Ross Stores Inc. has strategically entered into a new senior unsecured revolving Credit Agreement, the 2025 Credit Facility, effective June 27, 2025, maintaining a borrowing capacity of up to \(1.3 billion. This facility replaces the prior credit agreement from February 2022, preserving substantially unchanged commercial terms and borrowing limits, with an expiration set for June 2030 and options for two one-year extensions subject to lender consent. The 2025 Credit Facility includes a \)300 million sublimit for standby letters of credit and an option to increase the credit line by an additional $700 million with lender approval.
The interest rates on borrowings under this facility are variable, based on Term SOFR plus a margin ranging from 0.675% to 1.25%, or a Base Rate Loan option tied to the federal funds rate, prime rate, or Term SOFR for a one-month tenor plus a margin between 0% and 0.25%. Commitment fees range from 0.05% to 0.125% annually on unused commitments. The facility imposes customary covenants, including a Consolidated Adjusted Debt to EBITDAR ratio cap of 3.50 to 1.00, subsidiary indebtedness limits at 20% of consolidated tangible net worth, and restrictions on asset sales and liens.
From a financial perspective, Ross Stores reported total revenue of approximately $20.38 billion for fiscal year 2024, with an operating margin of 12.49%, a current ratio of 1.77, and a debt-to-equity ratio of 1.55. The new credit facility’s terms align with maintaining financial flexibility and liquidity, crucial for navigating the cyclical consumer discretionary sector, which is sensitive to economic fluctuations and consumer confidence.
This credit facility renewal underscores Ross Stores’ commitment to sustaining operational agility and financial health amid evolving market conditions. The company’s previous earnings calls emphasized disciplined capital management and strategic liquidity positioning, themes consistent with this credit agreement renewal. The facility’s structure supports Ross Stores’ ability to manage working capital efficiently and invest in growth initiatives, including digital transformation and store enhancements.
In conclusion, Ross Stores’ 2025 Credit Facility renewal is a pivotal financial maneuver that reinforces its balance sheet strength and operational resilience. This move positions the company well to capitalize on consumer discretionary sector opportunities while mitigating risks associated with economic uncertainty and market volatility.
For detailed terms and conditions, refer to the official 8-K filing: Ross Stores 8-K Credit Facility.
Tags: ROST, Ross Stores Inc, FY2025 Q2, credit facility renewal, consumer discretionary finance, revolving credit agreement