Ross Stores (ROST)

Risks

• 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.
• 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.
• 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.
• Competitive pressures in the apparel and home-related merchandise retailing industry are high.
• Unexpected changes in the level of consumer spending on or preferences for apparel and home-related merchandise could adversely affect us.
• 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.
• 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 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.
• 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.
• 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.
• We need to obtain acceptable new store sites with favorable consumer demographics to achieve our planned growth.
• To achieve growth, we need to expand in existing markets and enter new geographic markets.
• 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.
• An adverse outcome in various legal, regulatory, or tax matters could damage our reputation or brand and increase our costs.
• Damage to our corporate reputation or brands could adversely affect our sales and operating results.
• 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.
• We must effectively advertise and market our business.
• We are subject to risks associated with selling and importing merchandise produced in other countries.
• Changes in U.S. tax or trade policy regarding apparel and home-related merchandise produced in other countries could adversely affect our business.
• We may experience volatility in revenues and earnings.
• 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.
• 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 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.