards our greenhouse gas emissions
target. We remain committed to taking actions that drive
environmental sustainability and invite our shareholders to learn
more about our efforts on our website, www.rossstores.com,
in the Social Responsibility section.
Cash Returned to
Stockholders2 (in millions)
$
1
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6
4
5
$
1
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4
1
2
$
1
,
1
2
3
$
1
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2
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4
17
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20
21
2017 results are based on a 53-week fiscal
year; all other years are on a 52-week basis;
2020 reflects the negative impact of store
closures due to COVID-19.
1. Includes debt refinancing costs in 2020.
2. Includes cash dividends and stock
repurchases.
2021 Annual Report | 9
We operate in an attractive sector of retail and our mission continues
to be delivering the best bargains possible to leverage our favorable
market position. Looking at 2023 and beyond, we are targeting a return
to double-digit earnings per share growth, driven by a combination of
same store sale gains, operating margin improvement, accelerated new
store openings, and our ongoing stock repurchase program.
In closing, we especially want to thank our approximately 100,000
talented Associates throughout the Company whose dedication has
enabled us to successfully navigate through the unprecedented
challenges of the past two years. We believe their continued efforts
will enable us to capitalize on our opportunities for future sales and
earnings growth while also delivering strong returns to stockholders
over the coming years.
Finally, we extend our deep appreciation to our customers, business
partners, and investors for their ongoing support with best wishes for
everyone’s continued health and safety.
Sincerely,
George P. Orban
Chairman of the Board
Barbara Rentler
Chief Executive Officer
10 | Ross Stores Inc.
Ross Stores, Inc. 2021 Annual Report
FORM
10-K
2021
2021
Table of Contents
Business
Management’s Discussion and Analysis
Financial Statements and Supplementary Data
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Signatures
Index to Exhibits
Certifications
Index to Other Information
Directors and Officers
Corporate Data
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32
44
48
63
69
70
74
77
78
12
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 29, 2022
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 0-14678
Ross Stores, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
5130 Hacienda Drive, Dublin, California
(Address of principal executive offices)
Registrant’s telephone number, including area code
94-1390387
(I.R.S. Employer Identification No.)
94568-7579
(Zip Code)
(925) 965-4400
Title of each class
Common stock, par value $.01
Securities registered pursuant to Section 12(b) of the Act:
Trading symbol
ROST
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange on which registered
NASDAQ Global Select Market
Title of class
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer ☐ Non-accelerated filer ☐
Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
The aggregate market value of the voting common stock held by non-affiliates of the Registrant as of July 31, 2021 was
$42,842,208,333, based on the closing price on that date as reported by the NASDAQ Global Select Market®. Shares of voting stock
held by each director and executive officer have been excluded, in that such persons may be deemed to be affiliates. This determination
of affiliate status is not necessarily a conclusive determination for other purposes.
The number of shares of Common Stock, $.01 par value, outstanding on March 7, 2022 was 350,892,474.
Documents incorporated by reference:
Portions of the Proxy Statement for the Registrant’s 2022 Annual Meeting of Stockholders, which will be filed on or before May 31, 2022,
are incorporated herein by reference into Part III.
13
PART I
ITEM 1. BUSINESS
Ross Stores, Inc. and its subsidiaries (“we” or the “Company”) operate two brands of off-price retail apparel and home fashion
stores—Ross Dress for Less® (“Ross”) and dd’s DISCOUNTS®.
Ross is the largest off-price apparel and home fashion chain in the United States, with 1,628 locations in 40 states, the District of
Columbia, and Guam, as of January 29, 2022. Ross offers first-quality, in-season, name brand and designer apparel,
accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store
regular prices every day. Ross’ target customers are primarily from middle income households.
We also operate 295 dd’s DISCOUNTS stores in 21 states as of January 29, 2022. dd’s DISCOUNTS features more
moderately-priced first-quality, in-season, name brand apparel, accessories, footwear, and home fashions for the entire family
at savings of 20% to 70% off moderate department and discount store regular prices every day. The typical dd’s DISCOUNTS
store is located in an established shopping center in a densely populated urban or suburban neighborhood, and its target
customers typically come from households with more moderate incomes than Ross customers.
The merchant, store field, and distribution operations for Ross and dd’s DISCOUNTS are separate. The two chains share certain
corporate and support services.
Both our Ross and dd’s DISCOUNTS brands target value-conscious customers. The decisions we make, from merchandising,
purchasing, and pricing, to the locations of our stores, are based on these customer profiles. We believe that both brands derive
a competitive advantage by offering a wide assortment of product within each of our merchandise categories, in organized and
easy-to-shop store environments.
Our mission is to offer competitive values to our target customers by focusing on the following key strategic objectives:
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Maintain an appropriate level of recognizable brands, labels, and fashions at strong discounts throughout the store.
Meet customer needs on a local basis.
Deliver an in-store shopping experience that reflects the expectations of the off-price customer.
Manage real estate growth to compete effectively across all our markets.
We refer to our fiscal years ended January 29, 2022, January 30, 2021, and February 1, 2020 as fiscal 2021, fiscal 2020, and
fiscal 2019, respectively, each of which were 52-week years.
Merchandising, Purchasing, and Pricing
We seek to provide our customers with a wide assortment of first-quality, in-season, brand name and designer apparel,
accessories, footwear, and home merchandise for the entire family at savings of 20% to 60% below department and specialty
store regular prices every day at Ross, and 20% to 70% below moderate department and discount store regular prices at dd’s
DISCOUNTS. We sell recognizable brand name merchandise that is on trend and fashionable in each category. New
merchandise typically is received from three to six times per week at both Ross and dd’s DISCOUNTS stores. Our buyers review
their merchandise assortments on a weekly basis, enabling them to respond to selling trends and purchasing opportunities in the
market. Our merchandising strategy is reflected in our advertising, which emphasizes a strong value message. Our stores offer a
treasure-hunt shopping experience where customers can find great savings every day on a broad assortment of brand name
bargains for the family and the home.
Merchandising. Our merchandising strategy incorporates a combination of off-price buying techniques to purchase
advance-of-season, in-season, and past-season merchandise for both Ross and dd’s DISCOUNTS. We believe nationally
recognized name brands sold at compelling discounts will continue to be an important determinant of our success. We generally
leave the brand name label on the merchandise we sell.
We have established merchandise assortments that we believe are attractive to our target customers. Although we offer fewer
classifications of merchandise than most department stores, we generally offer a large selection within each classification with a
wide assortment of vendors, labels, prices, colors, styles, and fabrics within each size or item. Our merchandise offerings
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include, but are not limited to, apparel (including footwear and accessories), small furniture, home accents, bed and bath, beauty,
toys, luggage, gourmet food, cookware, jewelry and watches.
Purchasing. We have a large network of merchandise vendors and manufacturers for both Ross and dd’s DISCOUNTS and
believe we have adequate sources of first-quality merchandise to meet our requirements. We purchase the vast majority of our
merchandise directly from manufacturers. Despite the ongoing supply chain congestion, we have been able to sufficiently source
merchandise inventory.
We believe our ability to effectively execute certain off-price buying strategies is a key factor in our success. Our buyers use a
number of methods that enable us to offer our customers brand name and designer merchandise at strong discounts every day
relative to department and specialty stores for Ross, and moderate department and discount stores for dd’s DISCOUNTS. By
purchasing later in the merchandise buying cycle than department, specialty, and discount stores, we are able to take advantage
of imbalances between retailers’ demand for products and manufacturers’ supply of those products.
Unlike most department and specialty stores, we typically do not require that manufacturers provide promotional allowances,
co-op advertising allowances, return privileges, split shipments, drop shipments to stores, or delayed deliveries of merchandise.
For most orders, delivery is made to one of our distribution centers. These flexible requirements further enable our buyers to
obtain significant discounts on purchases.
The merchandise that we offer in all of our stores is acquired through opportunistic purchases created by manufacturer and
brand overruns and canceled orders both during and at the end of a season (“close-out” purchases), and production direct from
brands and factories (“upfront” purchases). We also source merchandise under in-house brands or vendor brands. Merchandise
can be shipped to stores in-season, allowing us to get in-season goods into our stores at great values, or can be stored as
packaway merchandise.
Packaway merchandise is purchased with the intent that it will be stored in our warehouses until a later date, which may even be
the beginning of the same selling season in the following year. Packaway purchases are an effective method of increasing the
percentage of prestige and national brands at competitive savings within our merchandise assortments. The timing of the release
of packaway inventory to our stores is principally driven by the product mix and seasonality of the merchandise, and its relation
to our store merchandise assortment plans. As such, the aging of packaway varies by merchandise category and seasonality of
purchase, but typically packaway remains in storage less than six months.
In fiscal 2021, we continued our emphasis on this important sourcing strategy in response to compelling opportunities available
in the marketplace. Packaway accounted for approximately 40% and 38% of total inventories as of January 29, 2022 and
January 30, 2021, respectively. We believe the strong discounts we offer on packaway merchandise are one of the key drivers of
our business results.
Our primary buying offices are located in New York City and Los Angeles, the nation’s two largest apparel markets. We also
operate a smaller buying office located in Boston. These strategic locations allow our buyers to be in the market frequently,
sourcing opportunities and negotiating purchases with vendors and manufacturers. These locations also enable our buyers to
strengthen vendor relationships—a key element to the success of our off-price buying strategies.
At the end of fiscal 2021, we had over 900 merchants for Ross and dd’s DISCOUNTS combined. The Ross and dd’s
DISCOUNTS buying organizations are separate and distinct, and each includes merchandise management, buyers, and
assistant buyers. Ross and dd’s DISCOUNTS buyers have on average seven years of experience, including merchandising
positions with other retailers. We expect to continue to make additional targeted investments in our merchant organization to
further develop our relationships with our manufacturers and vendors. Our ongoing objective is to strengthen our ability to
procure the most desirable brands and fashions at competitive discounts.
The off-price buying strategies utilized by our experienced team of merchants enable us to purchase Ross merchandise at net
prices that are lower than prices paid by department and specialty stores, and to purchase dd’s DISCOUNTS merchandise at net
prices that are lower than prices paid by moderate department and discount stores.
Pricing. We sell brand name merchandise at Ross that is priced 20% to 60% below most department and specialty store regular
prices. At dd’s DISCOUNTS, we sell more moderate brand name merchandise that is priced 20% to 70% below most moderate
department and discount store regular prices. Our pricing is reflected on most of our price tags which display our selling price as
well as the comparable value for that item in department and specialty stores for Ross merchandise, or in more moderate
department and discount stores for dd’s DISCOUNTS merchandise.
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Our pricing strategy at Ross differs from that of a department or specialty store. We purchase our merchandise at lower prices
and mark it up less than a department or specialty store. This strategy enables us to offer customers consistently low prices and
compelling value. On a weekly basis our buyers review specified departments in our stores for possible markdowns based on the
rate of sale, as well as at the end of fashion seasons, to promote faster turnover of merchandise inventory and to accelerate the
flow of fresh product. A similar pricing strategy is in place at dd’s DISCOUNTS where prices are compared to those in moderate
department and discount stores.
Stores
As of January 29, 2022, we operated a total of 1,923 stores comprised of 1,628 Ross stores and 295 dd’s DISCOUNTS stores.
Our stores are located predominantly in community and neighborhood shopping centers in heavily populated urban and
suburban areas. Where the size of the market and real estate opportunities permit, we cluster Ross stores to benefit from
economies of scale in advertising, distribution, and field management. We do the same for dd’s DISCOUNTS stores.
We believe a key element of our success at both Ross and dd’s DISCOUNTS is our organized, attractive, and easy-to-shop
in-store environments which allow customers to shop at their own pace. While our stores promote a self-service, treasure-hunt
shopping experience, the layouts are designed to enhance customer convenience in their merchandise presentation, dressing
rooms, checkout, and merchandise return areas. Our store’s sales area is based on a prototype single floor design with a
racetrack aisle layout. A customer can locate desired departments by signs displayed just below the ceiling of each department.
We enable our customers to select among sizes and prices through prominent category and sizing markers. Our stores have
shopping carts and/or baskets available at the entrance for customer convenience. Cash registers are primarily located at store
exits for customer ease and efficient staffing. In response to the health pandemic from the novel coronavirus (COVID-19), we
have implemented enhanced safety protocols for our customers and associates.
We accept a variety of payment methods. We provide refunds or store credit on all merchandise (not used, worn, or altered)
returned with a receipt within 30 days. Merchandise returns having a receipt older than 30 days are exchanged or refunded with
store credit.
Operating Costs
Consistent with the other aspects of our business strategy, we strive to keep operating costs as low as possible. Among the
factors which have enabled us to do this are: labor costs that are generally lower than full-price department and specialty stores
due to a store design that creates a self-service retail format and due to the utilization of labor saving technologies; economies of
scale with respect to general and administrative costs resulting from centralized merchandising, marketing, and purchasing
decisions; and flexible store layout criteria which facilitate conversion of existing buildings to our formats.
In response to COVID-19, we implemented additional processes and procedures to facilitate social distancing, to enhance
cleaning and sanitation activities, and to provide personal protective equipment to our associates, which has increased our
operating costs. We have incurred and expect to continue to incur elevated operating costs during the COVID-19 pandemic.
Information Systems
We continue to invest in new information systems and technology to provide a platform for growth over the next several years.
Current initiatives include continued enhancements to our stores, distribution, merchandising, merchandise planning, and
cybersecurity systems. These initiatives support future growth, the execution and achievement of our plans, ongoing stability and
compliance.
Distribution
We operate distribution processing facilities where we receive and ship all of our merchandise to our stores. These distribution
centers are large, highly automated, and built to suit our specific off-price business model. We also operate warehouse facilities
for packaway storage.
We utilize a combination of our own, and third-party, cross dock facilities to distribute merchandise to stores on a regional basis.
Shipments are made by contract carriers to the stores three to six times per week depending on location.
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We believe that our distribution centers and warehouses with their current expansion capabilities will provide adequate
processing and storage capacity to support our current store growth. Information on the size and locations of our distribution
centers and warehouse facilities is found under “Properties” in Item 2.
Advertising
Advertising for Ross Dress for Less relies on a mix of television and digital channels to communicate the Ross value
proposition—savings off the same brands carried at leading department or specialty stores every day. This strategy reflects our
belief that a mix of channels is necessary to reach our customer. Within digital channels, we continue to grow social, digital
video, and audio, to communicate our brand position. Advertising for dd’s DISCOUNTS is primarily focused on radio, both
broadcast and digital, social media, and new store grand openings.
Trademarks
The trademarks for ROSS®, Ross Dress For Less®, and dd’s DISCOUNTS® have been registered with the United States Patent
and Trademark Office.
Human Capital
As of January 29, 2022, we had approximately 100,000 total associates, which includes both full- and part-time associates.
Additionally, we hire temporary associates, especially during peak seasons. We have no associates that are covered by a
collective bargaining agreement. Management considers the relationship between the Company and our associates to be good.
Our associates play essential roles in delivering great value to our customers. Throughout our organization, we recognize and
appreciate the importance of attracting, retaining, and developing our associates and we have a number of key programs to do
so.
Talent development. The professional growth of our associates is important to our success as a business. We identify and
enumerate key competencies we believe are critical to our ability to execute our business model and deliver the values our
customers expect. We utilize these competencies in the hiring, development, evaluation, and future planning of our teams. We
provide training opportunities to help associates grow and build their careers. Our associates, managers, and executives may
participate in technical and leadership development activities. We support associates interested in leadership roles by offering
opportunities to gain experience and build the skills necessary to advance within the Company. We are proud that many store
leaders started their careers with us as retail associates.
Diversity, equality, and inclusion. We care about our associates and the communities we serve. We are committed to building
diverse teams and an inclusive culture that respects, values, and celebrates the diversity of backgrounds, identities, and ideas of
those who work and shop with us. We are focused on executing strategies to support our commitment to diversity, equality, and
inclusion.
Community and social impact. We provide our associates the opportunity to give back to their communities and make a social
impact through various programs such as our matching gift program, volunteer time off for eligible associates, and a scholarship
program for our associates and their dependents.
Competition
We believe the principal competitive factors in the off-price retail apparel and home fashion industry are offering significant
discounts on brand name merchandise, offering a well-balanced assortment that appeals to our target customers, and
consistently providing store environments that are convenient and easy to shop. To execute this concept, we continue to make
strategic investments in our merchandising organization. We also continue to make improvements to our merchandising systems
to strengthen our ability to plan, buy, and allocate product to our stores. We operate in an attractive sector of retail that we
anticipate will be facing reduced brick and mortar competition given the significant number of recent retail closures and
bankruptcies. We believe that we remain well-positioned within the off-price retail apparel and home fashion industry to compete
based on these factors.
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Nevertheless, the retail apparel market is highly fragmented and competitive. We face a challenging macro-economic and retail
environment that creates intense competition for business from online retailers, department stores, specialty stores, discount
stores, warehouse stores, other off-price retailers, and manufacturer-owned outlet stores, many of which are units of large
national or regional chains that have substantially greater resources. The retail apparel and home-related businesses may
become even more competitive in the future.
Available Information
The internet address for our corporate website is www.rossstores.com. Our Annual Reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, Proxy Statements, and any amendments to those reports are made available free of
charge on or through the Investors section of our corporate website, promptly after being electronically filed with the Securities
and Exchange Commission. The information found on our corporate website is not part of this report, or of any other report or
regulatory filing we file with or furnish to the Securities and Exchange Commission.
ITEM 1A. RISK FACTORS
Our Annual Report on Form 10-K for fiscal 2021, and information we provide in our Annual Report to Stockholders, press
releases, and other investor communications, including those on our corporate website, may contain forward-looking statements
with respect to anticipated future events, including the rapidly developing challenges (and our plans and responses) from the
COVID-19 pandemic and related economic disruptions, our future financial performance, operations, competitive position, and
our projected growth, that are all subject to risks and uncertainties that could cause our actual results to differ materially from
those forward-looking statements and from our prior expectations and projections. Refer to Management’s Discussion and
Analysis for a more complete identification and discussion of “Forward-Looking Statements.”
Our financial condition, results of operations, cash flows, and the performance of our common stock may be adversely affected
by a number of risk factors. Risks and uncertainties that apply to both Ross and dd’s DISCOUNTS include, without limitation, the
following:
The COVID-19 pandemic continues to adversely affect our sales and our operations, and we expect it to continue to
have adverse effects on our business and our financial performance.
The United States and other countries continue to experience a prolonged, major global COVID-19 pandemic, including
additional outbreaks driven by new virus variants, with related, significant disruptions and impacts to retail operations and supply
chains, and to general economic activities. The situation continues to be unprecedented and rapidly changing, and has unknown
duration and severity.
As the COVID-19 pandemic continues, our customers and associates may be affected by future recommendations and/or
mandates from federal, state, and local authorities to stay home, to avoid non-essential social contact and gatherings of people,
and to self-quarantine. While a significant and increasing portion of the population is vaccinated or may have acquired some
level of immunity after recovering from illness, it will take more time for those factors to reach levels that permit a return to
pre-pandemic levels of social activity. Additional outbreaks and spreading of the disease have been occurring across the United
States, and levels of spread have gone up and down in different regions. Government authorities in affected regions have in the
past taken actions, sometimes drastic and including mandatory capacity restrictions, reduced operating hours, and closure of
retail operations, in an effort to slow down the spread of the disease. We may still face required store closures and distribution
center closures, nationally, regionally, or in specific locations.
We have a concentration of store locations in the states of California, Texas, and Florida; together those states include almost
fifty percent of our stores. More than half of our distribution centers and warehouses are located in California. A severe outbreak
or a required closure affecting these facilities would be very disruptive to our ability to supply merchandise to our stores. The
COVID-19 pandemic may potentially adversely affect our ability to adequately staff our distribution centers, our stores, and our
merchant and other support operations. Further, the COVID-19 pandemic has impacted multiple countries, leading to supply
related disruptions, including port of exit/entry congestion, shipping delays, and ocean freight cost increases, which may also
adversely affect our ability to access and ship products from affected regions.
The prolonged, widespread pandemic has adversely impacted global economies, which has resulted in an economic downturn.
An economic rebound is resulting in rising inflation that may reduce consumer demand for our products, and also increase our
costs. The extent and duration of the impact from the COVID-19 pandemic on our business and financial results will depend
largely on future developments, including the duration and spread of outbreaks within the U.S., regional surges in infection,
vaccination rates, potential acquired immunity, the effectiveness of vaccines in controlling current and future variants of the virus,
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the response by all levels of government in their efforts to contain the outbreak and to mitigate the resulting economic
disruptions, and the related impact on consumer confidence, shopping behavior, and spending, all of which are highly uncertain
and cannot be predicted. Such impacts have and are expected to adversely affect our profitability, cash flows, financial results,
and our capital resources.
We are subject to impacts from the macro-economic environment, financial and credit markets, and geopolitical
conditions that affect consumer confidence and consumer disposable income. The COVID-19 pandemic and
accompanying economic impacts, including supply chain disruptions and inflation, and the developing Russia-Ukraine
conflict and accompanying economic impacts, may have prolonged and significant negative effects on consumer
confidence, shopping behavior, and spending, which may adversely affect our sales and gross margins.
Consumer spending habits for the merchandise we sell are affected by many factors. Currently, the repercussions from the
ongoing COVID-19 pandemic present significant risks and uncertainty. There is significant uncertainty over potential changes in
consumer behavior and shopping patterns as the pandemic continues and as different regions experience surges.
Currently, there is also a rapidly developing Russia-Ukraine conflict, which has already escalated into a significant military
confrontation, and is resulting in major, potentially prolonged economic sanctions and other responses from the United States
and other countries, which present significant risks and uncertainties. These events may cause various adverse macro-economic
effects, including increases in fuel and energy prices and depressed financial markets.
Other factors include levels of unemployment, the size and timing of federal stimulus programs, salaries and wage rates,
prevailing economic conditions, increasing inflation, rising interest rates, recession and fears of recession, housing costs, energy
and fuel costs, income tax rates and the timing of tax refunds, consumer perceptions of personal well-being and security,
availability of consumer credit, consumer debt levels, and the resulting effects on consumers’ disposable income and consumer
confidence in future economic conditions.
The COVID-19 pandemic, the Russia-Ukraine conflict, and other potential, adverse developments in any of these areas, could
reduce demand for our merchandise, increase our cost of goods, freight cost, and payroll costs, decrease our inventory turnover,
cause greater markdowns, and negatively affect our sales and margins. All of our stores are located in the United States and its
territories, so we are especially susceptible to changes in the U.S. economy.
