ROST A-Rating Lift: Ross Stores Accelerates Growth

Ross Stores Strengthens Balance Sheet and Execution

Ross Stores (ROST) drew investor attention this week after S&P Global upgraded the company’s issuer and unsecured note rating to A-. The move reflects improved operating performance, margin resilience and a clear capital plan: Ross is rolling out an aggressive store expansion while maintaining liquidity and positive free operating cash flow.

Why the A- Upgrade Matters

S&P cited three concrete drivers for the upgrade: consistent revenue growth, meaningful comparable-store sales gains, and a disciplined financing outlook for expansion. For fiscal 2025, Ross posted roughly 7.7% revenue growth with comp gains of about 9% in Q4 and 5% for the full year. Those operational results, paired with projected free operating cash flow near $2 billion in 2026, gave ratings agencies confidence the chain can fund its growth without overleveraging.

Expansion: Scale and Speed

Execution on store growth is the clearest near-term catalyst. Ross plans to open approximately 110 new locations in fiscal 2026—about 85 Ross Dress for Less stores and 25 dd’s DISCOUNTS. To date in Q1, the company has opened 17 stores (13 Ross and 4 dd’s) across 11 states, signaling that openings are on schedule.

Capital Spending and Growth Economics

Management has increased planned capital expenditures to roughly $1.1 billion for fiscal 2026, up from $819 million the prior year, to support store build-outs and remodels. While higher capex typically pressures free cash flow, Ross projects that its operating cash generation will comfortably absorb spending and still deliver robust cash flow—hence S&P’s view that the company’s financial profile has improved.

Near-Term Investor Calendar: Q1 2026 Earnings

The company scheduled its first quarter 2026 earnings release for May 21, with results to be posted around 4:00 p.m. ET and a conference call shortly after. Given the recent rating upgrade and ongoing store rollouts, this earnings release will be a focal point for investors assessing whether same-store sales momentum and margin trends continue into 2026.

What to Watch on the Call

Investors will be watching for three specific updates: the trajectory of comparable-store sales, any change in gross margin trajectory given cost/tariff pressures, and execution details on the 110-store plan (including cadence and lease economics). Management commentary on inventory discipline and promotional cadence will also be important for modeling profitability as new units ramp.

Context: Off-Price Resilience

Ross occupies the fast-growing off-price segment, which tends to gain share during periods when consumers trade down from full-price apparel. The combination of attractive price points, high inventory turnover and regional real estate opportunities creates a durable growth run-rate for well-executed operators. Ross’s commitment to adding dd’s DISCOUNTS alongside Ross Dress for Less increases its reach into value-conscious customer cohorts.

Analogy for Investors

Think of Ross’s strategy as widening a successful highway: the company is not only adding lanes (new stores) but also reinforcing the pavement (strong liquidity and an improved credit rating) so traffic (sales and cash flow) can increase without creating costly congestion (excess leverage or margin erosion).

Bottom Line

The recent S&P upgrade and the confirmed rollout of 110 new stores place Ross Stores in a favorable position entering its Q1 2026 results. Concrete metrics—comp sales strength, higher capex that’s supported by robust cash generation, and orderly store openings—are the primary fundamentals backing the positive outlook. Investors should focus on the May 21 earnings release for confirmation that growth and margin dynamics remain intact as expansion accelerates.