Fenimore Asset Management, Inc. on Ross Stores, Inc.
Thesis
Ross Stores is benefiting as consumers seek off-price apparel and retail value. Fenimore believes Ross is executing better than its peers, and a strong quarterly earnings report showed comparable-store-sales growth, margin expansion and increased guidance. Faster store openings may provide an additional growth channel.
“ROST is executing at the highest level among its peers, in our opinion.”
Key risks
- Consumer weakness could affect even discounted retailers
- The trade-down demand tailwind may fade
- Margin and store-opening execution could disappoint