We need to successfully operate under the health and safety measures implemented in our stores and distribution
centers, and across all our operations, to comply with regulatory requirements and with the goal of keeping our
customers and associates safe from the spread of the COVID-19 virus without disruptions to our operations.
We have implemented a variety of measures in our store locations, distribution centers, and other facilities, with the goal of
keeping our associates, customers, and the communities we serve safe from spreading the COVID-19 virus. These measures
include additional cleaning and sanitation of stores and workspaces, providing associates with personal protective equipment
based on CDC or other federal, state, or local health guidelines, and implementing physical distancing practices, in our stores,
distribution centers, and in our other operations. This is very challenging to do, and there is significant risk, incremental costs,
and uncertainty regarding changing requirements. Not only are these measures evolving, but they often require change to
established habits and patterns of behavior by large groups of people, who may not fully understand or agree with the requested
changes. Whatever measures we adopt, there will also be challenges in effecting consistent compliance by our customers and
our associates. We are adapting and changing these measures as we learn from experience. And despite our efforts and best
intentions, incidents of infection will occur at our stores, distribution centers, and/or in our other facilities, potentially resulting in
serious illness for those affected, including our associates. This may result in required temporary closure of specific stores,
distribution centers, or other facilities, and in temporary or longer term loss of key personnel during illness, and potential supply
chain disruptions. We may also face claims (with or without merit) that our retail stores or our other facilities and workplaces are
operating in an unsafe manner or are not in compliance with applicable laws and regulations. Any such incidents may adversely
affect our operating results, increase our costs, and damage our reputation and competitive position.
Competitive pressures in the apparel and home-related merchandise retailing industry are high.
The retail industry is highly competitive and the marketplace is highly fragmented, as many different retailers compete for market
share by utilizing a variety of store and on-line formats and merchandising strategies. We expect competition to increase in the
future. There are no significant economic barriers for others to enter our retail sector. We compete for customers, associates,
store locations, and merchandise with many other local, regional, and national retailers, traditional department stores, upscale
mass merchandisers, other off-price retailers, specialty stores, internet and catalog businesses, and other forms of retail
commerce. Our retail competitors constantly adjust their pricing, business strategies, and promotional activity (particularly during
holiday periods) in response to changing market conditions or their own financial condition. The substantial sales growth in
e-commerce within the last decade has also encouraged the entry of many new competitors, new business models, and an
increase in competition from established companies looking for ways to create successful on-line shopping alternatives. Intense
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pressures from our competitors, our inability to adapt effectively and quickly to a changing competitive landscape, or a failure to
effectively execute our off-price model, could reduce demand for our merchandise, decrease our inventory turnover, cause us to
take greater markdowns, and negatively affect our sales and margins.
Unexpected changes in the level of consumer spending on or preferences for apparel and home-related merchandise
could adversely affect us.
Our success depends on our ability to effectively buy and resell merchandise that meets customer demand. We work on an
ongoing basis to identify customer trends and preferences, and to obtain merchandise inventory to meet anticipated customer
needs. It is very challenging to successfully do this well and consistently across our diverse merchandise categories and in the
multiple markets in which we operate throughout the United States and its territories. Although our off-price business model
provides us certain advantages and may allow us greater flexibility than traditional retailers have in adjusting our merchandise
mix to ever-changing consumer tastes, our merchandising decisions may still fail to correctly anticipate and match consumer
trends and preferences, particularly in our newer geographic markets. Failure to correctly anticipate and match the trends,
preferences, and demands of our customers could adversely affect our business, financial condition, and operating results.
Adverse and/or unseasonable weather may affect shopping patterns and consumer demand for seasonal apparel and
other merchandise, and may result in temporary store closures and disruptions in deliveries of merchandise to our
stores.
Unseasonable weather and prolonged, extreme temperatures, as well as events such as storms, affect consumers’ buying
patterns and willingness to shop, and may adversely affect the demand for merchandise in our stores, particularly in apparel and
seasonal merchandise. Among other things, weather conditions may also affect our ability to deliver our products to our stores or
require us to close certain stores temporarily, thereby reducing store traffic. Even if stores are not closed, many customers may
be unable to go, or may decide to avoid going to stores in bad weather. As a result, adverse or unseasonable weather in any of
our markets could lead to disappointing sales and cause us to increase our markdowns, which may negatively affect our sales
and margins.
In order to achieve our planned gross margins, we must effectively manage our inventories, markdowns, and inventory
shortage. As a result of changes in shopping behaviors due to the COVID-19 pandemic, disruptions to supply chains
and store operations, and inflation, we are at risk for inventory imbalances and the potential for higher than normal
levels of markdowns to sell through our inventory, increased cost of goods, and for lost sales due to insufficient
inventory to meet customer demand, any of which would negatively affect our gross margins and our operating results.
We purchase the majority of our inventory based on our sales plans. If our actual demand is lower than our sales plans, we may
experience excess inventory levels and need to take markdowns on excess or slow-moving inventory, resulting in decreased
profit margins. Inflation may cause our costs to purchase inventory to be higher than we planned, and we may not be able to sell
the inventory to our customers at correspondingly increased prices, resulting in decreased profit margins. We also may have
insufficient inventory to meet customer demand, leading to lost sales opportunities. The COVID-19 pandemic and accompanying
economic impacts may change shopping behavior so that our predictions and sales plans become less accurate, and that may
lead us to have higher than usual levels of slow-moving or non-salable inventory at our prior planned price levels. We would then
need to aggressively and progressively reduce our selling prices in order to clear out that inventory, which would result in
decreased profit margins or losses on sales of that inventory, and adversely affect our results of operations in future periods.
As a regular part of our business, we purchase “packaway” inventory with the intent that it will be stored in our warehouses until
a later date. The timing of the release of packaway inventory to our stores is principally driven by the product mix and seasonality
of the merchandise, and its relation to our store merchandise assortment plans, but it typically remains in storage less than six
months. Packaway inventory is frequently a significant portion of our overall inventory. If we make packaway purchases that do
not align with consumer preferences at the later time of release to our stores, we could have significant inventory markdowns.
Changes in packaway inventory levels could impact our operating cash flow. Although we have various systems to help protect
against loss or theft of our inventory, both when in storage and once distributed to our stores, we may have damaged, lost, or
stolen inventory (called “shortage”) in higher amounts than we forecast, which would result in write-offs, lost sales, and reduced
margins.
We depend on the market availability, quantity, and quality of attractive brand name merchandise at desirable
discounts, and on the ability of our buyers to purchase merchandise to enable us to offer customers a wide assortment
of merchandise at competitive prices.
Opportunistic buying, lean inventory levels, and frequent inventory turns are critical elements of our off-price business strategy.
Maintaining an overall pricing differential to department and specialty stores is also key to our ability to attract customers and
sustain our sales and gross margins. Our opportunistic buying places considerable discretion with our merchants, who are in the
marketplace continually and who are generally purchasing merchandise for the current or upcoming season. Our ability to meet
or exceed our operating performance targets depends upon the continuous, sufficient availability of high quality merchandise that
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we can acquire at prices sufficiently below those paid by conventional retailers and that represent a value to our customers. To
the extent that certain of our vendors are better able to manage their inventory levels and reduce the amount of their excess
inventory, the amount of high quality merchandise available to us could be materially reduced. To the extent that certain of our
vendors decide not to sell to us or go out of business, the amount of high quality merchandise available to us could also be
materially reduced. Because a significant portion of the apparel and other goods we sell is originally manufactured in other
countries, constraints on the availability of shipping capacity, changes in transportation costs or in U.S. tariffs, trade relationships,
or tax policies, and natural disasters, or public health issues such as the current COVID-19 pandemic (or other, future
pandemics), that reduce the supply or increase the relative cost of imported goods, could also result in disruptions to our existing
supply relationships. Shortages, delays, or disruptions in the availability to us of high quality, value-priced merchandise would
likely have a material adverse effect on our sales and margins.
Information or data security breaches, including cyber-attacks on our transaction processing and computer information
systems, could result in theft or unauthorized disclosure of customer, credit card, employee, or other private and
valuable information that we handle in the ordinary course of our business, disrupt our operations, damage our
reputation, and increase our costs.
Like other large retailers, we rely on commercially available computer and telecommunications systems to process, transmit, and
store payment card and other personal and confidential information, and to provide information or data security for those
transactions. Some of the key information systems and processes we use to handle payment card transactions and check
approvals, and the levels of security technology utilized in payment cards, are controlled by the banking and payment card
industry, not by us. Cybercriminals may attempt to penetrate our point of sale and other information systems to misappropriate
customer or business information, including but not limited to credit/debit card, personnel, or trade information. Cybercriminals
(including state-sponsored actors) may attempt to penetrate our information systems to deprive us from access to necessary
business information and to disrupt our operations, as part of so-called “ransomware” extortion activity or otherwise. Despite
security measures we have in place, and our efforts to prevent, monitor, and mitigate attacks and errors, our facilities and
systems (or those of third-party service providers we utilize or connect to) may be vulnerable to security breaches, acts of
vandalism, computer viruses, misplaced or lost data, programming and/or human errors, phishing, ransomware attacks, and
similar fraudulent attacks, or other similar events. It is also possible that an associate within our Company, or a third party we do
business with, may purposefully or inadvertently cause a security breach involving such information. The increasing
sophistication of cybercriminals, the increased potential for cyberattacks, and the advances in computer capabilities and remote
access increases these risks. A breach of our information or data security, a system shut down or other response we may take,
or our failure or delay in detecting and mitigating a loss of personal or business information, could result in damage to our
reputation, loss of customer confidence, violation (or alleged violation) of applicable laws (including laws relating to consumer
data protection and privacy, and required notifications of data security breaches), and expose us to civil claims, litigation, and
regulatory action, and to unanticipated costs and disruption of our operations.
Disruptions in our supply chain or in our information systems could impact our ability to process sales and to deliver
product to our stores in a timely and cost-effective manner.
Various information systems are critical to our ability to operate and to manage key aspects of our business. We depend on the
integrity, continuous availability, and consistent operations of these systems to process transactions in our stores, track inventory
flow, manage merchandise allocation and distribution logistics, generate performance and financial reports, and support
merchandising decisions.
We are currently making, and will continue to make, significant technology investments to improve or replace information
processes and systems that are key to managing our business. We must monitor and choose sound investments and implement
them at the right pace. The risk of system disruption is increased whenever significant system changes are undertaken. An
excessive rate of technological change could detract from the effectiveness of adoption, and could make it more difficult for us to
realize benefits from new technology. Poorly targeting opportunities, failing to make good investments, or making an investment
commitment significantly above or below our needs could damage our competitive position and adversely impact our business
and results of operations. Additionally, the potential problems and interruptions associated with implementing technology system
changes could disrupt or reduce the efficiency of our operations in the short term. These initiatives might not provide us with the
anticipated benefits, or may provide them on a delayed schedule or at a higher cost.
Our information systems, including our back-up systems, are subject to damage or interruption from power outages, computer
and telecommunications failures, cyberattacks, computer viruses, internal or external security breaches, catastrophic events
such as severe storms, fires, earthquakes, floods, acts of terrorism, and design or usage errors by our employees or by third
parties. If our information systems or our back-up systems are damaged or cease to function properly, we may have to make
significant investments to fix or replace them, and we may suffer interruptions in our operations in the interim. Any material
interruption in our computer systems could have a material adverse effect on our business and results of operations.
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A disruption within our logistics or supply chain network could adversely affect our ability to timely and efficiently transport
merchandise to our stores or our distribution centers, which could impair our ability to meet customer demand for products and
result in lost sales or increased supply chain costs. Such disruptions may result from public health issues such as the current
COVID-19 pandemic (or other, future pandemics), cyberattacks, damage or destruction to our distribution centers,
weather-related events, natural disasters, trade restrictions, tariffs, third-party strikes or ineffective cross dock operations, work
stoppages or slowdowns, shipping capacity constraints, supply or shipping interruptions, or other factors beyond our control. Any
such disruptions could negatively impact our financial performance or financial condition.
We need to obtain acceptable new store sites with favorable consumer demographics to achieve our planned growth.
Successful growth requires us to find appropriate real estate sites in our targeted market areas. We compete with other retailers
and businesses for acceptable store locations. For the purpose of identifying locations we rely, in part, on consumer
demographics. While we believe consumer demographics are helpful indicators of acceptable store locations, we recognize that
this information cannot predict future consumer preferences and buying trends with complete accuracy. Time frames for
negotiations and store development vary from location to location and can be subject to unforeseen delays or unexpected
cancellations. We may not be able to open new stores or, if opened, operate those new stores profitably. Construction and other
delays in store openings could have a negative impact on our business and operating results. Additionally, we may not be able to
renegotiate our current lease terms which could negatively impact our operating results. New stores may not achieve the same
sales or profit levels as our existing stores, and adding stores to existing markets may adversely affect the sales and profitability
of other existing stores. If we cannot acquire sites on attractive terms, it could limit our ability to grow or adversely affect the
economics of our new stores in various markets.
To achieve growth, we need to expand in existing markets and enter new geographic markets.
Our growth strategy is based on successfully expanding our off-price model in current markets and in new geographic regions.
There are significant risks associated with our ability to continue to expand our current business and to enter new markets.
Stores we open in new markets may take longer to reach expected sales and profit levels on a consistent basis and may have
higher construction, occupancy, advertising, or operating costs than stores we open in existing markets, thereby affecting our
overall profitability. New markets may have competitive conditions, consumer tastes, and discretionary spending patterns that
are more difficult to predict or satisfy than our existing markets. Our limited operating experience and limited brand recognition in
new markets may require us to build brand awareness in that market through greater investments in advertising and promotional
activity than we originally planned. We may find it more difficult in new markets to hire, motivate, and retain qualified associates.
Consumer problems or legal issues involving the quality, safety, or authenticity of products we sell could harm our
reputation, result in lost sales, and/or increase our costs.
Various governmental authorities regulate the quality and safety of merchandise we sell. These regulations and related laws
frequently change, and the ultimate cost of compliance cannot be precisely estimated. Because of our opportunistic buying
strategy, we sometimes obtain merchandise in new categories or from new vendors that we have not dealt with before. Although
our vendor arrangements typically place contractual responsibility on the vendor for resulting liability and we generally rely on our
vendors to provide authentic merchandise that matches the stated quality attributes and complies with applicable product safety
and other laws, vendor non-compliance with consumer product safety laws may subject us to product recalls, make certain
products unsalable, or require us to incur significant compliance costs.
Regardless of fault, any real or perceived issues with the quality and safety of merchandise we offer (particularly products such
as food and children’s items), issues with the authenticity of merchandise, or our inability or that of our vendor to comply on a
timely basis with laws and regulatory requirements, could adversely affect our reputation, result in lost sales, inventory write-offs,
uninsured product liability or other legal claims, penalties or losses, merchandise recalls, and increased costs.
An adverse outcome in various legal, regulatory, or tax matters could damage our reputation or brand and increase our
costs.
As an ordinary part of our business, we are involved in various legal proceedings, regulatory reviews, tax audits, and/or other
legal matters. These may include lawsuits, inquiries, demands, or other claims or proceedings by governmental entities and
private plaintiffs, including those relating to employment and employee benefits (including classification, employment rights,
discrimination, harassment, wage and hour, and retaliation), securities, real estate, tort, commercial, consumer protection,
privacy, product compliance and safety, advertising, environmental, comparative pricing, product labeling, intellectual property,
tax, escheat, and whistle-blower claims. We continue to be involved in a number of employment-related lawsuits, including
class/representative actions which are primarily in California.
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We are subject to federal, state, and local rules and regulations in the United States, and to various international laws, which
change from time to time. These legal requirements collectively affect multiple aspects of our business, including the cost of
health care, workforce management and employee benefits, minimum wages, advertising, comparative pricing, import/export,
sourcing and manufacturing, data protection (including customer and associate data privacy, choice and notification rights),
intellectual property, and others. If we fail to comply (or are alleged not to comply) with any of these requirements, we may be
subject to fines, settlements, penalties, or other costs. In addition, an adverse outcome (or the adverse publicity from the claims)
in any of these matters may damage our reputation or brand. We are also subject to the continuous examination of our tax
returns and reports by federal, state, and local tax authorities, and these examining authorities may challenge positions we take.
Significant judgment is required in evaluating and estimating our tax provisions and reserves for legal claims. Actual results may
differ and our costs may exceed the reserves we establish in estimating the probable outcomes. In addition, applicable
accounting principles and interpretations may change from time to time, and those changes could have material effects on our
reported operating results and financial condition.
Damage to our corporate reputation or brands could adversely affect our sales and operating results.
Our reputation is partially based on perceptions of various subjective qualities and overall integrity. Any incident that erodes the
trust or confidence of our customers or the general public could adversely affect our reputation and business, particularly if the
incident results in significant adverse publicity or governmental inquiry. Such an incident could also include alleged acts or
omissions by or situations involving our suppliers (or their contractors or subcontractors), the landlord for our stores, or our
associates outside of work, and may pertain to social or political issues or protests largely unrelated to our business. The use of
social media platforms, including blogs, social media websites, and other forms of internet-based communications which allow
individuals access to a broad audience of consumers and other interested persons, continues to increase. The availability of
information (whether correct or erroneous) on social media platforms is virtually immediate, as is its impact. Many social media
platforms immediately publish the content their subscribers and participants post, often without filters or checks on accuracy of
the content. The opportunity for dissemination of information, including inaccurate information, is seemingly limitless and readily
available. Information concerning our Company may be posted on such platforms at any time. Information posted may be
adverse to our interests or may be inaccurate, which could negatively affect our sales, diminish customer trust, reduce employee
morale and productivity, and lead to difficulties in recruiting and retaining qualified associates. The harm may be immediate,
without affording us an opportunity for redress or correction.
Our inability to continually attract, train, and retain associates with the retail talent necessary to execute our off-price
retail strategies along with labor shortages, increased turnover, or increased labor costs could adversely affect our
operating results.
Like other retailers, we face challenges in recruiting and retaining sufficient talent in our buying organization, management,
stores, distribution centers, and other key areas. Many of our retail store associates are in entry level or part-time positions with
historically high rates of turnover. Our ability to control labor costs is subject to numerous external factors, including prevailing
wage rates and health and other insurance costs, as well as the impact of legislation or regulations governing minimum wage or
healthcare benefits.
Any increase in labor costs may adversely impact our profitability or, if we fail to pay such higher wages, may result in increased
turnover. Excessive turnover may result in higher costs associated with finding, hiring, and training new associates. If we cannot
hire enough qualified associates, or if there is a disruption in the supply of personnel we hire from third-party providers,
especially during our peak seasons, our operations could be negatively impacted.
Because of the distinctive nature of our off-price model, we must also attract, train, and retain our key associates across the
Company, especially within our buying organization. The loss of one or more of our key personnel, or the inability to effectively
identify a suitable successor for a key role could have a material adverse effect on our business. There is no assurance that we
will be able to attract or retain highly qualified associates in the future, and any failure to do so could have a material adverse
effect on our growth, operations, or financial position.
We must effectively advertise and market our business.
Customer traffic and demand for our merchandise is influenced by our advertising and marketing activities, the name recognition
and reputation of our brands, and the location of our stores. Although we use marketing and advertising programs to attract
customers to our stores, particularly through television and digital channels, our competitors may spend more or use different
approaches, which could provide them with a competitive advantage. Our advertising and other promotional programs may not
be effective or may be perceived negatively, or could require increased expenditures, any of which could adversely affect sales
or increase costs.
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We are subject to risks associated with selling and importing merchandise produced in other countries.
Risks in importing and selling such merchandise include import duties and quotas, compliance with anti-dumping regulations,
economic uncertainties and adverse economic conditions (including shipping capacity limitations, cost increases, inflation,
recession, and exchange rate fluctuations), foreign government regulations, employment and labor matters, concerns relating to
human rights, working conditions, and other issues in factories or countries where merchandise is produced, transparency of
sourcing and supply chains, exposure on product warranty and intellectual property issues, consumer perceptions of the safety
of imported merchandise, wars and fears of war, political unrest, natural disasters, regulations to address climate change, and
trade restrictions.
A predominant portion of the apparel and other goods we sell (even when we purchase it domestically, often as excess inventory
sold to us by a domestic vendor) is originally manufactured in other countries. In addition, we directly source a portion of the
products sold in our stores from foreign vendors predominantly in Asia (including China). We also buy products that originate
from foreign sources indirectly through domestic vendors and manufacturers’ representatives. Although our foreign purchases of
merchandise are negotiated and paid for in U.S. dollars, decreases in the value of the U.S. dollar relative to foreign currencies
could increase the cost of products we purchase from overseas vendors. When we are the importer of record, we may be subject
to regulatory or other requirements similar to those applicable to a manufacturer.
To the extent that our vendors are located overseas or rely on overseas sources for a large portion of their products, any event
causing a disruption, delay, or increase in the cost of imports, including the imposition of import or other restrictions such as
product detention, war, acts of terrorism, natural disasters, or public health issues such as the current COVID-19 pandemic (or
other, future pandemics) could adversely affect our business. The flow of merchandise from our vendors could also be adversely
affected by global shipping capacity limitations, or by financial or political instability in any of the countries in which the goods we
purchase are manufactured. Trade restrictions in the form of tariffs or quotas, or both, applicable to the products we sell could
also affect the importation of those products and could increase the cost and reduce the supply of products available to us. We
cannot predict whether any of the countries from which our products are sourced, or in which our products are currently
manufactured or may be manufactured in the future, will be subject to trade restrictions imposed by the U.S. or foreign
governments or the likelihood, type or effect of any such restrictions.
We require our vendors (for both import and domestic purchasing) to contractually confirm that they adhere to various conduct,
compliance, and other requirements, including those relating to environmental, employment and labor (including wages and
working conditions), health, safety, and anti-bribery standards. From time to time, our vendors, their contractors, or their
subcontractors may be alleged to not be in compliance with these standards or with applicable local laws. Although we have
implemented policies and procedures to promote compliance with laws and regulations relating to doing business in foreign
markets and importing merchandise, and to monitor the compliance of our suppliers, this does not guarantee that suppliers and
other third parties with whom we do business will not violate (or not allegedly violate) such laws and regulations or our policies.
Significant or continuing noncompliance (or alleged noncompliance) with such standards and laws by one or more vendors could
have a negative impact on our reputation, could subject us to claims and liability, and could have an adverse effect on our results
of operations.
Changes in U.S. tax or trade policy regarding apparel and home-related merchandise produced in other countries could
adversely affect our business.
