Ross Stores enters new $1.3 billion revolving credit facility, replacing prior agreement

Ross Stores, Inc. (NASDAQ:ROST), a $41.8 billion market cap specialty retailer, announced Monday that it has entered into a new senior unsecured revolving credit agreement, providing up to $1.3 billion in borrowing capacity. According to InvestingPro analysis, the company currently operates with a moderate debt level and maintains strong liquidity metrics, suggesting this facility enhancement aligns with its prudent financial management approach. The new facility, effective June 27, 2025, replaces the company’s previous $1.3 billion revolving credit agreement from February 2022, according to a press release statement based on a SEC filing.

The 2025 credit facility is set to expire in June 2030, with an option for Ross Stores to extend the term for up to two additional one-year periods, subject to lender approval and customary conditions. The agreement includes a $300 million sublimit for standby letters of credit and an option to increase the facility by as much as $700 million, contingent on lender commitment.

Bank of America, N.A. acts as the administrative agent, swing line lender, and letter of credit issuer for the facility. Syndication agents and additional letter of credit issuers include Wells Fargo (NYSE:WFC) Bank, JPMorgan Chase (NYSE:JPM) Bank, and U.S. Bank.

Borrowings under the new facility can be made on a revolving basis, with interest rates tied to Term SOFR or an alternative benchmark, plus an applicable margin based on the company’s long-term debt credit rating. For Term SOFR rate loans, the margin ranges from 0.675% to 1.25%. For base rate loans, the margin ranges from 0% to 0.25%. Commitment fees on unused portions of the facility range from 0.05% to 0.125% per annum, also depending on credit rating.

The agreement includes customary covenants, such as maintaining a consolidated adjusted debt to consolidated EBITDAR ratio of no greater than 3.50 to 1.00, restrictions on indebtedness, limitations on asset sales, and a $100 million general lien basket. The company’s current total debt-to-capital ratio stands at just 11%, while its current ratio of 1.55 indicates strong ability to meet short-term obligations. InvestingPro subscribers can access detailed analysis of Ross Stores’ debt management strategy and comprehensive financial health metrics in the Pro Research Report. Standard events of default are also included, allowing lenders to terminate commitments and accelerate loans if triggered.

As of the effective date, Ross Stores reported no outstanding borrowings under either the new or prior credit facilities. This conservative approach to debt utilization, combined with the company’s robust cash flow coverage of interest payments, underscores its solid financial position. For deeper insights into Ross Stores’ financial health and future prospects, including exclusive ProTips and detailed valuation metrics, explore the comprehensive analysis available on InvestingPro.

This information is based on a press release statement contained in a SEC filing.

In other recent news, Ross Stores, Inc. reported earnings per share of $1.47 for the first quarter, slightly above the consensus estimate of $1.44. The company showed a flat same-store sales performance, which was an improvement from the expected decline. JPMorgan has raised its price target for Ross Stores to $154, maintaining an Overweight rating, due to potential growth in traffic and comparable store sales. Meanwhile, UBS has reiterated a Neutral rating with a $144 price target, citing a balanced outlook with potential tariff impacts. Evercore ISI adjusted its price target to $160 from $170, maintaining an Outperform rating but lowering its second-quarter EPS forecast due to tariff and inventory concerns.

TD Cowen also revised its price target to $161, maintaining a Buy rating, and noted merchandise margin pressures due to tariffs. The firm expects Ross Stores to capitalize on value gaps in the retail sector despite these challenges. Bernstein maintained a Market Perform rating with a $147 target, emphasizing the impact of tariffs on Ross Stores’ profit margins. The analysts expressed skepticism about the company’s ability to implement price increases without affecting sales volumes. These developments underscore the mixed outlook among analysts regarding Ross Stores’ financial performance and strategic initiatives in the current market environment.

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