The company opened 31 new stores in Q2 2025, bringing the year-to-date total to 50 new stores, including expansion into the New York Metro area and Puerto Rico. Management remains on track to open approximately 90 new stores (80 Ross, 10 dd's DISCOUNTS) for the full fiscal year.

Management states that its flexible off-price business model is well-positioned to capture market share and mitigate macroeconomic challenges, including elevated tariffs and inflationary pressures. The strategy focuses on offering high-quality, branded merchandise at outstanding values.

Planned capital expenditures for fiscal 2025 are projected at $800 million, with a focus on opening new stores, improving existing stores, and significant investments in the supply chain, including the construction of a new distribution center in Randleman, North Carolina.

Cost of goods sold as a percentage of sales increased by 70 basis points in Q2 2025, primarily due to the deleveraging effect from the opening of the eighth distribution center in Buckeye, Arizona, and tariff-related processing costs. Management expects these tariff-related costs to continue impacting operating income in H2 2025.

The company is on track to meet its goal of opening approximately 90 new stores in fiscal 2025. Additionally, management successfully repaid $700 million of 4.600% Senior Notes at maturity in April 2025, demonstrating effective debt management.

Management secured a new $1.3 billion revolving credit facility in June 2025, replacing the previous facility, and reported no outstanding borrowings. The company ended the quarter with $3.8 billion in unrestricted cash, affirming adequate liquidity to meet obligations for at least the next 12 months.

The company highlights ongoing macroeconomic uncertainty, elevated tariffs, broad-based inflationary pressures, high interest rates, and geopolitical conflicts as significant risks. These factors are expected to continue impacting consumer confidence, disposable income, shopping behavior, and the company's costs and profitability.

Changes in U.S. tax, tariff, or trade policy, particularly concerning goods from China (which accounts for over half of merchandise sold), are identified as a major risk. Tariff-related costs had an approximate 90 basis point negative impact on Q2 operating income and are expected to persist.

Risks associated with importing merchandise, including supply chain disruptions, shipping delays, and higher ocean freight costs, are explicitly mentioned. The company also notes the ongoing challenge of effectively managing inventories, markdowns, and shortages to achieve planned gross margins.

Management believes its flexible off-price business model, offering 20% to 70% off regular prices, positions it well to capture market share. This strategy is particularly relevant given the uncertain macroeconomic environment where customers are increasingly focused on value and convenience.

Despite a slowdown in comparable store sales growth, the 2% increase in Q2 2025 was attributed to an approximate 1% increase in both basket size and customer traffic. This indicates some success in attracting and retaining customers in a competitive retail landscape.

The sales mix for Home Accents and Bed and Bath decreased by 100 basis points for both the three and six-month periods year-over-year, while Accessories, Lingerie, Fine Jewelry, and Cosmetics increased by 100 basis points. These shifts suggest the company is adapting its offerings to current consumer demand.

Cost of goods sold as a percentage of sales increased by 70 basis points for the three months ended August 2, 2025. This was primarily due to the deleveraging effect from the opening of the eighth distribution center in Buckeye, Arizona, and tariff-related processing costs, indicating pressure on operational efficiency.

Selling, general and administrative (SG&A) expenses increased by $52 million for the three-month period and $73 million for the six-month period. As a percentage of sales, SG&A increased by 25 basis points in Q2, primarily due to costs associated with the Chief Executive Officer transition.

The company is making higher capital expenditures, with a significant portion allocated to the construction of its next distribution center in Randleman, North Carolina. This long-term investment aims to enhance supply chain capabilities despite short-term deleveraging impacts from new facilities.

The 'One Big Beautiful Bill Act' (OBBBA), signed in July 2025, reinstated 100% bonus depreciation and immediate expensing of domestic research and development expenditures. This resulted in an increase of approximately $30 million to the company's deferred tax liability balance as of August 2, 2025.

The company's projected capital expenditures of $800 million for fiscal 2025 include investments in information technology systems. This indicates a continued commitment to enhancing technological capabilities to support operations and growth.

The company utilizes performance share awards for senior executives, vesting based on the attainment of performance goals during the fiscal year. This aligns executive incentives with strategic objectives and financial performance.

The company repaid $700 million principal amount of its 4.600% Senior Notes at maturity in April 2025, contributing to a decrease in long-term debt. This strategic move reduces interest expense and improves the overall capital structure.

The Board of Directors declared a quarterly cash dividend of $0.4050 per common share, an increase from $0.3675 in the prior year. Additionally, the company repurchased $525 million of common stock (3.9 million shares) in the six-month period under its $2.1 billion program, with $525 million remaining.

Fiscal 2025 capital expenditures are projected at $800 million, targeting new store openings, existing store improvements, and critical investments in supply chain infrastructure and information technology systems. These investments are crucial for supporting the company's long-term growth strategy.

The company lists climate change as a factor that could potentially adversely affect its revenue, profitability, operating conditions, and growth in its forward-looking statements. This indicates an awareness of environmental risks, though specific initiatives are not detailed in this filing.

Risk factors include concerns relating to human rights, working conditions, and other issues in factories or countries where merchandise is produced, and transparency of sourcing and supply chains. This implies an acknowledgment of social responsibility in its global supply chain, though specific ESG initiatives are not elaborated.

Management, with the participation of the CEO and CFO, conducted an evaluation of the effectiveness of disclosure controls and procedures, concluding they were effective. This demonstrates adherence to governance practices for financial reporting, with no material changes to internal control over financial reporting noted in Q2 2025.

The macroeconomic environment remains uncertain, characterized by elevated inflation, high interest rates, housing costs, and fuel prices. These factors are noted to affect consumer confidence, disposable income, and shopping behavior, posing ongoing challenges to the retail sector.

Geopolitical conflicts, changes in U.S. tax and tariff policies (especially concerning China-sourced goods), and potential supply chain disruptions are identified as significant risks. These external factors can increase costs, disrupt buying patterns, and put pressure on profit margins.

The recent 'One Big Beautiful Bill Act' (OBBBA) in July 2025, which reinstated 100% bonus depreciation and immediate expensing of domestic R&D, resulted in an approximately $30 million increase in the company's deferred tax liability. This highlights the impact of a dynamic regulatory environment on financial reporting.