A predominant portion of the apparel and other goods we sell is originally manufactured in other countries. The U.S. government
has at times indicated a willingness to significantly change existing trade policies, including those with China. This exposes us to
risks of disruption and cost increases in our established patterns for sourcing our merchandise, and creates increased
uncertainties in planning our sourcing strategies and forecasting our margins. Changes in U.S. tariffs, quotas, trade relationships,
or tax provisions that reduce the supply or increase the relative cost of goods produced in other countries could increase our cost
of goods and/or increase our effective tax rate. Although such changes would have implications across the entire industry, we
may fail to effectively adapt and to manage the adjustments in strategy that would be necessary in response to those changes.
In addition to the general uncertainty and overall risk from potential changes in U.S. laws and policies, as we make business
decisions in the face of uncertainty as to potential changes, we may incorrectly anticipate the outcomes, miss out on business
opportunities, or fail to effectively adapt our business strategies and manage the adjustments that are necessary in response to
those changes. These risks could adversely affect our revenues and expenses, increase our effective tax rates, and reduce our
profitability.
24
We may experience volatility in revenues and earnings.
Our business has slower and busier periods based on holiday and back-to-school seasons, weather, and other factors. Although
our off-price business is historically subject to less seasonality than traditional retailers, we may still experience unexpected
decreases in sales from time to time, which could result in increased markdowns and reduced margins. Significant operating
expenses, such as rent expense and associate salaries, do not adjust proportionately with our sales. If sales in a certain period
are lower than our plans, we may not be able to adjust these operating expenses concurrently, which could adversely affect our
operating results.
A pandemic, natural or man-made disaster in California or in another region where we have a concentration of stores,
offices, or a distribution center could harm our business.
Our corporate headquarters, Los Angeles buying office, 10 distribution centers/warehouses, and approximately 23% of our
stores are located in California. Natural or other disasters, such as the current COVID-19 pandemic (or other, future pandemics),
wildfires, earthquakes, hurricanes, tornadoes, floods, or other extreme weather and climate conditions, or fires, explosions, and
acts of war or terrorism, or public health issues, in any of our markets could disrupt our operations or our supply chain, or could
shut down, damage, or destroy our stores or distribution facilities.
To support our continuing operations, our new store and distribution center growth plans, our quarterly dividends, and
our stock repurchase program, we must maintain sufficient liquidity; the COVID-19 pandemic and related economic
disruptions are adding significant uncertainty and challenges.
We depend upon our operations to generate strong cash flows to support our general operating activities, and to finance our
operations, make capital expenditures and acquisitions, manage our debt levels, and return value to our stockholders through
dividends and stock repurchases. While the pandemic continues, disruptions to our operations may occur, nationally, regionally,
or in specific locations. The situation is unprecedented and rapidly changing, and has unknown duration and severity. If we are
unable to generate sufficient cash flows from operations to support our activities, our growth plans and our financial performance
would be adversely affected.
If our access to capital is restricted or our borrowing costs increase, our operations and financial condition could be adversely
impacted. In addition, if we do not properly allocate our capital resources to maximize returns, our operations, cash flows, and
returns to stockholders could be adversely affected.
We are subject to impacts from instances of damage to our stores and losses of merchandise accompanying protests
or demonstrations, which may result in temporary store closures.
There have been recent demonstrations and protests in cities throughout the United States. While they have generally been
peaceful, in some locations they have been accompanied by violence, damage to retail stores, and the loss of merchandise.
While generally subject to coverage by insurance, the repair of damage to our stores and replacement of lost merchandise may
also increase our costs and temporarily disrupt store operations, and we may incur increased operating costs for additional
security. Governmental authorities in affected cities and regions may take actions in an effort to protect people and property while
permitting lawful and non-violent protests, including curfews and restrictions on business operations, which may be disruptive to
our operations. These activities, governmental responses, and resulting media coverage may also harm consumer confidence
and perceptions of personal well-being and security, which may negatively affect shopping behavior and our sales.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
At January 29, 2022, we operated a total of 1,923 stores, of which 1,628 were Ross stores in 40 states, the District of Columbia,
and Guam, and 295 were dd’s DISCOUNTS stores in 21 states. All stores are leased, with the exception of two locations which
we own.
During fiscal 2021, we opened 44 new Ross stores and closed 1 existing store. The average approximate Ross store size is
28,000 square feet.
During fiscal 2021, we opened 21 new dd’s DISCOUNTS stores and closed no existing stores. The average approximate dd’s
DISCOUNTS store size is 23,000 square feet.
25
During fiscal 2021, no one store accounted for more than 1% of our sales.
We carry fire, flood, wind, and earthquake insurance to help mitigate the risk of financial loss that may result from such events.
Our real estate strategy in 2022 is to primarily open stores in states where we currently operate, with the objective to increase
our market penetration and leverage our overhead and advertising expenses as a percentage of sales in each market. We also
expect to continue our store expansion in newer markets in 2022. Important considerations in evaluating a new store location in
both newer and more established markets are the availability and quality of potential sites, demographic characteristics,
competition, and population density of the local trade area. In addition, we continue to consider opportunistic real estate
acquisitions.
The following table summarizes the locations of our stores by state/territory as of January 29, 2022 and January 30, 2021.
State/Territory
Alabama
Arizona
Arkansas
California
Colorado
Delaware
District of Columbia
Florida
Georgia
Guam
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Mississippi
Missouri
Montana
Nebraska
Nevada
New Jersey
New Mexico
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Utah
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total
January 29, 2022
25
82
10
443
39
4
2
231
64
2
22
12
94
28
6
12
15
21
27
9
30
6
6
41
18
18
49
3
11
28
30
51
30
2
39
277
24
41
45
2
21
3
January 30, 2021
24
81
10
431
38
4
2
225
63
2
22
12
89
26
6
12
15
20
26
9
27
6
5
40
18
18
49
3
8
28
30
51
30
2
37
260
23
41
43
1
19
3
1,923
1,859
26
Where possible, we obtain sites in buildings requiring minimal alterations, allowing us to establish stores in new locations in a
relatively short period of time and at reasonable costs in a given market. At January 29, 2022, the majority of our stores had
unexpired original lease terms ranging from three to ten years, with three to four renewal options of five years each. The
weighted-average unexpired lease term of our leased stores is approximately six years, or approximately 20 years if renewal
options are included. See Note E of Notes to Consolidated Financial Statements.
See additional discussion under “Stores” in Item 1.
The following table summarizes the location and approximate sizes of our distribution/warehouse facilities and office locations as
of January 29, 2022. Square footage information for the distribution and warehouse facilities represents total ground floor area of
the facility. Square footage information for office space represents total space owned and leased. See additional discussion in
Management’s Discussion and Analysis.
Location
Distribution/Warehouse Facilities
Approximate Square Footage
Own/Lease
Moreno Valley, California
Moreno Valley, California1
Moreno Valley, California1
Perris, California
Perris, California
Riverside, California
Sacramento, California
Shafter, California
Shafter, California
Shafter, California1
Lakeland, Florida
Baltimore, Maryland
Kansas City, Missouri
Las Vegas, Nevada
Statesville, North Carolina1
Carlisle, Pennsylvania
Carlisle, Pennsylvania
Carlisle, Pennsylvania
Fort Mill, South Carolina
Fort Mill, South Carolina
Fort Mill, South Carolina
Fort Mill, South Carolina
Fort Mill, South Carolina
Rock Hill, South Carolina
Rock Hill, South Carolina
Brookshire, Texas
Office Space
Dublin, California
Los Angeles, California
Boston, Massachusetts
New York City, New York
1 Operated by a third party.
See additional discussion under “Distribution” in Item 1.
1,300,000
740,000
1,110,000
1,300,000
699,000
449,000
114,000
1,700,000
1,003,000
350,000
100,000
122,000
72,000
102,000
640,000
465,000
239,000
246,000
1,200,000
428,000
423,000
255,000
160,000
1,200,000
431,000
1,890,000
414,000
120,000
5,000
572,000
Own
Lease
Lease
Own
Own
Own
Lease
Own
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Own
Lease
Lease
Own
Own
Own
Lease
Lease
Own
Lease
Own
Own
Lease
Lease
Own
27
ITEM 3. LEGAL PROCEEDINGS
We have been named in class/representative action lawsuits, primarily in California, alleging violations of wage and hour laws
and consumer protection laws. Class/representative action litigation remains pending as of January 29, 2022.
We are also party to various other legal and regulatory proceedings arising in the normal course of business. Actions filed
against us may include commercial, product and product safety, consumer, intellectual property, environmental, and labor and
employment-related claims, including lawsuits in which private plaintiffs or governmental agencies allege that we violated federal,
state, and/or local laws. Actions against us are in various procedural stages. Many of these proceedings raise factual and legal
issues and are subject to uncertainties.
Like many retailers and other businesses, we have filed a lawsuit as plaintiff against the insurance companies with respect to our
claims for insurance coverage for business interruption, property damage, and other losses that we have experienced as a result
of the COVID-19 pandemic. Our suit was filed in Alameda County, California in December 2020. The proceedings remain in early
stages, and are subject to significant uncertainties.
We believe that the resolution of our pending class/representative action litigation and other currently pending legal and
regulatory proceedings will not have a material adverse effect on our financial condition, results of operations, or cash flows.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
28
Executive Officers of the Registrant
The following sets forth the names and ages of our executive officers, indicating each person’s principal occupation or
employment during at least the past five years. The term of office is at the discretion of our Board of Directors.
Name
Age
Position
Barbara Rentler
Michael J. Hartshorn
Michael Kobayashi
Brian Morrow
Adam Orvos
64
54
57
62
57
Chief Executive Officer
Group President and Chief Operating Officer
President and Chief Capability Officer
President and Chief Merchandising Officer, dd’s DISCOUNTS
Executive Vice President and Chief Financial Officer
Ms. Rentler has served as Chief Executive Officer and a member of the Board of Directors since 2014. From 2009 to 2014, she
was President and Chief Merchandising Officer, Ross Dress for Less and Executive Vice President, Merchandising, from 2006 to
2009. She also served at dd’s DISCOUNTS as Executive Vice President and Chief Merchandising Officer from 2005 to 2006,
and Senior Vice President and Chief Merchandising Officer from 2004 to 2005. Prior to that, she held various merchandising
positions since joining the Company in 1986.
Mr. Hartshorn has served as Group President and Chief Operating Officer since August 2019 and a member of the Board of
Directors since March 2021. Previously, he was Group Executive Vice President, Finance and Legal, Chief Financial Officer in
2019; Executive Vice President, Chief Financial Officer from 2018 to 2019; Group Senior Vice President, Chief Financial Officer
from 2015 to 2018; Senior Vice President and Chief Financial Officer from 2014 to 2015; and Senior Vice President and Deputy
Chief Financial Officer from 2012 to 2014. He was also Group Vice President, Finance and Treasurer from 2011 to 2012, and
Vice President, Finance and Treasurer from 2006 to 2011. From 2002 to 2006, he held a number of management roles in the
Ross IT and supply chain organizations. He initially joined the Company in 2000 as Director and Assistant Controller. For seven
years prior to joining Ross, Mr. Hartshorn held various financial roles at The May Department Stores Company.
Mr. Kobayashi has served as President and Chief Capability Officer since February 2022. Prior to this role, he served as
President, Operations and Technology from 2019 to 2022; Group Executive Vice President, Supply Chain, Merchant Operations,
and Technology from 2014 to 2019; and Executive Vice President, Supply Chain, Allocation, and Chief Information Officer from
2010 to 2014. Previously, he was Group Senior Vice President, Supply Chain and Chief Information Officer from 2008 to 2010,
and Senior Vice President and Chief Information Officer from 2004 to 2008. Prior to joining Ross, Mr. Kobayashi was a Partner
with Accenture, providing consulting services to clients in Accenture’s Retail & Consumer Goods practice.
Mr. Morrow has served as President and Chief Merchandising Officer, dd’s DISCOUNTS since December 2015. Prior to joining
Ross, Mr. Morrow served as President, Chief Merchandising Officer of Stein Mart from 2014 to 2015 and Executive Vice
President and Chief Merchandising Officer from 2010 to 2014. From 2008 to 2009, he served as Executive Vice President,
General Merchandise Manager at Macy’s West. He also held roles as Senior Vice President, General Merchandise Manager at
Mervyn’s in 2008 and Macy’s North/Marshall Field’s from 2006 to 2008. For approximately 20 years prior to this, Mr. Morrow held
various merchandising roles at The May Department Stores Company.
Mr. Orvos has served as Executive Vice President and Chief Financial Officer since October 2021. Mr. Orvos joined Ross in
January 2021 as Group Senior Vice President, Supply Chain Administration. Prior to joining Ross, Mr. Orvos served as Senior
Vice President, Retail Finance and Global Financial Planning and Analysis at Lowe’s from 2019 to 2020; Chief Financial Officer
and Chief Operating Officer at Neiman Marcus from 2018 to 2019; and Executive Vice President, Retail and then Chief Executive
Officer at Total Wine & More from 2016 to 2017. Mr. Orvos held several senior management positions at Belk Department Stores
from 2006 to 2016, where he eventually became its Chief Financial Officer. For almost 20 years prior to this, Mr. Orvos held
various financial roles at The May Department Stores Company, including Chief Financial Officer of their Foley’s division.
29
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
General information. Our stock is traded on The NASDAQ Global Select Market® under the symbol ROST. There were 1,198
stockholders of record as of March 7, 2022 and the closing stock price on that date was $85.12 per share.
Cash dividends. On March 1, 2022, our Board of Directors declared a quarterly cash dividend of $0.310 per common share,
payable on March 31, 2022. Our Board of Directors declared cash dividends of $0.285 per common share in March, May,
August, and November 2021. Our Board of Directors declared a cash dividend of $0.285 per common share in March 2020. In
May 2020, we temporarily suspended our quarterly dividends, due to the economic uncertainty stemming from the COVID-19
pandemic. Our Board of Directors declared cash dividends of $0.255 per common share in March, May, August, and November
2019.
Issuer purchases of equity securities. Information regarding shares of common stock we repurchased during the fourth
quarter of fiscal 2021 is as follows:
Total number
of shares
(or units)
purchased as
part of publicly
announced
plans or programs
Maximum
number (or
approximate
dollar value) of
shares (or units)
that may yet be
purchased under
the plans or
programs ($000)
Total number
of shares
(or units)
purchased¹
Average price
paid per share
(or unit)
493,824
$115.90
493,824
$1,025,788
885,525
$110.80
885,525
$927,675
760,962
2,140,311
$102.40
$108.99
758,321
2,137,670
$850,003 2
$1,900,000 2
Period
November
(10/31/2021 - 11/27/2021)
December
(11/28/2021 - 01/01/2022)
January
(01/02/2022 - 01/29/2022)
Total
¹ We acquired 2,641 shares of treasury stock during the quarter ended January 29, 2022. Treasury stock includes shares acquired
from employees for tax withholding purposes related to vesting of restricted stock grants. All remaining shares were repurchased
under our publicly announced stock repurchase program.
² In March 2022, our Board of Directors approved a new two-year program to repurchase up to $1.9 billion of our common stock
through fiscal 2023, replacing the $850 million that remained available at the end of fiscal 2021 under the previous $1.5 billion
program.
In May 2021, our Board of Directors authorized a program to repurchase up to $1.5 billion of our common stock through fiscal
2022, with plans to buy back $650 million in fiscal 2021 and $850 million in fiscal 2022. In March 2022, our Board of Directors
approved a new two-year program to repurchase up to $1.9 billion of our common stock through fiscal 2023. This new program
replaces the previous $1.5 billion stock repurchase program, effective at the end of fiscal 2021 (at which time we had
repurchased $650 million under the $1.5 billion program).
See Note H of Notes to Consolidated Financial Statements for equity compensation plan information. The information under Item
12 of this Annual Report on Form 10-K under the caption “Equity compensation plan information” is incorporated herein by
reference.
30
Stockholder Return Performance Graph
The following information in this Item 5 shall not be deemed filed for purposes of Section 18 of the Securities Act of 1934, nor
shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
The graph below compares total stockholder returns over the last five years for our common stock to the Standard & Poor’s 500
Index (“S&P Index”) and the Dow Jones Apparel Retailers Index.
We use the Dow Jones Apparel Retailers Index in our performance graph because we believe the retail companies comprising
that index are aligned with the segment of the retail industry in which we operate, and it provides a relevant comparison against
which to measure our stock performance.
The cumulative total return listed below assumed an initial investment of $100 and reinvestment of dividends at each fiscal
year-end, and measures the performance of this investment as of the last trading day in the month of January for each of the
following five years. These measurement dates are based on the historical month-end data available and vary slightly from our
actual fiscal year-end date for each period. Data with respect to returns for the S&P Index and the Dow Jones Apparel Retailers
Index is not readily available for periods shorter than one month. The graph is a historical representation of past performance
only and is not necessarily indicative of future performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among Ross Stores, Inc., the S&P 500 Index, and Dow Jones Apparel Retailers
Base Period
Indexed Returns for Fiscal Years Ended
Company/Index
Ross Stores, Inc.
S&P 500 Index
Dow Jones Apparel Retailers
2016
100
100
100
2017
122
126
114
2018
143
123
124
2019
177
150
138
2020
176
176
147
2021
153
217
163
31
ITEM 6. RESERVED
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview
Ross Stores, Inc. operates two brands of off-price retail apparel and home fashion stores—Ross Dress for Less® (“Ross”) and
dd’s DISCOUNTS®. Ross is the largest off-price apparel and home fashion chain in the United States with 1,628 locations in 40
states, the District of Columbia, and Guam, as of January 29, 2022. Ross offers first-quality, in-season, name brand and designer
apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty
store regular prices every day. We also operate 295 dd’s DISCOUNTS stores in 21 states as of January 29, 2022 that feature a
more moderately-priced assortment of first-quality, in-season, name brand apparel, accessories, footwear, and home fashions for
the entire family at savings of 20% to 70% off moderate department and discount store regular prices every day.
Our primary objective is to pursue and refine our existing off-price strategies to maintain and improve both profitability and
financial returns over the long term. In establishing appropriate growth targets for our business, and considering the pace and
magnitude of the economic recovery as the COVID-19 pandemic subsides, we are closely monitoring market share trends for the
off-price industry. We believe our share gains will continue to be driven mainly by continued focus on bringing value and
convenience to our consumers. Our merchandise and operational strategies are designed to take advantage of the trends
toward expanding market share of the off-price industry as well as the ongoing customer demand for name brand fashions for
the family and home at compelling discounts every day.
We refer to our fiscal years ended January 29, 2022, January 30, 2021, and February 1, 2020 as fiscal 2021, fiscal 2020, and
fiscal 2019, respectively.
Results of Operations
While the United States and other countries continued to experience the ongoing global COVID-19 coronavirus pandemic
throughout fiscal 2021, the effects on our operations were less disruptive than in fiscal 2020. All of our store locations and
distribution centers remained open and operating throughout fiscal 2021, in contrast to 2020, when our results reflected the
significant revenue decline and other impacts from our chain-wide store closures for approximately half of the first quarter and 25
percent of the second quarter, as well as mandated occupancy restrictions and reduced operating hours that occurred
throughout that year. For fiscal 2021, we compare our results of operations to fiscal 2020 and also to fiscal 2019. We believe the
extended closure of our operations in the spring of 2020, and the significant disruptions caused by COVID-19 throughout fiscal
2020, make fiscal 2019 a more useful and relevant basis for comparison to our fiscal 2021 performance in assessing our
ongoing results of operations.
We achieved strong sales results in fiscal 2021, which benefited from a combination of government stimulus, increasing
vaccination rates, diminishing COVID-19 restrictions, pent-up consumer demand, and strong execution of our merchandising
strategies. We achieved these results despite the negative impacts from COVID-19 and related variants during fiscal 2021,
especially the surge in Omicron cases which depressed in-person shopping behavior during the peak holiday selling period, and
from continued supply chain congestion. Throughout the year, we continued to experience expense pressures from higher
domestic freight costs of approximately 95 basis points, primarily due to the ongoing and worsening industry-wide supply chain
congestion compared to fiscal 2019. We also incurred ongoing COVID-related increased operating costs of approximately 35
basis points (the vast majority of which impacted our selling, general and administrative expenses). We expect higher freight
costs, higher distribution expenses, higher wages, and ongoing COVID-related operating costs to continue during fiscal 2022.
There remains significant uncertainty related to the ongoing industry-wide supply chain congestion. We also face external risks
from the effects of inflation, both on consumer demand and on costs in our business. In addition, there continues to be significant
uncertainty surrounding the COVID-19 pandemic, including its unknown duration, the potential for further new virus variants and
future resurgences, as well as possible operational restrictions, the ongoing effect of the pandemic on consumer behavior and
shopping patterns, and the potential adverse impact on our business.
32
The following table summarizes the financial results for fiscal 2021, 2020, and 2019:
Sales
Sales (millions)
Sales growth (decline)
Comparable store sales growth
Costs and expenses (as a percent of sales)
Cost of goods sold
Selling, general and administrative
Interest expense (income), net
Earnings before taxes (as a percent of sales)
Net earnings (as a percent of sales)
2021
2020
2019
$
18,916
50.9%
13% 1
$
12,532
(21.9)%
$
n/a 2
16,039
7.0%
3% 3
72.5%
15.2%
0.4%
11.9%
9.1%
78.5%
20.0%
0.7%
0.8%
0.7%
71.9%
14.7%
(0.1)%
13.5%
10.4%
1 Amount shown is for fiscal 2021 compared to fiscal 2019. Comparable store sales for this purpose represents sales from stores that
were open at the end of fiscal 2019, less stores closed in fiscal 2020 and fiscal 2021.
2 Given the temporary store closures resulting from the COVID-19 pandemic, the comparable store sales metric for fiscal 2020 is not
meaningful.
3 Amount shown is for fiscal 2019 compared to fiscal 2018 for stores that have been open for more than 14 complete months.
Stores. Total stores open at the end of fiscal 2021, 2020, and 2019 were 1,923, 1,859, and 1,805, respectively. The number of
stores at the end of fiscal 2021, 2020, and 2019 increased by 3%, 3%, and 5% from the respective prior years. In response to
the impacts and uncertainties from the COVID-19 pandemic, we reduced our pace of new store openings for fiscal 2020 and
fiscal 2021. Looking forward to 2022, we expect to return to our historical annual opening program of approximately 100 new
stores. Beyond fiscal 2022, we are planning for our pace of new store openings to be greater than our historical annual opening
program of approximately 100 stores, based on trends we perceive toward consumers’ increased focus on value and
convenience, favorable store performance in both our new and in-fill markets, and the market share opportunities resulting from
the significant number of brick-and-mortar retail closures and bankruptcies over the last several years. Our longer term strategy
is to open additional stores based on market penetration, local demographic characteristics, competition, expected store
profitability, and the ability to leverage overhead expenses. We continually evaluate opportunistic real estate acquisitions and
opportunities for potential new store locations. We also evaluate our current store locations and determine store closures based
on similar criteria.
