3. Ross Stores, Inc. NASDAQ:ROST
Number of Hedge Fund Holders: 53
Ross Stores Inc. (NASDAQ:ROST) is a home fashion and off-price apparel chain in the US that offers name-brand and designer in-season apparel, footwear, accessories, and home fashion for a broad audience. It provides around 20% to 60% discounts on its prices as compared to regular department and specialty stores, solidifying its market presence and appealing to its audience. The company operates around 1,764 locations in 43 states across the US, Guam, and the District of Columbia.
The company also operates around 345 dd’s DISCOUNTS® stores in 22 states in the US, which offer even more discounted name-brand, in-season apparel, footwear, accessories, and home decor with around 20% to 70% off. All Ross stores are family-friendly, with items for every age group. The total count of Ross stores and dd’s DISCOUNTS® stores comes up to more than 2,109. It announced the opening of 21 Ross stores and three dd’s DISCOUNTS® stores across 17 states in the US in June and July. This expansion is a part of the company’s plans to open around 90 new stores in fiscal 2024, divided into 75 Ross and 15 dd’s DISCOUNTS® stores.
The company’s sales increased for the 2024 year-to-date period, going from $9.4 billion in 2023 to $10.1 billion in 2024. Comparable store sales also grew by 4% in Q2 2024, primarily because of increased basket size and improved traffic. Apart from rising sales, Ross’s improved profitability also benefited from lower incentive and distribution costs, which were partially offset as designed by lower merchandise margins. Ross Stores Inc. (NASDAQ:ROST) is taking steps to continue these improving trends by adjusting its assortments in its newer markets to resonate with a wider customer base. At the end of Q2 2024, the company’s total consolidated inventories rose 8% as compared to last year.
The company’s solid and profitable model is appealing to investors. Ross Stores Inc. (NASDAQ:ROST) also raised its guidance assumptions for Q3, with total sales forecasted to increase 3% to 5% compared to 2023. It also has plans to open 47 new stores in Q3, including 43 Ross and 4 dd’s DISCOUNTS® stores. Ross Stores Inc. (NASDAQ:ROST) holds a consensus Buy rating among analysts, with its median price target of $150.79 implying an upside of 16.06% from current levels. Morgan Stanley reaffirmed their Buy rating on the stock on September 4. 53 hedge funds hold stakes in the stock as of Q2 2024, with D E Shaw holding the largest stake worth $420.48 million.
TimesSquare Capital U.S. Mid Cap Growth Strategy stated the following regarding Ross Stores, Inc. (NASDAQ:ROST) in its fourth quarter 2023 investor letter:
“In Consumer-oriented sectors, we lean towards value-oriented or specialty retailers, franchise models, as well as premium brands. Also gaining 23% over the quarter was Ross Stores, Inc. (NASDAQ:ROST), an off-price retailer featuring apparel and home fashions. Third quarter results were solid as sales comparisons accelerated with higher levels of customer traffic across geographies. Management raised full-year guidance. We added to the position given our increased conviction at the start of the quarter.”
