Ross Stores Inc

Digital transformation and innovation · Technology implementation and upgrades

We are currently making, and will continue to make, 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.

Technology infrastructure · Technology systems and infrastructure failure

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 associates 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.

Digital transformation and innovation · Artificial intelligence and automation

Advancements in technology (including artificial intelligence or other emerging technologies) will present opportunities to inform merchandising, pricing, assortment, and other key business decisions; however, there are costs, risks and potential adverse consequences from premature adoption or over-reliance on those emerging technologies. At the same time, if competitors successfully implement these capabilities more quickly or effectively than we do, our competitive position could be adversely affected.

Cybersecurity and data protection · Third party data security and vendors

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.

Supply chain and procurement · Transportation and logistics disruption

Such disruptions may result from public health issues such as pandemics, cyberattacks, damage or destruction to our distribution centers, equipment failures, weather-related events, natural disasters, power outages, fires, 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.

Data and privacy · Data protection and privacy laws

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 system breach and 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.

Industry regulation · Regulatory compliance and changes

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.

Legal and litigation · Product liability and warranty claims

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 vendors, 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.

Legal and litigation · Employment and labor law compliance

We continue to be involved in a number of employment-related lawsuits, including class/representative actions which are primarily in California. 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), workplace safety.

Tax and financial reporting · Financial reporting and accounting standards

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. Significant judgment is required in evaluating and estimating our tax provisions and reserves for legal claims.

Reputation and brand · Social media and digital reputation

The use of social media and other online platforms, including blogs, applications, 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. 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.

Reputation and brand · Corporate social responsibility

Our responses to events or crises and our position (or perceived lack of position) on environmental, social, and governance matters, such as sustainability, corporate social responsibility, diversity, equality, and inclusion, responsible sourcing, and any perceived lack of transparency about those matters could harm our reputation, receive negative feedback from stakeholders, including our customers and investors, and could adversely affect our sales.

Credit and liquidity · Liquidity and cash flow constraints

To support our continuing operations, our new store and distribution center growth plans and other capital investment plans, our stock repurchase program, our debt repayments, and our quarterly dividends, we must maintain sufficient liquidity. 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 stock repurchases and dividends.

Credit and liquidity · Access to capital and financing

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.

International and currency · International operations and emerging markets

We are subject to risks associated with importing and selling merchandise produced in other countries. Risks in importing and selling such merchandise include increased tariffs and more stringent quotas, economic and supply chain disruption uncertainties and adverse economic conditions (including shipping capacity limitations, cost increases, and exchange rate fluctuations), foreign government regulations, labor stoppages or disputes, concerns relating to human rights, working conditions, and other issues in factories or countries where merchandise is produced.

International and currency · Foreign exchange and currency exposure

Although our foreign purchases of merchandise are negotiated and paid for in U.S. dollars, increased tariffs or other import duties on goods imported into the United States, or decreases in the value of the U.S. dollar relative to foreign currencies, could increase the cost of products we purchase from overseas vendors and from domestic vendors who are reselling foreign-produced goods.

Economic and market conditions · Economic recession and downturns

Continuing inflation, tariff increases (or threats of increases), potential supply chain disruptions, and other external events may have significant negative effects on our costs, and also on consumer confidence, shopping behavior, and spending, which may adversely affect our sales and profitability.

Economic and market conditions · Inflation and deflation pressures

Elevated inflation, rapidly changing and increased tariffs on goods imported into the United States, other government regulation or policy changes, geopolitical conflicts, bank failures, federal government shutdowns, public health crises (including pandemics), and other potential, adverse developments and related uncertainties, could reduce demand for our merchandise, disrupt our buying patterns, increase our cost of goods.

Economic and market conditions · Consumer spending and confidence

Consumer spending levels and shopping behaviors for the merchandise we sell are affected by many external macroeconomic factors. In addition to consumer sensitivity to the price points and value differentiation we offer on the merchandise we sell, elevated consumer costs of living for other goods and services (including increased fuel and energy costs, food prices, interest rates, and housing costs), relative wage rates, unemployment levels, availability of consumer credit, consumer debt levels, income tax rates and the timing of tax refunds, various government policies and practices (including those with respect to immigration), and the resulting effects on consumers' disposable income and consumer confidence in future economic conditions all have an impact on consumer spending habits.

Geopolitical and trade · Trade policies tariffs and sanctions

Changes and uncertainty in U.S. trade or tax policy regarding apparel, home-related merchandise, shoes, and other goods we sell produced in other countries could adversely affect our business. The U.S. government has indicated a willingness to significantly change existing trade policies, and has imposed increased tariffs on goods imported into the United States, in particular on goods produced in China.