Store Count and Square Footage
Beginning of the period
Opened in the period
Closed in the period
End of the period
2021
1,859
65
(1)
1,923
2020
1,805
66 1
(12)
1,859
2019
1,717
98
(10) 2
1,805
Selling square footage at the end of the period (000)
39,900
38,800
37,900
1 Includes the reopening of a store previously temporarily closed due to a weather event.
2 Includes the temporary closure of a store impacted by a weather event.
Sales. Sales for fiscal 2021 increased $6.4 billion, or 50.9%, compared to the prior year. This was primarily due to all store
locations remaining open throughout fiscal 2021, compared to the negative impact from the COVID-19 related closures of all of
our stores during a significant portion of the March 2020 to June 2020 period. Sales for fiscal 2021 also benefited from a
combination of government stimulus payments, increasing vaccination rates, diminishing COVID-19 restrictions on operations,
pent-up consumer demand, and strong execution of our merchandising strategies. Sales also increased due to the opening of 64
net new stores between fiscal 2020 and fiscal 2021.
33
Sales for fiscal 2020 decreased $3.5 billion, or 21.9%, compared to fiscal 2019. This was primarily due to the negative impact
from the COVID-19 related closures of all of our stores during a significant portion of the March 2020 to June 2020 period, the
negative impacts on customer demand from the COVID-19 pandemic, mandated occupancy restrictions, and reduced store
operating hours during the remainder of fiscal 2020. We opened 54 net new stores during 2020. The sales from these new stores
partially offset the overall sales decline.
Sales for fiscal 2021 increased $2.9 billion, or 17.9%, compared to fiscal 2019, due to a 13% increase in sales from comparable
stores and the opening of 118 net new stores between fiscal 2019 and fiscal 2021.
Our sales mix is shown below for fiscal 2021, 2020, and 2019:
Home Accents and Bed and Bath
Ladies
Men’s
Accessories, Lingerie, Fine Jewelry, and Cosmetics
Shoes
Children’s
2021 1
26%
25%
14%
14%
12%
9%
2020
28%
23%
14%
14%
12%
9%
2019
25%
26%
14%
13%
13%
9%
Total
100%
100%
100%
We intend to address the competitive retail climate for off-price apparel and home goods by pursuing and refining our existing
strategies, and by continuing to strengthen our merchant organization, diversify our merchandise mix, and more fully develop our
systems to improve our merchandise offerings.
It is difficult to predict any future impact from some of the factors that benefited our sales results for fiscal 2021, in particular the
benefit from the government stimulus payments and pent-up consumer demand. There remains significant uncertainty related to
ongoing industry-wide supply chain congestion. We also face external risks from the effects of inflation, both on consumer
demand and on costs in our business. In addition, there continues to be significant uncertainty surrounding the COVID-19
pandemic, including its unknown duration, the potential for new virus variants and future resurgences, as well as possible
operational restrictions, the ongoing effect of the pandemic on consumer behavior and shopping patterns, and the potential
adverse impact on our business. We cannot be sure that our strategies and our store expansion program will result in a
continuation of our historical sales growth, or an increase in net earnings.
Cost of goods sold. Cost of goods sold in fiscal 2021 increased $3.9 billion compared to the prior year, mainly due to higher
sales, given that all our stores were open throughout fiscal 2021, compared to the negative impact from the COVID-19 related
closures of all of our stores during a significant portion of the March 2020 to June 2020 period. Cost of goods also increased due
to the opening of 64 net new stores between fiscal 2020 and fiscal 2021.
Cost of goods sold in fiscal 2020 decreased $1.7 billion compared to fiscal 2019, mainly due to the lower sales from the
temporary COVID-19 related closures of all of our stores during a significant portion of the March 2020 to June 2020 period, and
ensuing negative impacts on shopping behavior and customer demand due to the COVID-19 pandemic after our store
reopenings, as well as lower costs from the temporary furlough of most hourly associates in our distribution centers and some
associates in our buying offices. These decreases were partially offset by higher markdowns used to clear aged and seasonal
inventory, higher distribution costs primarily due to increased wages, and higher freight costs due to industry-wide supply chain
congestion, added expenditures for COVID-19 related measures, and higher occupancy costs from the opening of 54 net new
stores during 2020.
Cost of goods sold in fiscal 2021 increased $2.2 billion compared to fiscal 2019, primarily due to a 13% increase in comparable
store sales, higher freight and distribution costs primarily due to industry-wide supply chain congestion, and higher wages, and
higher sales due to the opening of 118 net new stores between fiscal 2019 and fiscal 2021.
Cost of goods sold as a percentage of sales for fiscal 2021 increased approximately 55 basis points from fiscal 2019, primarily
due to a 95 basis point increase in domestic freight costs, mainly driven by worsening industry-wide supply chain congestion, a
30 basis point increase in distribution expenses, mainly driven by higher wages, and a 10 basis point increase in buying costs.
These increases were partially offset by leverage of 60 basis points in occupancy costs and a 20 basis point improvement in
merchandise gross margin.
We expect higher supply chain costs from the industry-wide congestion and higher wages to continue throughout fiscal 2022.
34
Selling, general and administrative expenses. For fiscal 2021, selling, general and administrative expenses (“SG&A”)
increased $371.2 million compared to the prior year. The increase was primarily due to all our stores remaining open throughout
fiscal 2021, compared to the impact from the COVID-19 related closures of all of our stores during a significant portion of the
March 2020 to June 2020 period, and to the opening of 64 net new stores between fiscal 2020 and fiscal 2021, partially offset by
approximately $240 million in long-term debt refinancing costs incurred in fiscal 2020.
For fiscal 2020, SG&A increased $146.6 million compared to fiscal 2019, primarily due to approximately $240 million in long-term
debt refinancing costs, COVID-related expenses (primarily for supplies, cleaning, and payroll related to additional safety
protocols), and payments to associates while our stores were closed (net of employee retention credits under the Coronavirus
Aid, Relief, and Economic Security Act (the “CARES Act”)), partially offset by payroll-related cost reduction measures in
response to the COVID-19 pandemic (including the temporary furlough of most hourly associates in our stores during closure
periods, and some associates in our corporate offices), reductions in non-business critical operating expenses, and lower store
operating expenses on lower sales.
For fiscal 2021, SG&A increased $517.8 million compared to fiscal 2019, mainly due to a 13% increase in comparable store
sales, the opening of 118 net new stores between fiscal 2019 and fiscal 2021, higher incentive compensation costs due to better-
than-expected results, net COVID-related operating expenses primarily for supplies, cleaning, and payroll related to additional
safety protocols, higher wages, and holiday related pay incentives.
SG&A as a percentage of sales for fiscal 2021 increased by approximately 50 basis points compared to fiscal 2019, primarily due
to higher incentive compensation costs due to better-than-expected results, net COVID-related operating expenses for supplies,
cleaning, and payroll related to additional safety protocols, higher wages, and holiday related pay incentives.
We expect our operating costs in fiscal 2022 to continue to reflect ongoing COVID-related expenses and also higher wages.
Interest expense (income), net. In fiscal 2021, net interest expense decreased by $9.1 million compared to 2020 primarily due
to the elimination of interest expense on short-term debt due to the repayment of our $800 million revolving credit facility in
October 2020 and higher capitalized interest primarily related to the construction of our Brookshire, Texas distribution center,
partially offset by lower interest income due to lower interest rates.
In fiscal 2020, net interest expense increased by $101.5 million compared to 2019 primarily due to higher interest expense on
long-term debt due to the issuance of Senior Notes in April 2020 and October 2020 (net of repurchase of Senior Notes), lower
interest income due to lower interest rates, and higher interest expense on short-term debt due to the draw down on our $800
million revolving credit facility in March 2020 (which was subsequently repaid in October 2020), partially offset by higher
capitalized interest primarily related to the construction of our Brookshire, Texas distribution center.
In fiscal 2021, net interest expense increased by $92.4 million compared to 2019 primarily due to higher interest expense on
long-term debt due to the issuance of Senior Notes in April 2020 and October 2020 (net of repurchase of Senior Notes), and
lower interest income due to lower interest rates, partially offset by higher capitalized interest primarily related to the construction
of our Brookshire, Texas distribution center.
The table below shows the components of interest expense and income for fiscal 2021, 2020, and 2019:
($000)
Interest expense on long-term debt
Interest expense on short-term debt
Other interest expense
Capitalized interest
Interest income
Interest expense (income), net
$
2021
2020
88,286 $
—
1,351
(14,476)
(833)
88,544 $
7,863
3,908
(12,251)
(4,651)
2019
13,139
—
968
(4,367)
(27,846)
$
74,328 $
83,413 $
(18,106)
35
Taxes on earnings. Our effective tax rates for fiscal 2021, 2020, and 2019 were approximately 24%, 20%, and 23%,
respectively. The increase in the effective tax rate of 4% for fiscal 2021 compared to fiscal 2020 and the decrease of 3% for fiscal
2020 compared to fiscal 2019 was primarily due to the impact of hiring tax credits on lower pre-tax earnings in fiscal 2020. The
increase in effective tax rate of 1% for fiscal 2021 compared to fiscal 2019 was primarily due to resolution of uncertain tax
positions with a state tax authority during fiscal 2019.
Our effective tax rate represents the applicable combined federal and state statutory rates reduced by the federal benefit of state
taxes deductible on federal returns. Our effective rate is impacted by changes in tax law and accounting guidance, location of
new stores, level of earnings, tax effects associated with share-based compensation, and the resolution of tax positions with
various tax authorities.
In fiscal 2020, the CARES Act was signed into law. The CARES Act made several significant changes to business tax provisions
including modifications for net operating losses, employee retention credits, and deferral of employer payroll tax payments. The
Consolidated Appropriations Act of 2021 (“CAA”) was signed into law during fiscal 2020. The CAA made several changes to
business tax provisions including extending certain employment-related tax credits through December 31, 2025.
Net earnings. Net earnings as a percentage of sales for fiscal 2021 were higher than in fiscal 2020, primarily due to lower cost
of goods sold, lower SG&A expenses, and lower interest expense, partially offset by higher taxes on earnings. Net earnings as a
percentage of sales for fiscal 2020 were lower compared to fiscal 2019, primarily due to higher cost of goods sold, higher SG&A
expenses, and higher interest expense. Net earnings as a percentage of sales for fiscal 2021 were lower than in fiscal 2019,
primarily due to higher cost of goods sold, higher SG&A expenses, and higher interest expense, partially offset by lower taxes on
earnings.
Earnings per share. Diluted earnings per share in fiscal 2021 was $4.87, compared to $0.24 in the prior year. The higher diluted
earnings per share in fiscal 2021 were primarily attributable to all our store locations remaining open throughout fiscal 2021,
compared to the negative impact from the COVID-19 related closures of all of our stores during a significant portion of the March
2020 to June 2020 period.
Diluted earnings per share in fiscal 2020 was $0.24, compared to $4.60 in fiscal 2019. The lower diluted earnings per share in
fiscal 2020 was primarily attributable to lower sales due to the closing of all our store locations during a significant portion of the
March 2020 to June 2020 period and the negative impacts on shopping behavior and customer demand due to the COVID-19
pandemic, higher markdowns to clear aged and seasonal inventory, long-term debt refinancing costs, payments to associates
while our stores were closed (net of employee retention credits under the CARES Act), and higher expenditures for COVID-19
related measures.
Diluted earnings per share in fiscal 2021 was $4.87, compared to $4.60 in fiscal 2019. The 6% increase in diluted earnings per
share for fiscal 2021 compared to fiscal 2019, was attributable to a 4% increase in net earnings, and to the reduction in
weighted-average diluted shares outstanding of 2% for fiscal 2021, largely due to stock repurchases under our stock repurchase
programs.
36
Financial Condition
Liquidity and Capital Resources
The primary sources of funds for our business activities have been cash flows from operations and short-term trade credit. Our
primary ongoing cash requirements are for merchandise inventory purchases, payroll, operating and variable lease costs, taxes,
and for capital expenditures in connection with new and existing stores, and investments in distribution centers, information
systems, and buying and corporate offices. We also use cash to pay dividends, to repay debt as it becomes due, and to
repurchase stock under active stock repurchase programs.
($ millions)
Cash provided by operating activities
Cash used in investing activities
Cash (used in) provided by financing activities
Net increase (decrease) in cash, cash equivalents,
and restricted cash and cash equivalents
$
2021
1,738.8
(557.8)
(1,152.4)
2020
2019
$ 2,245.9
(405.4)
1,701.9
$
2,171.5
(555.0)
(1,683.2)
$
28.6
$ 3,542.4
$
(66.7)
In this report, we compare our cash flows from operating activities to both fiscal 2020 and fiscal 2019. We believe fiscal 2019 is a
more useful and relevant basis of comparison given that our stores were open for full 52-week periods in fiscal 2021 and fiscal
2019. Our cash flows from investing and financing activities are compared to fiscal 2020, given the construction of our
Brookshire, Texas distribution center during fiscal 2020 and 2021, and the significant financing actions we took in fiscal 2020 to
preserve our financial liquidity and enhance our financial flexibility in response to the COVID-19 pandemic.
Operating Activities
Net cash provided by operating activities was $1.7 billion in fiscal 2021. This was primarily driven by net earnings excluding
non-cash expenses for depreciation, amortization, and stock-based compensation, partially offset by higher merchandise
inventory receipts net of accounts payable. Net cash provided by operating activities was $2.2 billion in fiscal 2020. This was
primarily driven by higher accounts payable due to longer payment terms, lower merchandise receipts as we closely managed
inventory levels and used packaway inventory to replenish our stores, and net earnings excluding non-cash expenses for
depreciation, amortization, and stock-based compensation. Net cash provided by operating activities was $2.2 billion in fiscal
2019, and was primarily driven by net earnings excluding non-cash expenses for depreciation, amortization, and stock-based
compensation, and for deferred taxes.
The decrease in cash flow from operating activities in fiscal 2021 compared to fiscal 2020 was primarily driven by lower Accounts
payable leverage (defined as accounts payable divided by merchandise inventory), partially offset by higher net earnings in the
current year. Accounts payable leverage was 105% and 150% as of January 29, 2022 and January 30, 2021, respectively. The
decrease in Accounts payable leverage in fiscal 2021 compared to fiscal 2020 was primarily driven by higher merchandise
receipts to support higher sales and to replenish our packaway inventory.
The increase in cash flow from operating activities in fiscal 2020 compared to fiscal 2019 was primarily driven by higher Accounts
payable leverage. Accounts payable leverage was 150% and 71% as of January 30, 2021, and February 1, 2020, respectively.
The increase in Accounts payable leverage in fiscal 2020 compared to fiscal 2019 was primarily driven by lower packaway and
in-store inventory and longer payment terms.
The decrease in cash flow from operating activities in fiscal 2021 compared to fiscal 2019 was primarily driven by higher
merchandise receipts to support higher sales and to replenish packaway inventory, partially offset by higher incentive bonus
accruals and higher net earnings.
37
As a regular part of our business, packaway inventory levels will vary over time based on availability of compelling merchandise
purchase opportunities in the marketplace and our decisions on the timing for release of that inventory. Packaway merchandise
is purchased with the intent that it will be stored in our warehouses until a later date. The timing of the release of packaway
inventory to our stores is principally driven by the product mix and seasonality of the merchandise, and its relation to our store
merchandise assortment plans. As such, the aging of packaway varies by merchandise category and seasonality of purchase,
but typically packaway remains in storage less than six months. We expect to continue to take advantage of packaway inventory
opportunities to maximize our ability to deliver bargains to our customers.
Changes in packaway inventory levels impact our operating cash flow. At the end of fiscal 2021, packaway inventory was 40% of
total inventory compared to 38% and 46% at the end of fiscal 2020 and 2019, respectively.
Investing Activities
Net cash used in investing activities was $557.8 million, $405.4 million, and $555.0 million in fiscal 2021, 2020, and 2019,
respectively, and was related to capital expenditures. Our capital expenditures include costs to build, expand, and improve
distribution centers (primarily related to the construction of our Brookshire, Texas distribution center); open new stores and
improve existing stores; and for various other expenditures related to our information technology systems, buying and corporate
offices.
The increase in cash used for investing activities in fiscal 2021 compared to fiscal 2020 was primarily due to an increase in our
capital expenditures related to the resumption of capital projects deferred during fiscal 2020. The decrease in cash used for
investing activities in fiscal 2020 compared to fiscal 2019 was primarily due to our actions to preserve our financial liquidity in
response to the COVID-19 pandemic and related economic disruptions. We opened 65, 66, and 98 new stores in fiscal 2021,
2020, and 2019, respectively.
Our capital expenditures over the last three years are set forth in the table below:
($ millions)
New stores
Existing stores
Information systems, corporate, and other
Distribution and transportation
Total capital expenditures
$
2021
2020
124.9 $
103.3
50.3
279.3
81.1 $
54.8
38.3
231.2
$
557.8 $
405.4 $
2019
137.4
125.3
91.8
201.0
555.5
Capital expenditures for fiscal 2022 are projected to be approximately $800 million. Our planned capital expenditures for fiscal
2022 are expected to be used for investments in our supply chain to support long-term growth, including construction of our next
distribution center, costs for fixtures and leasehold improvements to open planned new Ross and dd’s DISCOUNTS stores,
investments in certain information technology systems, and for various other needed expenditures related to our stores,
distribution centers, buying, and corporate offices. We expect to fund capital expenditures with available cash. The increase in
our planned capital expenditures for fiscal 2022 compared to fiscal 2021 is primarily driven by the upgrade or remodeling of
existing stores, costs for fixtures and leasehold improvements to open planned new Ross and dd’s DISCOUNTS stores,
construction of our next distribution center, investments in information technology systems, and for various other needed
expenditures related to our stores, distribution centers, buying, and corporate offices.
38
Financing Activities
Net cash used in financing activities was $1.2 billion in fiscal 2021. Net cash provided by financing activities was $1.7 billion in
fiscal 2020. Net cash used in financing activities was $1.7 billion in fiscal 2019. The decrease in cash provided by financing
activities for fiscal 2021, compared to fiscal 2020, was primarily due to the completion of our public debt offerings, net of
refinancing costs in fiscal 2020, the resumption of our share repurchases in the second quarter of fiscal 2021, the resumption of
cash dividend payments in the first quarter of fiscal 2021, and the repayment of our Series B unsecured Senior Notes. The
increase in cash provided by financing activities for fiscal 2020, compared to fiscal 2019, was primarily due to the completion of
our public debt offerings, net of repurchase and refinancing costs in fiscal 2020, and the suspension of our share repurchases
and dividends in the second quarter of 2020.
Revolving credit facilities. In February 2022 (the “Effective Date”), we entered into a new, $1.3 billion senior unsecured
revolving Credit Agreement (the “2022 Credit Facility”), which replaced our previous $800 million unsecured revolving credit
facility (the “Prior Credit Facility”). The 2022 Credit Facility expires in February 2027, and may be extended, at our option, for up
to two additional one year periods, subject to customary conditions. The new facility contains a $300 million sublimit for issuance
of standby letters of credit. It also contains an option allowing us to increase the size of our credit facility by up to an additional
$700 million, with the agreement of the committing lenders. The interest rate on borrowings under the 2022 Credit Facility is a
term rate based on the Secured Overnight Financing Rate (“Term SOFR”) (or an alternate benchmark rate, if Term SOFR is no
longer available) plus an applicable margin, and is payable quarterly and upon maturity. The 2022 Credit Facility is subject to a
quarterly Consolidated Adjusted Debt to Consolidated EBITDAR financial leverage ratio covenant, effective the first quarter of
fiscal 2022.
On the Effective Date of the 2022 Credit Facility, the Prior Credit Facility was terminated and was replaced by the new 2022
Credit Facility. As of January 29, 2022, we had no borrowings or standby letters of credit outstanding under the Prior Credit
Facility, the $800 million credit facility remained in place and available, and we were in compliance with the financial covenant.
In March 2020, we borrowed $800 million under the Prior Credit Facility. Interest on the loan was based on LIBOR plus 0.875%
(or 1.76%). In May 2020, we amended the Prior Credit Facility to temporarily suspend for the second and third quarters of fiscal
2020 the Consolidated Adjusted Debt to EBITDAR ratio financial covenant, and to apply a transitional modification to that ratio,
effective in the fourth quarter of fiscal 2020. In October 2020, we repaid in full the $800 million we borrowed under the Prior
Credit Facility.
In May 2020, we also entered into an additional $500 million 364-day senior revolving credit facility which was scheduled to
expire in April 2021. In October 2020, we terminated this senior revolving credit facility. We had no borrowings under that credit
facility at any time.
Senior notes. In April 2020, we issued an aggregate of $2.0 billion in unsecured senior notes in four tenors as follows: $700
million of 4.600% Senior Notes due April 2025, $400 million of 4.700% Senior Notes due April 2027, $400 million of 4.800%
Senior Notes due April 2030, and $500 million of 5.450% Senior Notes due April 2050.
In October 2020, we accepted for purchase approximately $775 million in aggregate principal amount of senior notes pursuant to
cash tender offers as follows: $351 million of the 2050 Notes, $266 million of the 2030 Notes, and $158 million of the 2027
Notes. We paid approximately $1.003 billion in aggregate consideration (including transaction costs, and accrued and unpaid
interest) and recorded an approximately $240 million loss on the early extinguishment for the accepted notes.
In October 2020, we also issued an aggregate of $1.0 billion in unsecured senior notes in two tenors as follows: 0.875% Senior
Notes due April 2026 (the “2026 Notes”) with an aggregate principal amount of $500 million and 1.875% Senior Notes due April
2031 (the “2031 Notes”) with an aggregate principal amount of $500 million. Cash proceeds, net of discounts and other issuance
costs, were approximately $987.2 million. We used the net proceeds from the offering of the 2026 and 2031 Notes to fund the
purchase of the accepted notes from our tender offers.
In December 2021, we repaid at maturity the $65 million principal amount of the Series B 6.530% unsecured Senior Notes.
39
Other financing activities. In March 2019, our Board of Directors had approved a two-year $2.55 billion stock repurchase
program through fiscal 2020. Due to the economic uncertainty stemming from the severe impact of the COVID-19 pandemic, we
suspended that stock repurchase program in March 2020, at which time we had repurchased $1.407 billion under the $2.55
billion stock repurchase program. In May 2021, our Board of Directors authorized a program to repurchase up to $1.5 billion of
our common stock through fiscal 2022, with plans to buy back $650 million in fiscal 2021 and $850 million in fiscal 2022. In
March 2022, our Board of Directors approved a new two-year program to repurchase up to $1.9 billion of our common stock
through fiscal 2023. This new program replaces the previous $1.5 billion stock repurchase program, effective at the end of fiscal
2021 (at which time we had repurchased $650 million under the previous $1.5 billion program).
