Ross Stores, Inc.
Business Model Analysis
How Ross Stores Makes Money
Annual Revenue: $22.8B
- How does Ross Stores make money?
- Ross Stores makes money from Ross Dress for Less and dd's DISCOUNTS.
Ross Stores generates revenue primarily through Off-Price Retail and Apparel, with roughly $22.8B in annual revenue.
Core Growth Engine: Growth comes mainly from new stores and comparable store sales. Ross raised its 2026 opening plan to 115 locations after opening 64 in the first half. Under CEO Jim Conroy, the company has added marketing, brand-forward ...
Revenue Model & Pricing
Ross earns nearly all revenue from in-store merchandise sales at Ross Dress for Less and dd's DISCOUNTS. More than 800 merchants buy branded apparel, footwear, home goods and accessories from manufacturer overruns, canceled orders and closeouts. Part of that buying is held as packaway inventory for later seasons. Stores are self-service with simple fixtures in strip centers, which keeps occupancy and labor costs low, and assortments change constantly so shoppers return often. Ross does not sell merchandise online.
Core Revenue Streams
Ross Dress for Less
Not formally reportedOff-price stores selling branded apparel, footwear, home goods and accessories bought from manufacturer overruns, canceled orders and closeouts.
dd's DISCOUNTS
Not formally reportedThe second store banner. Ross earns nearly all revenue from in-store merchandise sales at the two chains and does not sell merchandise online.
Growth Strategy
Growth comes mainly from new stores and comparable store sales. Ross raised its 2026 opening plan to 115 locations after opening 64 in the first half. Under CEO Jim Conroy, the company has added marketing, brand-forward merchandise and in-store experience changes, and management credits traffic from both new and existing customers for the 2026 comp gains.
How Ross Stores Makes Money: FAQ
What is the core concept of Ross Stores' off-price business model?
Ross operates an off-price retail model purchasing name-brand and designer apparel, accessories, footwear, and home goods at deep wholesale discounts, reselling them in physical stores at 20% to 60% below department store regular prices.
How does Ross's "opportunistic buying" strategy work?
A network of hundreds of Ross merchant buyers based in New York and Los Angeles constantly monitors the market to purchase canceled department store orders, manufacturer overproductions, end-of-season closeouts, and excess inventory for cash at steep discounts.
What is the "Packaway" inventory strategy and how does it generate profit?
Packaway involves purchasing high-end brand name goods late in a season at deep discounts, holding them in low-cost automated distribution warehouses for several months, and releasing them to store floors at the beginning of the next corresponding season for high gross margins.
Why does Ross deliberately avoid e-commerce and online shopping?
With an average item selling price around $10 to $15, shipping costs, digital photography of one-off SKUs, and industry-standard 30% online apparel return rates would erase operating profits. Avoiding e-commerce eliminates fulfillment losses and keeps prices unbeatable.
What is the "Treasure Hunt" shopping experience and why is it effective?
Ross does not guarantee specific sizes or styles from week to week. Instead, customers browse packed racks of constantly changing, unpredictable designer merchandise, creating a sense of urgency to buy immediately before someone else takes the bargain.
How does Ross keep its store operating costs lower than department stores?
Ross utilizes no-frills, self-service store layouts in open-air suburban strip centers rather than expensive enclosed shopping malls. Stores feature centralized checkout registers, minimal wall fixtures, and non-commissioned store associates, minimizing overhead.
What are Ross Stores' typical gross and operating margins?
Ross consistently delivers gross profit margins between 26% and 28% and operating profit margins of 11% to 12.5%, significantly outperforming traditional department stores like Macy's and Kohl's.
How does dd's DISCOUNTS complement the flagship Ross Dress for Less chain?
While Ross Dress for Less serves moderate-income households earning $55,000 to $85,000 annually, dd's DISCOUNTS caters to lower-income demographics ($35,000 to $50,000) with deeper bargain price points ($5 to $10 ASP) in urban strip malls.
How does Ross manage inventory turnover and shrinkage?
Ross turns its inventory over 6 to 7 times per year, keeping inventory fresh. To control loss prevention and retail shrinkage, Ross employs security greeters, electronic article surveillance (EAS) tagging, and camera analytics.
What is Ross's real estate selection criteria?
Ross locates stores in heavily trafficked strip centers anchored by grocery stores or discount supercenters (like Walmart or Target), ensuring high weekly foot traffic from routine errand-running shoppers.
How does inflation impact Ross Stores' customer base?
High inflation acts as a dual catalyst: while lower-income shoppers may buy fewer discretionary items, higher-income households trade down from full-price department stores and specialty boutiques to find deals at Ross.
How does vendor financing and cash payment give Ross buying power?
Because Ross has a pristine credit rating and massive cash flow, it pays apparel manufacturers quickly without demanding markdown money, advertising co-ops, or return privileges, making Ross the preferred buyer for distressed vendor inventory.
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