We repurchased 5.7 million, 1.2 million, and 12.3 million shares of common stock for aggregate purchase prices of
approximately $650 million, $132 million, and $1,275 million in fiscal 2021, 2020, and 2019, respectively. We also acquired
0.5 million, 0.5 million, and 0.6 million shares in fiscal 2021, 2020, and 2019, respectively, of treasury stock from our employee
stock equity compensation programs, for aggregate purchase prices of approximately $57.3 million, $45.2 million, and $60.7
million during fiscal 2021, 2020, and 2019, respectively.
On March 1, 2022, our Board of Directors declared a quarterly cash dividend of $0.310 per common share, payable on
March 31, 2022. Our Board of Directors declared quarterly cash dividends of $0.285 per common share in March, May, August,
and November 2021, respectively. Prior to fiscal 2021, our most recent quarterly dividend was a quarterly cash dividend of
$0.285 per common share declared by our Board of Directors in March 2020. In May 2020, we temporarily suspended our
quarterly dividends, due to the economic uncertainty stemming from the COVID-19 pandemic. Our Board of Directors declared
quarterly cash dividends of $0.255 per common share in March, May, August, and November 2019, respectively.
During fiscal 2021, 2020, and 2019, we paid dividends of $405.1 million, $101.4 million, and $369.8 million, respectively.
Short-term trade credit represents a significant source of financing for our merchandise inventory. Trade credit arises from
customary payment terms and trade practices with our vendors. We regularly review the adequacy of credit available to us from
all sources and expect to be able to maintain adequate trade credit, bank credit facility, and other credit sources to meet our
capital and liquidity requirements, including lease and interest payment obligations.
During fiscal 2021 and 2019, our liquidity and capital requirements were provided by available cash and cash flows from
operations. During fiscal 2020, our liquidity and capital requirements were provided by available cash and cash flows from
operations and our long-term debt financing.
We ended fiscal 2021 with $4.9 billion of unrestricted cash balances, and as of the Effective Date we have $1.3 billion available
under our senior unsecured revolving credit facility. We estimate that existing cash and cash equivalent balances, cash flows
from operations, bank credit facility, and trade credit are adequate to meet our operating cash needs and to fund our planned
capital investments, common stock repurchases, and quarterly dividend payments for at least the next 12 months.
40
Contractual Obligations
The table below presents our significant contractual obligations as of January 29, 2022:
($000)
Recorded contractual obligations:
Senior notes
Operating leases
New York buying office ground lease2
Unrecorded contractual obligations:
Real estate obligations3
Interest payment obligations
Purchase obligations4
Total contractual obligations
Less than
1 year
Greater than
1 year
Total¹
$
$
—
652,365
6,274
2,474,991
2,529,515
961,705
$
2,474,991
3,181,880
967,979
11,715
80,316
5,026,221
241,469
515,450
14,991
253,184
595,766
5,041,212
$
5,776,891
$
6,738,121
$ 12,515,012
1 We have a $65.4 million liability for unrecognized tax benefits that is included in Other long-term liabilities on our Consolidated
Balance Sheets. This liability is excluded from the schedule above as the timing of payments cannot be reasonably estimated.
2 Our New York buying office building is subject to a 99-year ground lease.
3 Minimum lease payments for operating leases signed that have not yet commenced.
4 Purchase obligations primarily consist of merchandise inventory purchase orders, commitments related to construction projects, store
fixtures and supplies, and information technology services, transportation, and maintenance contracts.
Supply chain finance program. We facilitate a voluntary supply chain finance program (the “program”) to provide certain
suppliers with the opportunity to sell receivables due from us to a participating financial institution at the sole discretion of both
the suppliers and the financial institution. A third party administers the program; our responsibility is limited to making payment on
the terms originally negotiated with the supplier, regardless of whether the supplier sells its receivable to a financial institution.
We do not enter into agreements with the participating financial institution in connection with the program. The range of payment
terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the program.
All outstanding payments owed under the program are recorded within Accounts payable in the Consolidated Balance Sheets.
The amounts owed to a participating financial institution under the program and included in Accounts payable were
$272.7 million and $15.6 million at January 29, 2022 and January 30, 2021, respectively. We account for all payments made
under the program as a reduction to operating cash flows in Accounts payable within the Consolidated Statements of Cash
Flows. The amounts settled through the program and paid to the participating financial institution were $430.1 million and
$2.6 million during fiscal 2021 and 2020, respectively.
Standby letters of credit and collateral trust. We use standby letters of credit outside of our revolving credit facility in addition
to a funded trust to collateralize some of our insurance obligations. We also use standby letters of credit outside of our revolving
credit facility to collateralize some of our trade payable obligations. As of January 29, 2022 and January 30, 2021, we had
$3.3 million and $15.3 million, respectively, in standby letters of credit outstanding, and $56.7 million and $56.1 million,
respectively, in a collateral trust. The standby letters of credit are collateralized by restricted cash and the collateral trust consists
of restricted cash, cash equivalents, and investments.
Trade letters of credit. We had $19.3 million and $16.3 million in trade letters of credit outstanding at January 29, 2022 and
January 30, 2021, respectively.
Other than the unrecorded contractual obligations noted above, we do not have any material off-balance sheet arrangements as
of January 29, 2022.
41
Other
Critical Accounting Estimates
The preparation of our consolidated financial statements requires our management to make estimates and assumptions that
affect the reported amounts. These estimates and assumptions are evaluated on an ongoing basis and are based on historical
experience and on various other factors that management believes to be reasonable. We believe the following critical accounting
estimates describe the more significant judgments and estimates used in the preparation of our consolidated financial
statements and are not intended to be a comprehensive list of all of our accounting estimates.
Merchandise inventory. Our merchandise inventory is stated at the lower of cost (determined using a weighted-average basis)
or net realizable value. Merchandise inventory includes acquisition, transportation, processing, and storage costs related to
packaway inventory. Included in the carrying value of our merchandise inventory is a provision for shortage. The shortage
reserve is based on historical shortage rates as determined through our annual physical merchandise inventory counts and cycle
counts. Historically, our actual physical inventory count results have shown our provision for shortage to be reliable. If actual
market conditions are less favorable than those projected by us, or if sales of the merchandise inventory are more difficult than
anticipated, additional merchandise inventory write-downs may be required beyond our normal markdowns taken to clear
seasonal and aged inventory. As a measure of sensitivity, a five percent change in shortage rates as of January 29, 2022, would
not have materially impacted our cost of goods sold in fiscal 2021.
Lease accounting. In determining the present value of lease payments, for use in the calculation of the operating lease liabilities
and right-of-use assets, we use the estimated collateralized incremental borrowing rate based on information available at the
lease commencement date. Since our leases generally do not provide an implicit discount rate, this rate is determined using a
portfolio approach based on the risk-adjusted rate of interest, and requires estimates and assumptions including credit rating,
credit spread, and adjustments for the impact of collateral. Changes in these inputs can increase or decrease the recorded
operating lease assets and related lease liabilities for new leases, and for remeasurements or modifications of existing leases.
We believe that this approximates the rate we would have to pay to borrow an amount equal to the lease payments on a
collateralized basis over a similar lease term.
Insurance obligations. We use a combination of insurance and self-insurance for a number of risk management activities,
including workers’ compensation, general liability, and employee-related health care benefits. Our self-insurance and deductible
liability is determined actuarially, based on claims filed and an estimate of claims incurred but not reported. Should a greater
amount of claims occur compared to what is estimated or the costs of medical care increase beyond what was anticipated, our
recorded reserves may not be sufficient and additional charges could be required. A five percent increase or decrease in our
insurance reserves would not have materially impacted our net earnings in fiscal 2021.
Recent Accounting Pronouncements
See Note A to the Consolidated Financial Statements - Summary of Significant Accounting Policies (Recently issued accounting
standards and Recently adopted accounting standards) for a discussion of recent accounting pronouncements and their impact
to our Consolidated Financial Statements.
Forward-Looking Statements
Our Annual Report on Form 10-K for fiscal 2021, and information we provide in our Annual Report to Stockholders, press
releases, and other investor communications including those on our corporate website, may contain a number of forward-looking
statements regarding, without limitation, the rapidly developing challenges and our plans and responses to the COVID-19
pandemic and related economic and supply chain disruptions, including adjustments to our operations, and planned new store
growth, new markets, expected sales, projected earnings levels, capital expenditures, and other matters. These forward-looking
statements reflect our then current beliefs, plans, and estimates with respect to future events and our projected financial
performance, operations, and competitive position. The words “plan,” “expect,” “target,” “anticipate,” “estimate,” “believe,”
“forecast,” “projected,” “guidance,” “looking ahead,” and similar expressions identify forward-looking statements.
42
Future impact from the ongoing COVID-19 pandemic, and other economic and industry trends that could potentially impact
revenue, profitability, operating conditions, and growth are difficult to predict. Our forward-looking statements are subject to risks
and uncertainties which could cause our actual results to differ materially from those forward-looking statements and our
previous expectations, plans, and projections. Refer to Item 1A in this Annual Report on Form 10-K for a more complete
discussion of risk factors for Ross and dd’s DISCOUNTS. The factors underlying our forecasts are dynamic and subject to
change. As a result, any forecasts or forward-looking statements speak only as of the date they are given and do not necessarily
reflect our outlook at any other point in time. We disclaim any obligation to update or revise these forward-looking statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks, which primarily include changes in interest rates. We do not engage in financial transactions for
trading or speculative purposes.
We occasionally use forward contracts to hedge against fluctuations in foreign currency prices. We had no outstanding forward
contracts as of January 29, 2022.
Interest that is payable on our revolving credit facility is based on variable interest rates and is, therefore, affected by changes in
market interest rates. As of January 29, 2022, we had no borrowings outstanding under our revolving credit facility.
As of January 29, 2022, we have outstanding seven series of unsecured Senior Notes. Interest that is payable on all series of
our Senior Notes is based on fixed interest rates, and is therefore unaffected by changes in market interest rates.
We receive interest on our short- and long-term investments. Changes in interest rates may impact interest income recognized in
the future, or the fair value of our investment portfolio.
A hypothetical 100 basis point increase or decrease in prevailing market interest rates would not have a material negative impact
on our consolidated financial position, results of operations, cash flows, or the fair values of our short- and long-term investments
as of and for the year ended January 29, 2022. We do not consider the potential losses in future earnings and cash flows from
reasonably possible, near-term changes in interest rates to be material.
43
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements of Earnings
($000, except per share data)
Sales
Costs and Expenses
Cost of goods sold
Selling, general and administrative
Interest expense (income), net
Total costs and expenses
Earnings before taxes
Provision for taxes on earnings
Net earnings
Earnings per share
Basic
Diluted
Year Ended
January 29, 2022
$
18,916,244 $
Year Ended
Year Ended
January 30, 2021 February 1, 2020
16,039,073
12,531,565 $
13,708,907
2,874,469
74,328
16,657,704
9,838,574
2,503,281
83,413
12,425,268
2,258,540
535,951
106,297
20,915
$
1,722,589 $
85,382
$
11,536,187
2,356,704
(18,106)
13,874,785
2,164,288
503,360
1,660,928
$
$
4.90 $
4.87 $
0.24 $
0.24 $
4.63
4.60
Weighted-average shares outstanding (000)
Basic
Diluted
351,496
353,734
352,392
354,619
358,462
361,182
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Comprehensive Income
($000)
Net earnings
Year Ended
January 29, 2022
Year Ended
January 30, 2021
$
1,722,589 $
85,382 $
Year Ended
February 1, 2020
1,660,928
Other comprehensive income (loss)
—
—
—
Comprehensive income
$
1,722,589 $
85,382 $
1,660,928
The accompanying notes are an integral part of these consolidated financial statements.
44
Consolidated Balance Sheets
($000, except share data)
Assets
Current Assets
Cash and cash equivalents
Accounts receivable
Merchandise inventory
Prepaid expenses and other
Total current assets
Property and Equipment
Land and buildings
Fixtures and equipment
Leasehold improvements
Construction-in-progress
Less accumulated depreciation and amortization
Property and equipment, net
Operating lease assets
Other long-term assets
Total assets
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable
Accrued expenses and other
Current operating lease liabilities
Accrued payroll and benefits
Income taxes payable
Current portion of long-term debt
Total current liabilities
Long-term debt
Non-current operating lease liabilities
Other long-term liabilities
Deferred income taxes
Commitments and contingencies
Stockholders’ Equity
Common stock, par value $0.01 per share
Authorized 1,000,000,000 shares
Issued and outstanding 351,720,000 and
356,503,000 shares, respectively
Additional paid-in capital
Treasury stock
Retained earnings
Total stockholders’ equity
January 29, 2022
January 30, 2021
$
4,922,365 $
119,247
2,262,273
169,291
7,473,176
1,240,246
3,425,762
1,332,687
574,333
6,573,028
3,674,501
2,898,527
3,027,272
241,281
4,819,293
115,067
1,508,982
249,149
6,692,491
1,187,045
3,243,206
1,278,134
376,076
6,084,461
3,373,965
2,710,496
3,084,819
230,061
$
13,640,256 $
12,717,867
$
2,372,302
$
613,089
630,517
588,772
10,249
—
4,214,929
2,452,325
2,539,297
236,013
137,642
2,256,928
592,122
598,120
400,273
54,680
64,910
3,967,033
2,448,175
2,621,594
268,558
121,867
3,517
3,565
1,717,530
(535,895)
2,874,898
4,060,050
1,579,824
(478,550)
2,185,801
3,290,640
Total liabilities and stockholders’ equity
$
13,640,256 $
12,717,867
The accompanying notes are an integral part of these consolidated financial statements.
45
Consolidated Statements of Stockholders’ Equity
(000)
Balance at February 2, 2019
Net earnings
Cumulative effect of adoption of
accounting standard (leases), net
Common stock issued under stock plans,
net of shares used for tax withholding
Stock-based compensation
Common stock repurchased
Dividends declared ($1.020 per share)
Balance at February 1, 2020
Net earnings
Common stock issued under stock plans,
net of shares used for tax withholding
Stock-based compensation
Common stock repurchased
Dividends declared ($0.285 per share)
Balance at January 30, 2021
Net earnings
Common stock issued under stock plans,
net of shares used for tax withholding
Stock-based compensation
Common stock repurchased
Dividends declared ($1.140 per share)
Common stock
Shares Amount
Additional
paid-in
capital
Treasury
stock
Retained
earnings
Total
368,242 $ 3,682 $ 1,375,965 $ (372,663) $ 2,298,762 $ 3,305,746
— 1,660,928 1,660,928
—
—
—
—
—
—
—
(19,614)
(19,614)
793
—
(12,260)
—
8
—
(122)
—
22,201
95,438
(35,297)
—
(60,665)
—
—
—
—
—
(1,239,581)
(369,793)
(38,456)
95,438
(1,275,000)
(369,793)
356,775 $ 3,568 $ 1,458,307 $ (433,328) $ 2,330,702 $ 3,359,249
85,382
85,382
—
—
—
—
899
—
(1,171)
—
9
—
(12)
—
23,525
101,568
(3,576)
—
(45,222)
—
—
—
—
—
(128,879)
(101,404)
(21,688)
101,568
(132,467)
(101,404)
356,503 $ 3,565 $ 1,579,824 $ (478,550) $ 2,185,801 $ 3,290,640
— 1,722,589 1,722,589
—
—
—
905
—
(5,688)
—
9
—
(57)
—
25,060
134,217
(21,571)
—
(57,345)
—
—
—
—
—
(628,369)
(405,123)
(32,276)
134,217
(649,997)
(405,123)
Balance at January 29, 2022
351,720 $ 3,517 $ 1,717,530 $ (535,895) $ 2,874,898 $ 4,060,050
The accompanying notes are an integral part of these consolidated financial statements.
46
Consolidated Statements of Cash Flows
($000)
Cash Flows From Operating Activities
Net earnings
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization
Loss on early extinguishment of debt
Stock-based compensation
Deferred income taxes
Change in assets and liabilities:
Merchandise inventory
Other current assets
Accounts payable
Other current liabilities
Income taxes
Operating lease assets and liabilities, net
Other long-term, net
Net cash provided by operating activities
Cash Flows From Investing Activities
Additions to property and equipment
Proceeds from investments
Net cash used in investing activities
Cash Flows From Financing Activities
Issuance of common stock related to stock plans
Treasury stock purchased
Repurchase of common stock
Dividends paid
Net proceeds from issuance of short-term debt
Payments of short-term debt
Net proceeds from issuance of long-term debt
Payments of long-term debt
Payments of debt extinguishment and debt
issuance costs
Net cash (used in) provided by financing
activities
Net increase (decrease) in cash, cash equivalents,
and restricted cash and cash equivalents
Cash and cash equivalents, and restricted cash
and cash equivalents:
Year Ended
January 29, 2022
Year Ended
January 30, 2021
Year Ended
February 1, 2020
$
1,722,589
$
85,382
$
1,660,928
360,664
—
134,217
15,775
(753,291)
1,420
135,311
198,595
(44,579)
7,647
(39,499)
1,738,849
(557,840)
—
(557,840)
25,069
(57,345)
(649,997)
(405,123)
—
—
—
(65,000)
364,245
239,953
101,568
(27,812)
323,357
(39,406)
938,837
171,444
39,806
13,669
34,890
350,892
—
95,438
32,009
(81,897)
(10,315)
114,153
30,513
(35,239)
15,631
(567)
2,245,933
2,171,546
(405,433)
—
(405,433)
23,534
(45,222)
(132,467)
(101,404)
805,601
(805,601)
2,965,115
(775,009)
(555,483)
517
(554,966)
22,209
(60,665)
(1,275,000)
(369,793)
—
—
—
—
—
(232,688)
—
(1,152,396)
1,701,859
(1,683,249)
28,613
3,542,359
(66,669)
Beginning of year
End of year
4,953,769
1,411,410
$
4,982,382
$
4,953,769
$
1,478,079
1,411,410
Supplemental Cash Flow Disclosures
Interest paid
Income taxes paid
$
$
84,331
564,755
$
$
72,471
8,921
$
$
12,682
506,591
The accompanying notes are an integral part of these consolidated financial statements.
47
Notes to Consolidated Financial Statements
Note A: Summary of Significant Accounting Policies
Business. Ross Stores, Inc. and its subsidiaries (the “Company”) is an off-price retailer of first-quality, in-season, name brand
and designer apparel, accessories, footwear, and home fashions for the entire family. At the end of fiscal 2021, the Company
operated 1,628 Ross Dress for Less® (“Ross”) locations in 40 states, the District of Columbia, and Guam, and 295 dd’s
DISCOUNTS® stores in 21 states. The Ross and dd’s DISCOUNTS stores are supported by the Company’s headquarters,
buying offices, and its network of distribution centers/warehouses.
Segment reporting. The Company has one reportable segment. The Company’s operations include only activities related to
off-price retailing in stores throughout the United States.
Basis of presentation and fiscal year. The consolidated financial statements include the accounts of the Company and its
subsidiaries, all of which are wholly-owned. Intercompany transactions and accounts have been eliminated. The Company
follows the National Retail Federation fiscal calendar and utilizes a 52-53 week fiscal year whereby the fiscal year ends on the
Saturday nearest to January 31. The fiscal years ended January 29, 2022, January 30, 2021 and February 1, 2020 are referred
to as fiscal 2021, fiscal 2020, and fiscal 2019, respectively, and were 52-week years.
Use of accounting estimates. The preparation of consolidated financial statements in conformity with Generally Accepted
Accounting Principles in the United States of America (“GAAP”) requires the Company to make estimates and assumptions that
affect the reported amounts of assets, liabilities, and disclosures of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The
Company’s significant accounting estimates include valuation reserves for inventory, packaway and other inventory carrying
costs, useful lives of fixed assets, insurance reserves, reserves for uncertain tax positions, employee retention credits under the
Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), and legal claims. The uncertainties and impacts from the
ongoing COVID-19 pandemic increase the challenge of making these estimates; actual results could differ materially from the
Company’s estimates.
Purchase obligations. As of January 29, 2022, the Company had purchase obligations of approximately $5.0 billion. These
purchase obligations primarily consist of merchandise inventory purchase orders, commitments related to construction projects,
store fixtures and supplies, and information technology services, transportation, and maintenance contracts.
Cash and cash equivalents. Cash equivalents consist of highly liquid, fixed income instruments purchased with an original
maturity of three months or less.
Restricted cash, cash equivalents, and investments. Restricted cash, cash equivalents, and investments serve as collateral
for certain insurance obligations and has also served as collateral for certain trade payable obligations of the Company. These
restricted funds are invested in bank deposits, money market mutual funds, U.S. Government and agency securities, and
corporate securities and cannot be withdrawn from the Company’s account without the prior written consent of the secured
parties. The classification between current and long-term is based on the timing of expected payments of the obligations.
The following table provides a reconciliation of cash, cash equivalents, restricted cash and cash equivalents in the Consolidated
Balance Sheets that reconcile to the amounts shown on the Consolidated Statements of Cash Flows:
($000)
Cash and cash equivalents
Restricted cash and cash equivalents included in:
Prepaid expenses and other
Other long-term assets
Total restricted cash and cash equivalents
2021
2020
2019
$ 4,922,365 $ 4,819,293 $ 1,351,205
11,403
48,614
60,017
85,711
48,765
134,476
10,235
49,970
60,205
Total cash and cash equivalents, and restricted cash and cash equivalents
$ 4,982,382 $ 4,953,769 $ 1,411,410
The Company had no restricted investments as of January 29, 2022, January 30, 2021, and February 1, 2020.
48
Estimated fair value of financial instruments. The carrying value of cash and cash equivalents, short- and long-term
investments, restricted cash and cash equivalents, restricted investments, accounts receivable, other long-term assets, accounts
payable, and other long-term liabilities approximates their estimated fair value. See Note B and Note D for additional fair value
information.
Cash and cash equivalents were $4,922.4 million and $4,819.3 million, at January 29, 2022 and January 30, 2021, respectively,
and include bank deposits and money market funds for which the fair value was determined using quoted prices for identical
assets in active markets, which are considered to be Level 1 inputs under the fair value measurements and disclosures
guidance.
Merchandise inventory. Merchandise inventory is stated at the lower of cost (determined using a weighted-average basis) or
net realizable value. The Company purchases inventory that can either be shipped to stores or processed as packaway
merchandise with the intent that it will be warehoused and released to stores at a later date. The timing of the release of
packaway inventory to the stores is principally driven by the product mix and seasonality of the merchandise, and its relation to
the Company’s store merchandise assortment plans. As such, the aging of packaway varies by merchandise category and
seasonality of purchase, but typically packaway remains in storage less than six months. Merchandise inventory includes
acquisition, transportation, processing, and storage costs related to packaway inventory. The cost of the Company’s
merchandise inventory is reduced by valuation reserves for shortage based on historical shortage experience from the
Company’s physical merchandise inventory counts and cycle counts.
Cost of goods sold. In addition to product costs, the Company includes in cost of goods sold its buying, distribution, and freight
expenses as well as occupancy costs, and depreciation and amortization related to the Company’s retail stores, buying, and
distribution facilities. Buying expenses include costs to procure merchandise inventories. Distribution expenses include the cost
of operating the Company’s distribution centers, warehouses, and cross-dock facilities.
Property and equipment. Property and equipment are stated at cost, less accumulated depreciation and amortization.
Depreciation is calculated using the straight-line method over the estimated useful life of the asset, typically ranging from three
years to 12 years for equipment, 20 years to 40 years for land improvements and buildings, and three years to seven years for
computer software costs incurred in developing or obtaining software for internal use. The cost of leasehold improvements is
amortized over the useful life of the asset or the applicable lease term, whichever is less. Depreciation and amortization expense
on property and equipment was $360.7 million, $364.2 million, and $350.9 million for fiscal 2021, 2020, and 2019, respectively.
The Company capitalizes interest during the construction period of facilities and during the development and implementation
phase of software projects. Interest capitalized was $14.5 million, $12.3 million, and $4.4 million in fiscal 2021, 2020, and 2019,
respectively. As of January 29, 2022, January 30, 2021, and February 1, 2020 the Company had $47.3 million, $56.2 million, and
$40.3 million, respectively, of property and equipment purchased but not yet paid. These purchases are included in Property and
Equipment and in Accounts payable and Accrued expenses and other in the accompanying Consolidated Balance Sheets.
Other long-term assets. Other long-term assets as of January 29, 2022 and January 30, 2021 consisted of the following:
($000)
Deferred compensation (Note B)
Restricted cash and cash equivalents
Other
Total
2021
2020
$ 163,891 $ 159,116
48,765
22,180
48,614
28,776
$ 241,281 $ 230,061
Impairment of long-lived assets. Property and other long-term assets that are subject to depreciation and amortization are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable based on estimated undiscounted future cash flows. For stores that are closed, the Company records an impairment
charge, if appropriate, or accelerates depreciation over the revised useful life of the asset. Intangible assets that are not subject
to amortization, including goodwill, are tested for impairment annually or more frequently if events or changes in circumstances
indicate that the asset may be impaired. No material impairment charges were recorded during fiscal 2021, 2020, and 2019.
Accounts payable. Accounts payable represents amounts owed to third parties at the end of the period. Accounts payable
includes book cash overdrafts (checks issued under zero balance accounts not yet presented for payment) in excess of cash
balances in such accounts of approximately $99.1 million and $63.5 million at January 29, 2022 and January 30, 2021,
respectively. The Company includes the change in book cash overdrafts in operating cash flows.
49
Insurance obligations. The Company uses a combination of insurance and self-insurance for a number of risk management
activities, including workers’ compensation, general liability, and employee-related health care benefits. The self-insurance and
deductible liability is determined actuarially, based on claims filed and an estimate of claims incurred but not yet reported.
Self-insurance and deductible reserves as of January 29, 2022 and January 30, 2021 consisted of the following:
($000)
Workers’ compensation
General liability
Medical plans
Total
$
2021
83,771 $
45,589
7,660
2020
83,900
42,575
7,727
$
137,020 $
134,202
Workers’ compensation and self-insured medical plan liabilities are included in Accrued payroll and benefits, and accruals for
general liability are included in Accrued expenses and other in the accompanying Consolidated Balance Sheets.
Other long-term liabilities. Other long-term liabilities as of January 29, 2022 and January 30, 2021 consisted of the following:
($000)
Income taxes (Note F)
Deferred compensation (Note G)
Deferred social security taxes
Other
Total
$
$
2021
65,359
163,891
—
6,763
2020
65,507
159,116
36,701
7,234
$
236,013
$
268,558
Lease accounting. As the Company’s leases generally do not provide an implicit discount rate, the Company uses the
estimated collateralized incremental borrowing rate based on information available at the lease commencement date in
determining the present value of lease payments for use in the calculation of the operating lease liabilities and right-of-use
assets. This rate is determined using a portfolio approach based on the risk-adjusted rate of interest and requires estimates and
assumptions including credit rating, credit spread, and adjustments for the impact of collateral. The Company believes that this is
the rate it would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar lease
term. Operating lease liabilities and corresponding right-of-use assets include options to extend lease terms that are reasonably
certain of being exercised. The Company does not record a lease liability and corresponding right-of-use asset for leases with
terms of 12 months or less, and accounts for lease and non-lease components as a single lease component. The Company’s
lease portfolio is comprised of operating leases with the lease cost recorded on a straight-line basis over the lease term.
In response to the COVID-19 pandemic, the Financial Accounting Standards Board (“FASB”) provided relief under Accounting
Standards Update (“ASU”) 2016-02, Leases (Accounting Standards Codification “ASC” 842). Under this relief, companies can
make a policy election on how to treat lease concessions resulting directly from the COVID-19 pandemic, provided that the
modified contracts result in total cash flows that are substantially the same or less than the cash flows in the original contract.
The Company made the policy election to account for lease concessions that result from the COVID-19 pandemic as if they were
made under enforceable rights in the original contract. Additionally, the Company made the policy election to account for these
concessions outside of the lease modification framework described under ASC 842. The Company recorded accruals for
deferred rental payments and recognized rent abatements or concessions as variable lease costs in the periods incurred.
Accruals for rent payment deferrals are included in Accrued expenses and other in the accompanying Consolidated Balance
Sheets.
Revenue recognition. The Company recognizes revenue at the point of sale, net of sales taxes collected and an allowance for
estimated future returns as required by ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606). The Company
recognizes allowances for estimated sales returns on a gross basis as a reduction to sales. The asset recorded for the expected
recovery of merchandise inventory was $10.5 million, $10.7 million, and $10.7 million and the liability recorded for the refund due
to the customer was $20.3 million, $21.2 million, and $20.9 million as of January 29, 2022, January 30, 2021, and February 1,
2020, respectively. Sales taxes collected that are outstanding and the allowance for estimated future returns are included in
Accrued expenses and other and the asset for expected recovery of merchandise is included in Prepaid expenses and other in
the Consolidated Balance Sheets.
50
Sales of stored value cards are deferred until they are redeemed for the purchase of Company merchandise. The Company’s
stored value cards do not have expiration dates. Based upon historical redemption rates, a small percentage of stored value
cards will never be redeemed, which represents breakage. As a result of adopting ASC 606, breakage is estimated and
recognized as revenue based upon the historical pattern of customer redemptions. Breakage was not material to the
consolidated financial statements in fiscal 2021, 2020, and 2019.
The following sales mix table disaggregates revenue by merchandise category for fiscal 2021, 2020, and 2019:
Home Accents and Bed and Bath
Ladies
Men’s
Accessories, Lingerie, Fine Jewelry, and Cosmetics
Shoes
Children’s
2021 1
26%
25%
14%
14%
12%
9%
2020
28%
23%
14%
14%
12%
9%
2019
25%
26%
14%
13%
13%
9%
Total
100%
100%
100%
Store pre-opening. Store pre-opening costs are expensed in the period incurred.
Advertising. Advertising costs are expensed in the period incurred and are included in Selling, general and administrative
expenses. Advertising costs for fiscal 2021, 2020, and 2019 were $65.1 million, $42.5 million, and $74.0 million, respectively.
Stock-based compensation. The Company recognizes compensation expense based upon the grant date fair value of all
stock-based awards, typically over the vesting period. See Note C for more information on the Company’s stock-based
compensation plans.
Taxes on earnings. The Company accounts for income taxes in accordance with ASC 740, “Accounting for Income Taxes,”
which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have
been recognized in the Company’s consolidated financial statements or tax returns. In estimating future tax consequences, the
Company generally considers all expected future events other than changes in the tax law or tax rates. ASC 740 clarifies the
criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company’s
consolidated financial statements. ASC 740 prescribes a recognition threshold of more-likely-than-not, and a measurement
standard for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the
consolidated financial statements. See Note F.
Treasury stock. The Company records treasury stock at cost. Treasury stock includes shares purchased from employees for tax
withholding purposes related to vesting of restricted stock grants.
Earnings per share (“EPS”). The Company computes and reports both basic EPS and diluted EPS. Basic EPS is computed by
dividing net earnings by the weighted-average number of common shares outstanding for the period. Diluted EPS is computed
by dividing net earnings by the sum of the weighted-average number of common shares and dilutive common stock equivalents
outstanding during the period. Diluted EPS reflects the total potential dilution that could occur from outstanding equity plan
awards and unvested shares of both performance and non-performance based awards of restricted stock and restricted stock
units. For periods of net loss, basic and diluted EPS are the same as the effect of the assumed vesting of restricted stock,
restricted stock units, and performance share awards are anti-dilutive.
In fiscal 2021, 2020, and 2019 there were 3,500, 79,500, and 27,400 weighted-average shares, respectively, that were excluded
from the calculation of diluted EPS because their effect would have been anti-dilutive for those years.
51
The following is a reconciliation of the number of shares (denominator) used in the basic and diluted EPS computations:
Shares in (000s)
2021
Shares
Amount
2020
Shares
Amount
2019
Shares
Amount
Basic EPS
Effect of dilutive
common stock
equivalents
Diluted
EPS
351,496
4.90
352,392
0.24
358,462
4.63
$
$
$
$
$
$
2,238
(0.03) $
353,734
4.87
2,227
— $
354,619
0.24
2,720
(0.03) $
361,182
4.60
Comprehensive income. Comprehensive income includes net earnings and components of other comprehensive income (loss),
net of tax, consisting of unrealized investment gains or losses.
Recently issued accounting standards. In November 2021, the FASB issued ASU 2021-10, Government Assistance
(Topic 832): Disclosures by Business Entities about Government Assistance, to increase the transparency of government
assistance including the disclosure of the types of assistance an entity receives, an entity’s method of accounting for government
assistance, and the effect of government assistance on an entity’s financial statements. The guidance in this Update will be
effective for the Company for its fiscal 2022 Form 10-K, with early application of the amendments permitted. The Company is
currently evaluating the impact of this guidance on its disclosures in the consolidated financial statements.
Recently adopted accounting standards. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for
Income Taxes (ASC 740). ASU 2019-12 eliminates certain exceptions in ASC 740 related to the methodology for calculating
income taxes in an interim period. It also clarifies and simplifies other aspects of the accounting for income taxes. The
amendments in ASU 2019-12 are effective for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2020. Early adoption is permitted, including adoption in any interim period. The Company adopted ASU 2019-12
on a prospective basis in the first quarter of fiscal 2020. The most significant impact to the Company is the removal of a limit on
the tax benefit recognized on pre-tax losses in interim periods. The adoption of this standard did not have a material impact on
the Company’s fiscal 2020 results.
In February 2016, the FASB issued ASU 2016-02, Leases (ASC 842), which along with subsequent amendments, supersedes
the lease accounting requirements in ASC 840, Leases. The updated guidance requires balance sheet recognition for all leases
with lease terms greater than one year including a lease liability, which is a lessee’s obligation to make lease payments arising
from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to
use, or control the use of, a specified asset for the lease term.
The Company adopted ASC 842 as of February 3, 2019 (the “effective date”), using the optional transition method on a modified
retrospective basis. The Company did not elect the transitional package of practical expedients or the use of hindsight upon
adoption of the ASC. The Company elected to not record a lease liability and corresponding right-of-use asset for leases with
terms of 12 months or less, and to account for lease and non-lease components as a single lease component. Upon adoption,
the Company recorded lease liabilities based on the present value of the remaining minimum rental payments, using incremental
borrowing rates as of the effective date, of $2.9 billion, and the corresponding right-of-use assets of $2.9 billion. The Company
also recorded a cumulative-effect adjustment to decrease beginning retained earnings of $19.6 million, primarily related to the
write-off of previously capitalized initial direct costs that are no longer capitalized under ASC 842, partially offset by the write-off
of the deferred gain on a previous sale-leaseback transaction that meets the sale definition under ASC 842. Reporting periods
beginning on or after February 3, 2019 are presented under ASC 842, while prior period amounts and disclosures were not
adjusted and continue to be reported under ASC 840. Adoption of ASC 842 did not have a significant impact to the Company’s
consolidated statements of earnings or to the consolidated statements of cash flows.
52
Note B: Fair Value Measurements
Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy which prioritizes the inputs
used in measuring fair value. The inputs used to measure fair value include: Level 1, observable inputs such as quoted prices in
active markets; Level 2, inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level 3, unobservable inputs in which little or no market data exists. This fair value hierarchy requires the Company to develop
its own assumptions and maximize the use of observable inputs and minimize the use of unobservable inputs when measuring
fair value. Corporate, U.S. government and agency, and mortgage-backed securities are classified within Level 1 or Level 2
because these securities are valued using quoted market prices or alternative pricing sources and models utilizing market
observable inputs.
The fair value of the Company’s financial instruments as of January 29, 2022 and January 30, 2021 are as follows:
($000)
Cash and cash equivalents (Level 1)
Restricted cash and cash equivalents (Level 1)
2021
$
$
4,922,365
60,017
$
$
2020
4,819,293
134,476
The underlying assets in the Company’s non-qualified deferred compensation program as of January 29, 2022 and January 30,
2021 (included in Other long-term assets and in Other long-term liabilities) primarily consist of participant-directed money market,
stock, and bond funds. The fair value measurement for funds with quoted market prices in active markets (Level 1) are as
follows:
($000)
Level 1
2021
2020
$
163,891
$
159,116
Note C: Management Incentive Plan and Stock-Based Compensation
The Company has incentive compensation programs which provide cash incentive bonuses and performance share awards to
key management and employees based on Company and individual performance.
For fiscal 2021, the Compensation Committee of the Board of Directors established the performance measures for determining
incentive compensation amounts based on a combination of profitability-based performance goals and the attainment of specific
management priorities related to business challenges from the COVID-19 pandemic, as measured and approved by the
Compensation Committee. As of January 29, 2022, the Company has established an accrual for this incentive compensation
based on its attainment of the profitability-based performance goals and the Compensation Committee’s assessment of
achievement of the specific business priorities.
For the fiscal 2020 management incentive bonus plan and performance share awards, the Compensation Committee approved
modifications in August 2020 to the performance measurement goals, to be based on the attainment of specific management
priorities related to business challenges from the COVID-19 pandemic, as measured and approved by the Compensation
Committee, as an alternative to the previously established profitability-based performance goals for 2020.
For fiscal 2021, 2020, and 2019, the Company recognized stock-based compensation expense as follows:
($000)
Restricted stock
Performance awards
ESPP
Total
$
2021
72,210 $
57,582
4,425
2020
66,908 $
30,506
4,154
$
134,217 $
101,568 $
2019
54,975
36,542
3,921
95,438
Capitalized stock-based compensation cost was not significant in any year.
53
At January 29, 2022, the Company had one active stock-based compensation plan, which is further described in Note H. The
Company recognizes expense for ESPP purchase rights equal to the value of the 15% discount given on the purchase date.
Total stock-based compensation recognized in the Company’s Consolidated Statements of Earnings for fiscal 2021, 2020, and
2019 is as follows:
Statements of Earnings Classification ($000)
Cost of goods sold
Selling, general and administrative
Total
2021
2020
66,500 $
67,717
52,267 $
49,301
134,217
$
101,568 $
$
$
2019
54,265
41,173
95,438
The tax benefits related to stock-based compensation expense for fiscal 2021, 2020, and 2019 were $25.6 million, $20.6 million,
and $18.5 million, respectively.
Note D: Debt
Long-term debt. Unsecured senior debt, net of unamortized discounts and debt issuance costs, as of January 29, 2022 and
January 30, 2021 consisted of the following:
($000)
6.530% Series B Senior Notes due 2021
3.375% Senior Notes due 2024
4.600% Senior Notes due 2025
0.875% Senior Notes due 2026
4.700% Senior Notes due 2027
4.800% Senior Notes due 2030
1.875% Senior Notes due 2031
5.450% Senior Notes due 2050
Total long-term debt
Less: current portion
Total due beyond one year
$
$
$
2021
—
248,808
695,888
494,814
239,470
132,431
494,691
146,223
2,452,325
—
2,452,325
$
$
$
2020
64,910
248,365
694,624
493,595
239,049
132,262
494,132
146,148
2,513,085
64,910
2,448,175
In April 2020, the Company issued an aggregate of $2.0 billion in unsecured senior notes in four tenors as follows: 4.600%
Senior Notes due April 2025 (the “2025 Notes”) with an aggregate principal amount of $700 million, 4.700% Senior Notes due
April 2027 (the “2027 Notes”) with an aggregate principal amount of $400 million, 4.800% Senior Notes due April 2030 (the “2030
Notes”) with an aggregate principal amount of $400 million, and 5.450% Senior Notes due April 2050 (the “2050 Notes”) with an
aggregate principal amount of $500 million. Cash proceeds, net of discounts and other issuance costs, were approximately
$1.973 billion. Interest on the 2025, 2027, 2030, and 2050 Notes is payable semi-annually beginning October 2020.
In October 2020, the Company accepted for purchase approximately $775 million in aggregate principal amount of senior notes
pursuant to cash tender offers as follows: $351 million of the 2050 Notes, $266 million of the 2030 Notes, and $158 million of the
2027 Notes. The Company paid approximately $1.003 billion in aggregate consideration (including transaction costs, and
accrued and unpaid interest) and recorded an approximately $240 million loss on the early extinguishment for the accepted
notes.
In October 2020, the Company issued an aggregate of $1.0 billion in unsecured senior notes in two tenors as follows: 0.875%
Senior Notes due April 2026 (the “2026 Notes”) with an aggregate principal amount of $500 million and 1.875% Senior Notes
due April 2031 (the “2031 Notes”) with an aggregate principal amount of $500 million. Cash proceeds, net of discounts and other
issuance costs, were approximately $987.2 million. Interest on the 2026 and 2031 Notes is payable semi-annually beginning
April 2021. The Company used the net proceeds from the offering of the 2026 and 2031 Notes to fund the purchase of the
accepted notes from its tender offers.
54
In December 2021, the Company repaid at maturity the $65 million principal amount of the Series B 6.530% unsecured Senior
Notes.
As of January 29, 2022, the Company also had outstanding unsecured 3.375% Senior Notes due September 2024 (the “2024
Notes”) with an aggregate principal amount of $250 million. Interest on the 2024 Notes is payable semi-annually.
As of January 29, 2022 and January 30, 2021, total unamortized discount and debt issuance costs were $22.7 million and
$26.9 million, respectively, and were classified as a reduction of long-term debt.
All of the Senior Notes are subject to prepayment penalties for early payment of principal.
As of January 29, 2022, the aggregate fair value of the seven outstanding series of Senior Notes was approximately $2.6 billion.
As of January 30, 2021, the aggregate fair value of the eight then outstanding series of Senior Notes was approximately
$2.8 billion. The fair value is estimated by obtaining comparable market quotes which are considered to be Level 1 inputs under
the fair value measurements and disclosures guidance.
The following table shows scheduled annual principal payments on long-term debt:
($000)
2022
2023
2024
2025
2026
Thereafter
$
$
$
$
$
$
—
—
250,000
700,000
500,000
1,024,991
The table below shows the components of interest expense and income for fiscal 2021, 2020, and 2019:
($000)
Interest expense on long-term debt
Interest expense on short-term debt
Other interest expense
Capitalized interest
Interest income
Interest expense (income), net
$
$
2021
88,286 $
—
1,351
(14,476)
(833)
74,328 $
2020
88,544 $
7,863
3,908
(12,251)
(4,651)
83,413 $
2019
13,139
—
968
(4,367)
(27,846)
(18,106)
Revolving credit facilities. As of January 29, 2022, the Company's $800 million unsecured revolving credit facility was
scheduled to expire in July 2024, and contained a $300 million sublimit for issuance of standby letters of credit. The facility also
contained an option allowing the Company to increase the size of its credit facility by up to an additional $300 million, with the
agreement of the lenders. Interest on borrowings under this facility was based on LIBOR (or an alternate benchmark rate, if
LIBOR was no longer available) plus an applicable margin and was payable quarterly and upon maturity. The revolving credit
facility could have been extended, at the Company’s option, for up to two additional one year periods, subject to customary
conditions.
In March 2020, the Company borrowed $800 million available under its revolving credit facility. Interest on the loan was based on
LIBOR plus 0.875% (or 1.76%).
In May 2020, the Company amended its $800 million unsecured revolving credit facility to temporarily suspend, for the second
and third quarters of fiscal 2020, the Consolidated Adjusted Debt to EBITDAR ratio financial covenant, and to apply a transitional
modification to that ratio, effective in the fourth quarter of fiscal 2020. As of January 29, 2022, the Company was in compliance
with this amended covenant.
In October 2020, the Company repaid in full the $800 million it borrowed under the unsecured revolving credit facility. The
Company had no borrowings or standby letters of credit outstanding under this facility as of January 29, 2022, and the
$800 million credit facility remained in place and available.
55
In May 2020, the Company also entered into an additional $500 million 364-day senior revolving credit facility which was
scheduled to expire in April 2021. In October 2020, the Company terminated this senior revolving credit facility. The Company
had no borrowings under that credit facility at any time.
In February 2022 (the “Effective Date”), the Company entered into a new, $1.3 billion senior unsecured revolving Credit
Agreement (the “2022 Credit Facility”). The 2022 Credit Facility replaces the Company’s previous $800 million unsecured
revolving credit facility, which was entered into in July 2019 (the “Prior Credit Facility”). The 2022 Credit Facility expires in
February 2027, and may be extended, at the Company's option, for up to two additional one year periods, subject to customary
conditions. The new facility contains a $300 million sublimit for issuance of standby letters of credit. It also contains an option
allowing the Company to increase the size of its credit facility by up to an additional $700 million, with the agreement of the
committing lenders. The interest rate on borrowings under the 2022 Credit Facility is a term rate based on the Secured Overnight
Financing Rate (“Term SOFR”) (or an alternate benchmark rate, if Term SOFR is no longer available) plus an applicable margin,
and is payable quarterly and upon maturity. The 2022 Credit Facility is subject to a quarterly Consolidated Adjusted Debt to
Consolidated EBITDAR financial leverage ratio covenant, effective the first quarter of fiscal 2022.
On the Effective Date, the Prior Credit Facility was terminated and was replaced by the new 2022 Credit Facility.
Standby letters of credit and collateral trust. The Company uses standby letters of credit outside of its revolving credit facility
in addition to a funded trust to collateralize some of its insurance obligations. The Company has also used standby letters of
credit outside of its revolving credit facility to collateralize some of its trade payable obligations. As of January 29, 2022 and
January 30, 2021, the Company had $3.3 million and $15.3 million, respectively, in standby letters of credit and $56.7 million and
$56.1 million, respectively, in a collateral trust. The standby letters of credit are collateralized by restricted cash and the collateral
trust consists of restricted cash, cash equivalents, and investments.
Trade letters of credit. The Company had $19.3 million and $16.3 million in trade letters of credit outstanding at January 29,
2022 and January 30, 2021, respectively.
Note E: Leases
The Company currently leases all but two of its store locations with original, non-cancelable terms that in general range from
three years to ten years. Store leases typically contain provisions for three to four renewal options of five years each. The
exercise of lease renewal options is at the sole discretion of the Company. Most store leases also provide for minimum annual
rentals and for payment of variable lease costs. In addition, some store leases also have provisions for additional rent based on
a percentage of sales (“percentage rent”) and others include rental payments adjusted periodically for inflation. The Company’s
lease agreements do not contain any material residual guarantees or material restrictive covenants. The Company does not
have any financing leases.
The Company leases 15 distribution/warehouse facilities with expiration dates ranging from 2023 to 2029, and all contain
renewal provisions. The Company also leases office space for its Los Angeles and Boston buying offices. The lease term for
these facilities expire in 2022 and 2024, respectively. The Los Angeles buying office facility contains renewal provisions. In
addition, the Company has a ground lease related to its New York buying office.
The following table presents net operating lease cost included in the Consolidated Statement of Earnings for fiscal 2021, 2020,
and 2019:
($000)
Operating lease cost1
Variable lease costs2
Net lease cost3
2021
687,187
194,112
881,299
$
$
2020
669,339
172,036
841,375
$
$
$
$
2019
639,545
174,438
813,983
1 Net of sublease income which was immaterial.
2 Includes property and rent taxes, insurance, common area maintenance, percentage rent, and rent abatements negotiated due
to the COVID-19 pandemic.
3 Excludes short-term lease costs which were immaterial.
56
The maturity of operating lease liabilities, including the ground lease related to the New York buying office as of January 29,
2022, are as follows:
($000)
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less: interest
Present value of lease liabilities
Less: current operating lease liabilities
Non-current operating lease liabilities
Operating Leases1
658,639
671,450
560,052
455,883
340,980
1,462,855
4,149,859
980,045
3,169,814
630,517
2,539,297
$
$
$
$
1 Operating leases exclude $253.2 million of minimum lease payments for leases signed that have not yet commenced.
The weighted-average remaining lease term and the weighted-average discount rate for operating leases as of January 29, 2022
and January 30, 2021 are as follows:
Weighted-average remaining lease term (years):
Including the long-term ground lease related to the New York buying office
Excluding the long-term ground lease related to the New York buying office
Weighted-average discount rate:
Including the long-term ground lease related to the New York buying office
Excluding the long-term ground lease related to the New York buying office
2021
2020
10.2
5.6
3.2%
2.8%
10.4
5.9
3.4%
3.0%
The following table presents cash paid for amounts included in the measurement of operating lease liabilities and operating
lease assets obtained in exchange for new operating lease liabilities (includes new leases and remeasurements or modifications
of existing leases) for fiscal 2021, 2020, and 2019:
($000)
2021
Cash paid for amounts included in the measurement of operating lease liabilities
Operating lease assets obtained in exchange for new operating lease liabilities1
$ 745,110 $
545,401 $
$
1 Includes new leases and remeasurements or modifications of existing leases.
2020
554,620
610,552
2019
$ 608,565
$ 739,326
57
Note F: Taxes on Earnings
The provision for income taxes consisted of the following:
($000)
Current
Federal
State
Deferred
Federal
State
Total
2021
2020
2019
$
442,152 $
44,164
$
414,823
78,024
520,176
4,563
56,528
48,727
471,351
21,103
(5,328)
15,775
(27,487)
(325)
(27,812)
28,244
3,765
32,009
$
535,951 $
20,915
$
503,360
The provision for taxes for financial reporting purposes is different from the tax provision computed by applying the statutory
federal income tax rate. The differences are reconciled below:
Federal income taxes at the statutory rate
State income taxes (net of federal benefit)
Hiring tax credits
Tax audit settlements
Total
2021
21.0%
3.2%
(0.5)%
— %
23.7%
2020
21.0%
4.1%
(5.4)%
— %
19.7%
2019
21.0%
3.2%
(0.4)%
(0.5)%
23.3%
Certain items in the prior years have been reclassified to conform to current year’s presentation.
In fiscal 2019, the Company resolved uncertain tax positions with a state tax authority. As a result, the Company recognized a
tax benefit of approximately $10.0 million in the Consolidated Statement of Earnings.
58
The components of deferred taxes at January 29, 2022 and January 30, 2021 are as follows:
($000)
Deferred Tax Assets
Accrued liabilities
Deferred compensation
Stock-based compensation
State taxes and credits
Employee benefits
Operating lease liabilities
Other
Gross Deferred Tax Assets
Less: Valuation allowance
Deferred Tax Assets
Deferred Tax Liabilities
Depreciation
Merchandise inventory
Supplies
Operating lease assets
Other
Deferred Tax Liabilities
Net Deferred Tax Liabilities
$
2021
2020
34,211
38,685
45,840
18,501
28,430
801,186
9,632
976,485
(1,931)
974,554
$
30,415
34,545
39,302
10,926
37,779
829,946
6,239
989,152
(4,089)
985,063
(293,065)
(27,699)
(12,280)
(764,557)
(14,595)
(285,161)
(25,434)
(11,589)
(775,183)
(9,563)
(1,112,196)
(1,106,930)
$
(137,642)
$
(121,867)
At the end of fiscal 2021 and 2020, the Company’s state tax credit carryforwards for income tax purposes were approximately
$12.0 million and $13.7 million, respectively. The state tax credit carryforwards will begin to expire in fiscal 2022. The Company
has provided a valuation allowance of $1.9 million as of the end of fiscal 2021 for deferred tax assets related to state tax credits
that are not expected to be realized.
The changes in amounts of unrecognized tax benefits (gross of federal tax benefits and excluding interest and penalties) at fiscal
2021, 2020, and 2019 are as follows:
($000)
Unrecognized tax benefits - beginning of year
Gross increases:
Tax positions in current period
Tax positions in prior period
Gross decreases:
Tax positions in prior periods
Lapse of statutes of limitations
Settlements
2021
2020
2019
$
60,240 $
59,887 $
65,787
10,381
1,494
(1,795)
(9,757)
(16)
12,310
2,860
(2,624)
(9,861)
(2,332)
13,864
2,672
(9,559)
(8,653)
(4,224)
Unrecognized tax benefits - end of year
$
60,547 $
60,240 $
59,887
At the end of fiscal 2021, 2020, and 2019, the reserves for unrecognized tax benefits were $68.1 million, $67.9 million, and
$67.1 million inclusive of $7.6 million, $7.7 million, and $7.2 million of related reserves for interest and penalties, respectively. In
fiscal 2019, the Company resolved uncertain tax positions with a state tax authority. As a result, the Company recognized a
decrease in reserves for tax positions in prior periods of $16.2 million, inclusive of $6.6 million of related reserves for interest and
penalties. The Company accounts for interest and penalties related to unrecognized tax benefits as a part of its provision for
taxes on earnings. If recognized, $54.6 million would impact the Company’s effective tax rate. The difference between the total
59
amount of unrecognized tax benefits and the amounts that would impact the effective tax rate relates to amounts attributable to
deferred tax assets and liabilities. These amounts are net of federal and state income taxes.
It is reasonably possible that certain federal and state tax matters may be concluded or statutes of limitations may lapse during
the next twelve months. Accordingly, the total amount of unrecognized tax benefits may decrease by up to $10.1 million.
The Company is open to audit by the Internal Revenue Service under the statute of limitations for fiscal years 2018 through
2021. The Company’s state income tax returns are generally open to audit under the various statutes of limitations for fiscal
years 2017 through 2021. Certain state tax returns are currently under audit by various tax authorities. The Company does not
expect the results of these audits to have a material impact on the consolidated financial statements.
Note G: Employee Benefit Plans
The Company has a defined contribution plan that is available to certain employees. Under the plan, employee and Company
contributions and accumulated plan earnings qualify for favorable tax treatment under Section 401(k) of the Internal Revenue
Code. This plan permits employees to make contributions up to the maximum limits allowable under the Internal Revenue Code.
The Company matches up to 4% of the employee’s salary up to the plan limits. Company matching contributions to the 401(k)
plan were $23.6 million, $20.8 million, and $19.2 million in fiscal 2021, 2020, and 2019, respectively.
The Company also makes available to management a Non-qualified Deferred Compensation Plan which allows management to
make payroll contributions on a pre-tax basis in addition to the 401(k) plan. Other long-term assets include $163.9 million and
$159.1 million at January 29, 2022 and January 30, 2021, respectively, of long-term plan investments, at market value, set aside
or designated for the Non-qualified Deferred Compensation Plan (See Note B). Plan investments are designated by the
participants, and investment returns are not guaranteed by the Company. The Company has a corresponding liability to
participants of $163.9 million and $159.1 million at January 29, 2022 and January 30, 2021, respectively, included in Other
long-term liabilities in the Consolidated Balance Sheets.
In addition, the Company has certain individuals who receive or will receive post-employment medical benefits. The estimated
liability for these benefits of $15.5 million and $8.9 million is included in Accrued expenses and other in the accompanying
Consolidated Balance Sheets as of January 29, 2022 and January 30, 2021, respectively.
Note H: Stockholders’ Equity
Common stock. In March 2019, the Company’s Board of Directors approved a two-year $2.55 billion stock repurchase program
through fiscal 2020. Due to the economic uncertainty stemming from the severe impact of the COVID-19 pandemic, the
Company suspended its stock repurchase program as of March 2020, at which time the Company had repurchased
$1.407 billion under the $2.55 billion stock repurchase program.
In May 2021, the Company's Board of Directors authorized a program to repurchase up to $1.5 billion of the Company's common
stock through fiscal 2022, with plans to buy back $650 million in fiscal 2021 and $850 million in fiscal 2022.
In March 2022, the Company's Board of Directors approved a new two-year program to repurchase up to $1.9 billion of the
Company's common stock through fiscal 2023. This new program replaces the previous $1.5 billion stock repurchase program,
effective at the end of fiscal 2021 (at which time the Company had repurchased $650 million under the $1.5 billion program).
The following table summarizes the Company’s stock repurchase activity in fiscal 2021, 2020, and 2019:
Shares repurchased
(in millions)
Average repurchase
price
Repurchased
(in millions)
5.7
1.2
12.3
$114.29
$113.10
$103.99
$650
$132
$1,275
Fiscal Year
2021
2020
2019
60
Preferred stock. The Company has 4.0 million shares of preferred stock authorized, with a par value of $.01 per share. No
preferred stock is issued or outstanding.
Dividends. On March 1, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.310 per common
share, payable on March 31, 2022. The Company's Board of Directors declared cash dividends of $0.285 per common share in
March, May, August, and November 2021. The Company’s Board of Directors declared a cash dividend of $0.285 per common
share in March 2020. In May 2020, the Company temporarily suspended its quarterly dividends, due to the economic uncertainty
stemming from the COVID-19 pandemic. The Company’s Board of Directors declared cash dividends of $0.255 per common
share in March, May, August, and November 2019.
2017 Equity Incentive Plan. On May 17, 2017, the Company’s stockholders approved the Ross Stores, Inc. 2017 Equity
Incentive Plan (the “2017 Plan”) which replaced the Company’s 2008 Equity Incentive Plan (“Predecessor Plan”). The 2017 Plan,
which was authorized to issue a maximum of 12.0 million shares, was immediately effective upon approval and no further
awards were granted under the Predecessor Plan, which was terminated.
The 2017 Plan has an initial share reserve of 12.0 million shares of the Company’s common stock which can be increased by a
maximum of 5.5 million shares from certain expired, withheld, or forfeited shares from the 2017 Plan or the Predecessor Plan.
The 2017 Plan provides for various types of incentive awards, which may potentially include the grant of stock options, stock
appreciation rights, restricted stock purchase rights, restricted stock bonuses, restricted stock units, performance shares,
performance units, and deferred compensation awards. As of January 29, 2022, there were 9.3 million shares available for grant
under the 2017 Plan.
A summary of restricted stock and performance share award activity for fiscal 2021 is presented below:
Unvested at January 30, 2021
Awarded
Released
Forfeited
Unvested at January 29, 2022
Number of
shares (000)
Weighted-average
grant date
fair value
4,230
1,521
(1,229)
(144)
4,378
$ 85.15
120.03
75.76
96.14
$ 99.58
The market value of shares of restricted stock and performance shares at the date of grant is amortized to expense over the
vesting period of generally three years to five years. The unamortized compensation expense at January 29, 2022 and
January 30, 2021 was $181.8 million and $161.3 million, respectively, which is expected to be recognized over a
weighted-average remaining period of 1.8 years and 1.9 years, respectively. Intrinsic value for restricted stock, defined as the
closing market value on the last business day of fiscal year 2021 (or $95.77), was $419.3 million. A total of 9.3 million, 10.2
million, and 10.7 million shares were available for new restricted stock awards at the end of fiscal 2021, 2020, and 2019,
respectively. During fiscal 2021, 2020, and 2019, shares purchased by the Company for tax withholding totaled 0.5 million,
0.5 million, and 0.6 million shares, respectively, and are considered treasury shares which are available for reissuance. As of
January 29, 2022 and January 30, 2021, the Company held 14.8 million and 14.3 million shares of treasury stock, respectively.
Performance share awards. The Company has a performance share award program for senior executives. A performance
share award represents a right to receive shares of restricted stock on a specified settlement date based on the Company’s
attainment of a performance goal during the performance period, which is the Company’s fiscal year. If attained, the restricted
stock then vests over a service period, generally two years to three years from the date the performance award was granted.
The Company issued approximately 626,000, 380,000, and 414,000 shares in settlement of the fiscal 2021, 2020, and 2019
awards.
61
Employee Stock Purchase Plan. Under the Employee Stock Purchase Plan (“ESPP”), eligible employees participating in the
quarterly offering period can choose to have up to the lesser of 10% of their annual base earnings or the IRS annual share
purchase limit of $25,000 in aggregate market value to purchase the Company’s common stock. The purchase price of the stock
is 85% of the closing market price on the date of purchase. Purchases occur on a quarterly basis (on the last trading day of each
calendar quarter). The Company recognizes expense for ESPP purchase rights equal to the value of the 15% discount given on
the purchase date.
During fiscal 2021, 2020, and 2019, employees purchased approximately 0.3 million, 0.3 million, and 0.3 million shares,
respectively, of the Company’s common stock under the plan at weighted-average per share prices of $99.07, $81.45, and
$88.45, respectively. Through January 29, 2022, approximately 40.7 million shares had been issued under this plan and
4.2 million shares remained available for future issuance.
Note I: Related Party Transactions
The Company has a consulting agreement with Norman Ferber, its former Chairman Emeritus of the Board of Directors, under
which the Company paid him $1.8 million, $2.1 million, and $2.1 million in fiscal 2021, 2020, and 2019, respectively. In addition,
the agreement provides for administrative support and health and other benefits for him and his dependents, which totaled
approximately $0.4 million, $0.4 million, and $0.4 million in fiscal 2021, 2020, and 2019, respectively, along with amounts to
cover premiums through May 2022 on a life insurance policy with a death benefit of $2.0 million. Mr. Ferber’s current consulting
agreement paid him an annual consulting fee of $2.3 million from May 31, 2020 through May 31, 2021 and pays him $1.6 million
from June 1, 2021 through May 31, 2022. On termination of Mr. Ferber’s consultancy with the Company, the Company will pay
Mr. Ferber $75,000 per year for a period of 10 years.
Robert Ferber, the son of Norman Ferber, is a Vice President, Divisional Merchandise Manager with the Company. The
Company paid Robert Ferber compensation including salary and bonus of approximately $254,000, $248,000, and $209,000 in
fiscal 2021, 2020, and 2019, respectively.
Note J: Litigation, Claims, and Assessments
Like many retailers, the Company has been named in class/representative action lawsuits, primarily in California, alleging
violations of wage and hour laws and consumer protection laws. Class/representative action litigation remains pending as of
January 29, 2022.
The Company is also party to various other legal and regulatory proceedings arising in the normal course of business. Actions
filed against the Company may include commercial, product and product safety, consumer, intellectual property, environmental,
and labor and employment-related claims, including lawsuits in which private plaintiffs or governmental agencies allege that the
Company violated federal, state, and/or local laws. Actions against the Company are in various procedural stages. Many of these
proceedings raise factual and legal issues and are subject to uncertainties.
In the opinion of management, the resolution of pending class/representative action litigation and other currently pending legal
and regulatory proceedings will not have a material adverse effect on the Company’s financial condition, results of operations, or
cash flows.
62
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Ross Stores, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Ross Stores, Inc. and subsidiaries (the “Company”) as of
January 29, 2022 and January 30, 2021, the related consolidated statements of earnings, comprehensive income, stockholders’
equity, and cash flows for each of the fiscal years ended January 29, 2022, January 30, 2021, and February 1, 2020 and the
related notes (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over
financial reporting as of January 29, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of January 29, 2022 and January 30, 2021, and the results of its operations and its cash flows for each of the fiscal
years ended January 29, 2022, January 30, 2021, and February 1, 2020, in conformity with accounting principles generally
accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of January 29, 2022, based on criteria established in Internal Control - Integrated
Framework (2013) issued by COSO.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
“Management’s Annual Report on Internal Control over Financial Reporting.” Our responsibility is to express an opinion on the
Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.
63
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
Critical audit matters are matters arising from the current-period audit of the financial statements that were communicated or
required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the
financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are
no critical audit matters.
/s/DELOITTE & TOUCHE LLP
San Francisco, California
March 29, 2022
We have served as the Company’s auditor since 1982.
64
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the
effectiveness of our “disclosure controls and procedures,” (as defined in Exchange Act Rule 13a-15(e)), as of the end of the
period covered by this report. Our disclosure controls and procedures are designed to provide reasonable assurance of
achieving their objectives. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective at that reasonable assurance level as of the end of the period covered by this
report.
It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not
absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part
upon certain assumptions about the likelihood of future events.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in
Exchange Act Rule 13a-15(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance
with generally accepted accounting principles.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial
Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework
established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as set forth in Internal Control
— Integrated Framework (2013). Based on our evaluation under the framework in Internal Control — Integrated Framework
(2013), our management concluded that our internal control over financial reporting was effective as of January 29, 2022.
Our internal control over financial reporting as of January 29, 2022 has also been audited by Deloitte & Touche LLP, an
independent registered public accounting firm, and their opinion as to the effectiveness of our internal control over financial
reporting is stated in their report, dated March 29, 2022, which is included in Item 8 in this Annual Report on Form 10-K.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be
noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute,
assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon
certain assumptions about the likelihood of future events. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Quarterly Evaluation of Changes in Internal Control Over Financial Reporting
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, also conducted an evaluation
of our internal control over financial reporting to determine whether any change occurred during the fourth fiscal quarter of 2021
that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on that
evaluation, our management concluded that there was no such change during the fourth fiscal quarter.
ITEM 9B. OTHER INFORMATION
None
65
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information required by Item 401 of Regulation S-K is incorporated herein by reference to the sections entitled “Executive
Officers of the Registrant” at the end of Part I of this report; and to the sections of the Ross Stores, Inc. Proxy Statement for the
Annual Meeting of Stockholders to be held on Wednesday, May 18, 2022 (the “Proxy Statement”) entitled “Information Regarding
Nominees and Incumbent Directors.” Information required by Item 405 of Regulation S-K is incorporated by reference to the
Proxy Statement under the section titled “Section 16(a) Beneficial Ownership Reporting Compliance.” Since our last Annual
Report on Form 10-K, we have not made any material changes to the procedures by which our stockholders may recommend
nominees to the Board of Directors. Information required by Item 407(d)(4) and (d)(5) of Regulation S-K is incorporated by
reference to the Proxy Statement under the section entitled “Information Regarding Nominees and Incumbent Directors” under
the caption “Audit Committee.”
Our Board of Directors has adopted a Code of Ethics for Senior Financial Officers that applies to our Chief Executive Officer and
our Chief Financial Officer (who is also our principal accounting officer), along with other of our senior operating and financial
executives. This Code of Ethics is posted on our corporate website (www.rossstores.com) under Corporate Governance in the
Investors Section. We intend to satisfy the disclosure requirements of Item 5.05 of Form 8-K regarding any future amendments
to, or waivers from, our Code of Ethics for Senior Financial Officers by posting any changed version on the same corporate
website.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 402 of Regulation S-K is incorporated herein by reference to the sections of the Proxy
Statement entitled “Compensation of Directors” and “Executive Compensation” under the captions “Compensation Discussion
and Analysis,” “Summary Compensation Table,” “All Other Compensation,” “Perquisites,” “Discussion of Summary
Compensation,” “Grants of Plan-Based Awards During Fiscal Year,” “Outstanding Equity Awards at Fiscal Year-End,” “Option
Exercises and Stock Vested,” “Non-Qualified Deferred Compensation,” and “Potential Payments Upon Termination or Change in
Control.”
The information required by Items 407(e)(4) and (e)(5) of Regulation S-K are incorporated herein by reference to the sections of
the Proxy Statement entitled “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee
Report.”
66
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Equity compensation plan information. The following table summarizes the equity compensation plans under which the
Company’s common stock may be issued as of January 29, 2022:
Shares in (000s)
Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders
Total
(a)
Number of securities
to be issued upon
exercise of
outstanding options
and rights
(b)
Weighted-average
exercise price per
share of outstanding
options and rights
(c)
Number of securities
remaining available for
future issuance
(excluding securities
reflected in column (a))1
625 ²
—
625
—
—
—
13,523 3
—
13,523
1 After approval by stockholders of the 2017 Equity Incentive Plan in May 2017, any shares remaining available for grant in the
share reserves of the 2008 Equity Incentive Plan were automatically canceled.
2 Securities include shares underlying outstanding performance share awards where the performance measurement has occurred
but that remain unsettled and unissued as of January 29, 2022. The weighted-average exercise price in column (b) does not
take these awards into account.
3 Includes 4.2 million shares reserved for issuance under the Employee Stock Purchase Plan and 9.3 million shares reserved for
issuance under the 2017 Equity Incentive Plan.
The information required by Item 403 of Regulation S-K is incorporated herein by reference to the section of the Proxy Statement
entitled “Stock Ownership of Certain Beneficial Owners and Management.”
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by Items 404 and 407(a) of Regulation S-K is incorporated herein by reference to the section of the
Proxy Statement entitled “Information Regarding Nominees and Incumbent Directors” including the captions “Audit Committee,”
“Compensation Committee,” and “Nominating and Corporate Governance Committee,” and the section of the Proxy Statement
entitled “Certain Transactions.”
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information concerning principal accountant fees and services will appear in the Proxy Statement in the Ross Stores, Inc. Board
of Directors Audit Committee Report under the caption “Summary of Audit, Audit-Related, Tax and All Other Fees.” Such
information is incorporated herein by reference.
67
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) The following consolidated financial statements, schedules, and exhibits are filed as part of this report or are incorporated
herein as indicated:
1.
List of Consolidated Financial Statements.
The following consolidated financial statements are included herein under Item 8:
Consolidated Statements of Earnings for the years ended January 29, 2022, January 30, 2021, and
February 1, 2020.
Consolidated Statements of Comprehensive Income for the years ended January 29, 2022,
January 30, 2021, and February 1, 2020.
Consolidated Balance Sheets at January 29, 2022 and January 30, 2021.
Consolidated Statements of Stockholders’ Equity for the years ended January 29, 2022, January 30,
2021, and February 1, 2020.
Consolidated Statements of Cash Flows for the years ended January 29, 2022, January 30, 2021,
and February 1, 2020.
Notes to Consolidated Financial Statements.
Report of Independent Registered Public Accounting Firm (PCAOB ID: 34).
2.
List of Consolidated Financial Statement Schedules.
Schedules are omitted because they are not required, not applicable, or such information is
included in the consolidated financial statements or notes thereto which are included in this Report.
3.
List of Exhibits (in accordance with Item 601 of Regulation S-K).
Incorporated herein by reference to the list of Exhibits contained in the Exhibit Index within this
Report.
68
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 29, 2022
ROSS STORES, INC.
(Registrant)
By: /s/Barbara Rentler
Barbara Rentler
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/Barbara Rentler
Barbara Rentler
/s/Adam Orvos
Adam Orvos
/s/K. Gunnar Bjorklund
K. Gunnar Bjorklund
/s/Michael J. Bush
Michael J. Bush
/s/Sharon D. Garrett
Sharon D. Garrett
/s/Michael J. Hartshorn
Michael J. Hartshorn
/s/Stephen D. Milligan
Stephen D. Milligan
/s/Patricia H. Mueller
Patricia H. Mueller
/s/George P. Orban
George P. Orban
/s/Gregory L. Quesnel
Gregory L. Quesnel
/s/Larree M. Renda
Larree M. Renda
/s/Doniel N. Sutton
Doniel N. Sutton
Chief Executive Officer, Director
March 29, 2022
Executive Vice President and Chief Financial
Officer, and Principal Accounting Officer
Director
Director
Director
Group President and Chief Operating Officer,
Director
Director
Director
Director
Director
Director
Director
March 29, 2022
March 29, 2022
March 29, 2022
March 29, 2022
March 29, 2022
March 29, 2022
March 29, 2022
March 29, 2022
March 29, 2022
March 29, 2022
March 29, 2022
69
INDEX TO EXHIBITS
Exhibit
Number Exhibit
3.1
3.2
4.1
4.2
Certificate of Incorporation of Ross Stores, Inc. as amended (Corrected First Restated Certificate of
Incorporation, dated March 17, 1999, together with amendments thereto through Amendment of Certificate of
Incorporation dated May 29, 2015) incorporated by reference to Exhibit 3.1 to the Form 10-Q filed by Ross
Stores, Inc. for its quarter ended August 1, 2015.
Amended and Restated Bylaws of Ross Stores, Inc. (as amended March 8, 2017), incorporated by reference to
Exhibit 3.2 to the Form 10-K filed by Ross Stores, Inc. for its fiscal year ended January 28, 2017.
Description of Common Stock of Ross Stores, Inc., incorporated by reference to Exhibit 4.5 to the Form 10-K
filed by Ross Stores, Inc. for its year ended February 1, 2020.
Indenture, dated as of September 18, 2014, between Ross Stores, Inc. and U.S. Bank National Association,
incorporated by reference to Exhibit 4.1 to the Form 8-K filed by Ross Stores on September 18, 2014.
4.3 Officers’ Certificate, dated as of September 18, 2014, establishing the terms and form of the Notes,
4.4
incorporated by reference to Exhibit 4.2 to the Form 8-K filed by Ross Stores on September 18, 2014.
Form of the 3.375% Senior Notes Due 2024, included in and incorporated by reference to Exhibit 4.2 to the
Form 8-K filed by Ross Stores on September 18, 2014.
4.6
4.7
4.5 Officers’ Certificate, dated as of April 6, 2020, establishing the aggregate amounts, terms and form of the
Notes, incorporated by reference to Exhibit 4.2 to the Form 8-K filed by Ross Stores, Inc. on April 7, 2020.
Form of 4.600% Senior Notes Due 2025, included in and incorporated by reference to Exhibit 4.2 to the Form
8-K filed by Ross Stores, Inc. on April 7, 2020.
Form of 4.700% Senior Notes Due 2027, included in and incorporated by reference to Exhibit 4.2 to the Form
8-K filed by Ross Stores, Inc. on April 7, 2020.
Form of 4.800% Senior Notes Due 2030, included in and incorporated by reference to Exhibit 4.2 to the Form
8-K filed by Ross Stores, Inc. on April 7, 2020.
Form of 5.450% Senior Notes Due 2050, included in and incorporated by reference to Exhibit 4.2 to the Form
8-K filed by Ross Stores, Inc. on April 7, 2020.
4.9
4.8
4.10 Officers’ Certificate, dated as of October 21, 2020 establishing the aggregate amounts, terms and forms of the
4.11
4.12
10.1
10.2
10.3
10.4
Notes., incorporated by reference to Exhibit 4.2 to the Form 8-K filed by Ross Stores, Inc. on October 22, 2020.
Form of the 0.875% Senior Notes Due 2026, included in and incorporated by reference to Exhibit 4.2 to the
Form 8-K filed by Ross Stores, Inc. on October 22, 2020.
Form of the 1.875% Senior Notes Due 2031, included in and incorporated by reference to Exhibit 4.2 to the
Form 8-K filed by Ross Stores, Inc. on October 22, 2020.
Amended and Restated Credit Agreement dated July 1, 2019 among Ross Stores, Inc., various lenders and
Bank of America, N.A., as Administrative Agent, incorporated by reference to Exhibit 10.3 to the Form 10-Q filed
by Ross Stores, Inc. for its quarter ended August 3, 2019.
First Amendment to Amended and Restated Credit Agreement dated as of May 1, 2020 among Ross Stores,
Inc., various lenders, and Bank of America, N.A., as Administrative Agent, incorporated by reference to Exhibit
10.2 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended May 2, 2020.
Underwriting Agreement, dated as of April 2, 2020, by and among Ross Stores, Inc., BofA Securities, Inc. and
J.P. Morgan Securities LLC, as representatives of the underwriters named therein, incorporated by reference to
Exhibit 1.1 to the Form 8-K filed by Ross Stores on April 7, 2020.
Underwriting Agreement, dated as of October 19, 2020, by and among Ross Stores, Inc., J.P. Morgan
Securities LLC and BofA Securities, Inc., as representatives of the several underwriters named therein,
incorporated by reference to Exhibit 1.1 to the Form 8-K filed by Ross Stores on October 22, 2020.
70
MANAGEMENT CONTRACTS AND COMPENSATORY PLANS (EXHIBITS 10.5 - 10.39)
10.5
10.6
10.7
Form of Indemnity Agreement for Directors and Executive Officers, incorporated by reference to Exhibit 10.26
to the Form 10-K filed by Ross Stores, Inc. for its fiscal year ended February 2, 2013.
Third Amended and Restated Ross Stores, Inc. Non-Qualified Deferred Compensation Plan effective
December 31, 2008 (as amended effective January 1, 2015 and October 1, 2017), incorporated by reference to
Exhibit 10.3 filed by Ross Stores, Inc. for its fiscal year ended February 3, 2018.
Second Amended and Restated Ross Stores, Inc. Incentive Compensation Plan, incorporated by reference to
Exhibit 10.2 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended October 31, 2020.
10.8 Ross Stores, Inc. 2008 Equity Incentive Plan (as amended through May 21, 2014), incorporated by reference to
Exhibit 10.18 to the Form 10-K filed by Ross Stores, Inc. for its fiscal year ended January 30, 2016.
10.9 Ross Stores, Inc. 2017 Equity Incentive Plan, incorporated by reference to Exhibit 99 to the Registration
10.10
10.11
10.12
10.13
10.14
10.15
10.16
Statement on Form S-8 filed by Ross Stores, Inc. on May 17, 2017 (Registration No. 333-218052).
Amended Ross Stores, Inc. 2017 Equity Incentive Plan, incorporated by reference to Exhibit 10.3 to the Form
10-Q filed by Ross Stores, Inc. for its quarter ended October 31, 2020.
Form of Restricted Stock Agreement, incorporated by reference to Exhibit 10.2 to the Form 10-Q filed by Ross
Stores, Inc. for its quarter ended May 3, 2014.
Form of Restricted Stock Agreement, incorporated by reference to Exhibit 10.4 to the Form 10-Q filed by Ross
Stores, Inc. for its quarter ended July 29, 2017.
Form of Restricted Stock Agreement, incorporated by reference to Exhibit 10.1 to the Form 10-Q filed by Ross
Stores, Inc. for its quarter ended May 5, 2018.
Form of Restricted Stock Agreement for Nonemployee Director, incorporated by reference to Exhibit 10.5 to the
Form 10-Q filed by Ross Stores, Inc. for its quarter ended July 29, 2017.
Form of Performance Share Agreement, incorporated by reference to Exhibit 10.6 to the Form 10-Q filed by
Ross Stores, Inc. for its quarter ended July 29, 2017.
Form of Performance Shares Grant Agreement, incorporated by reference to Exhibit 10.2 to the Form 10-Q
filed by Ross Stores, Inc. for its quarter ended May 5, 2018.
10.17 Ross Stores, Inc. Notice of Grant of Performance Shares, incorporated by reference to Exhibit 10.1 to the
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
Form 10-Q filed by Ross Stores, Inc. for its quarter ended July 31, 2021.
Forms of Executive Employment Agreement for Executive Officers, incorporated by reference to Exhibit 10.3 to
the Form 10-Q filed by Ross Stores, Inc. for its quarter ended May 5, 2018.
Forms of Executive Employment Agreement for Executive Officers, incorporated by reference to Exhibit 10.1 to
the Form 10-Q filed by Ross Stores, Inc. for its quarter ended May 4, 2019.
Form of Executive Employment Agreement for Executive Officers (CA), incorporated by reference to Exhibit
10.4 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended May 2, 2020.
Form of Executive Employment Agreement for Executive Officers (NON-CA), incorporated by reference to
Exhibit 10.5 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended May 2, 2020.
Form of Executive Employment Agreement for Executive Officers (CA), incorporated by reference to Exhibit
10.1 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended May 1, 2021.
Form of Executive Employment Agreement for Executive Officers (NON-CA), incorporated by reference to
Exhibit 10.2 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended May 1, 2021.
Employment Agreement effective June 1, 2012 between Michael Balmuth and Ross Stores, Inc., incorporated
by reference to Exhibit 10.1 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended October 27, 2012.
First Amendment to Employment Agreement between Michael Balmuth and Ross Stores, Inc. dated March 15,
2015, incorporated by reference to Exhibit 10.2 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended
August 1, 2015.
Second Amendment to Employment Agreement effective January 1, 2016 between Michael Balmuth and Ross
Stores, Inc., incorporated by reference to Exhibit 10.49 to the Form 10-K filed by Ross Stores, Inc. for its fiscal
year ended January 30, 2016.
Third Amendment to the Employment Agreement effective May 18, 2016 between Michael Balmuth and Ross
Stores, Inc., incorporated by reference to Exhibit 10.2 to the Form 10-Q filed by Ross Stores, Inc. for its quarter
ended July 30, 2016.
Fourth Amendment to the Employment Agreement effective April 15, 2017 between Michael Balmuth and Ross
Stores, Inc., incorporated by reference to Exhibit 10.4 to the Form 10-Q filed by Ross Stores, Inc. for its quarter
ended April 29, 2017.
71
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
Fifth Amendment to the Employment Agreement effective July 3, 2018 between Michael Balmuth and Ross
Stores, Inc., incorporated by reference to Exhibit 10.1 to the Form 10-Q filed by Ross Stores, Inc. for its quarter
ended August 4, 2018.
Sixth Amendment to the Employment Agreement effective November 23, 2018 between Michael Balmuth and
Ross Stores, Inc., incorporated by reference to Exhibit 10.35 to the Form 10-K filed by Ross Stores, Inc. for its
fiscal year ended February 2, 2019.
Seventh Amendment to the Employment Agreement effective July 13, 2019 between Michael Balmuth and
Ross Stores, Inc., incorporated by reference to Exhibit 10.1 to the Form 10-Q filed by Ross Stores, Inc. for its
quarter ended August 3, 2019.
Eighth Amendment to the Employment Agreement effective September 24, 2020 between Michael Balmuth and
Ross Stores, Inc., incorporated by reference to Exhibit 10.5 to the Form 10-Q filed by Ross Stores, Inc. for its
quarter ended October 31, 2020.
Employment Agreement effective March 16, 2019 between Barbara Rentler and Ross Stores, Inc., incorporated
by reference to Exhibit 10.2 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended May 4, 2019.
Employment Agreement effective March 16, 2021 between Barbara Rentler and Ross Stores, Inc., incorporated
by reference to Exhibit 10.3 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended May 1, 2021.
Employment Agreement effective August 16, 2019 between Michael Hartshorn and Ross Stores, Inc.,
incorporated by reference to Exhibit 10.1 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended
November 2, 2019.
Employment Agreement effective March 16, 2020 between Brian Morrow and Ross Stores, Inc., incorporated
by reference to Exhibit 10.11 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended May 2, 2020.
Employment Agreement effective August 16, 2019 between Michael Kobayashi and Ross Stores, Inc.,
incorporated by reference to Exhibit 10.13 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended May
2, 2020.
Employment Agreement effective March 16, 2021 between Travis Marquette and Ross Stores, Inc,
incorporated by reference to Exhibit 10.4 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended May
1, 2021.
Employment Agreement effective October 1, 2021 between Adam Orvos and Ross Stores, Inc., incorporated by
reference to Exhibit 10.1 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended October 30, 2021.
Subsidiaries.
21
23 Consent of Independent Registered Public Accounting Firm.
31.1 Certification of Chief Executive Officer Pursuant to Sarbanes-Oxley Act Section 302(a).
31.2 Certification of Chief Financial Officer Pursuant to Sarbanes-Oxley Act Section 302(a).
32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
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72
EXHIBIT 21
SUBSIDIARIES & AFFILIATES
Certain subsidiaries and affiliates of the Registrant and their subsidiaries are listed below. The names of certain subsidiaries,
which considered in the aggregate would not constitute a significant subsidiary, have been omitted.
Subsidiary Name
Ross Procurement Inc.
Ross Merchandising Inc.
Ross Dress For Less, Inc.
Retail Assurance Group, Inc.
Ross Distribution Company, LLC
EXHIBIT 23
Domiciled
Delaware
Delaware
Virginia
Hawaii
Delaware
Date of Incorporation
November 22, 2004
January 12, 2004
January 14, 2004
October 15, 1991
March 15, 2018
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statements No. 333-06119, No. 333-34988, No. 333-51478,
No. 333-56831, No. 333-115836, No. 333-151116, No. 333-210465, and No. 333-218052 on Form S-8, and No. 333-237546 on
Form S-3 of our report dated March 29, 2022, relating to the consolidated financial statements of Ross Stores, Inc. and
subsidiaries (the “Company”), and the effectiveness of the Company’s internal control over financial reporting, appearing in this
Annual Report on Form 10-K of the Company for the year ended January 29, 2022.
/s/DELOITTE & TOUCHE LLP
San Francisco, California
March 29, 2022
73
EXHIBIT 31.1
Ross Stores, Inc.
Certification of Chief Executive Officer
Pursuant to Sarbanes-Oxley Act Section 302(a)
I, Barbara Rentler, certify that:
1.
I have reviewed this annual report on Form 10-K of Ross Stores, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: March 29, 2022
/s/Barbara Rentler
Barbara Rentler
Chief Executive Officer
74
EXHIBIT 31.2
Ross Stores, Inc.
Certification of Chief Financial Officer
Pursuant to Sarbanes-Oxley Act Section 302(a)
I, Adam Orvos, certify that:
1.
I have reviewed this annual report on Form 10-K of Ross Stores, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: March 29, 2022
/s/Adam Orvos
Adam Orvos
Executive Vice President and Chief Financial Officer,
and Principal Accounting Officer
75
EXHIBIT 32.1
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Ross Stores, Inc. (the “Company”) on Form 10-K for the year ended January 29, 2022 as
filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Barbara Rentler, as Chief Executive
Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002 (“Section 906”), that, to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78m); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date: March 29, 2022
/s/Barbara Rentler
Barbara Rentler
Chief Executive Officer
EXHIBIT 32.2
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Ross Stores, Inc. (the “Company”) on Form 10-K for the year ended January 29, 2022 as
filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Adam Orvos, as Chief Financial Officer
of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (“Section 906”), that, to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78m); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date: March 29, 2022
/s/Adam Orvos
Adam Orvos
Executive Vice President and Chief Financial Officer,
and Principal Accounting Officer
76
Larree M. Renda 1, 3
Former Executive Vice President,
Safeway, Inc.;
Board Member, Casey’s General
Stores, Inc.
Doniel N. Sutton 2, 3
Chief People Officer, Fastly, Inc.;
Former Senior Vice President, People,
PayPal Holdings, Inc.
Directors and Officers
Board of Directors
George P. Orban 3
Chairman of the Board
Ross Stores, Inc.;
Managing Partner,
Orban Partners
Barbara Rentler
Vice Chair of the Board,
Chief Executive Officer
Ross Stores, Inc.
K. Gunnar Bjorklund 2, 3
Chairman,
Rev360 LLC
Michael J. Bush 2, 3
Managing Member,
B IV Investments, LLC;
Former Executive Chairman,
Trumaker, Inc.
Sharon D. Garrett 1, 3
Management Consultant;
Former Board Member,
Jerome’s Furniture and
Scott’s Liquid Gold-Inc.
Corporate Officers
Barbara Rentler
Chief Executive Officer
Michael J. Hartshorn
Group President and
Chief Operating Officer
Michael Kobayashi
President and
Chief Capability Officer
Michael J. Hartshorn
Chief Operating Officer,
Ross Stores, Inc.
Stephen D. Milligan 1, 3
Board Member, Autodesk;
Former Chief Executive Officer
and Board Member,
Western Digital Corporation
Patricia H. Mueller 2, 3
Management Consultant;
Board Member, Dave & Buster’s
Entertainment
Gregory L. Quesnel 1, 3
Former Chief Executive Officer,
CNF, Inc.;
Former Board Member,
SYNNEX Corporation and
Potlatch Corporation
Brian Morrow
President,
dd’s DISCOUNTS
Adam Orvos
Executive Vice President and
Chief Financial Officer
1 Audit Committee
2 Compensation Committee
3 Nominating & Corporate Governance Committee
77
Corporate Data
Corporate Headquarters
Transfer Agent and Registrar
Computershare
P.O. Box 505000
Louisville, KY 40233-5000
or
Overnight Correspondence
462 South 4th Street, Suite 1600
Louisville, KY 40202
Inquiries by:
Website
www.computershare.com/investor
or
Online
https://www-us.computershare.com/investor/Contact
Telephone
1-866-455-3120 (domestic holders)
1-800-231-5469 (TDD#)
1-201-680-6578 (foreign holders)
1-201-680-6610 (foreign TDD#)
Ross Stores, Inc.
5130 Hacienda Drive
Dublin, CA 94568-7579
(925) 965-4400
Corporate Website
www.rossstores.com
New York Buying Office
Ross Stores, Inc.
1372 Broadway
New York, NY 10018-6141
Los Angeles Buying Office
Ross Stores, Inc.
110 East 9th Street, Suite A-979
Los Angeles, CA 90079-1711
Annual Report (Form 10-K)
A copy of the Company’s 2021
Annual Report on Form 10-K as
filed with the Securities and
Exchange Commission is available
on our corporate website, or
without charge, by contacting
the following:
Investor Relations Department
Ross Stores, Inc.
5130 Hacienda Drive
Dublin, CA 94568-7579
78
THERE’S ALWAYS
A NEW BARGAIN
We launched our off-price business almost four decades ago based
on the premise that everyone always loves a new bargain. Since then,
we have met customer wants and needs by consistently offering
outstanding value on a wide array of fresh name brand fashions in
convenient and easy-to-shop stores.
We accomplish this through our two off-price apparel and home
fashion chains, Ross Dress for Less® (“Ross”) and dd’s DISCOUNTS®.
The first Ross Dress for Less locations opened in 1982, and today,
Ross is the largest off-price apparel and home fashion chain in the
U.S. with 1,628 stores in 40 states, the District of Columbia, and
Guam. We launched dd’s DISCOUNTS in 2004 and it now operates
295 locations in 21 states.
Ross offers name brand apparel, accessories, footwear, and home
fashions for the entire family at savings of 20% to 60% off department
store and specialty store regular prices every day. dd’s DISCOUNTS
features more moderately-priced assortments at savings of 20%
to 70% off moderate department and discount store prices every
day. With the continued careful execution of our off-price strategies,
we remain confident in our prospects for ongoing profitable market
share gains.
Ross Stores, Inc. 2021 Annual Report
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Ross Stores, Inc.
5130 Hacienda Drive
Dublin, CA 94568-7579
(925) 965-4400
www.rossstores.com
Sustainable Choice. Reduce, Reuse & Recycle.
To minimize our environmental impact, the Ross Stores
2021 Annual Report was printed on paper containing
fibers from environmentally appropriate, socially
beneficial and economically viable forest resources.
2021
2021