8-K: Ross Stores Secures New $1.3 Billion Revolving Credit Facility, Extends Maturity to 2030

Ross Stores, Inc. has entered into a new $1.3 billion senior unsecured revolving credit facility, replacing its prior facility with substantially unchanged terms and borrowing capacity, extending its maturity to June 2030.

Summary

• Ross Stores, Inc. (the Company) entered into a new senior unsecured revolving Credit Agreement (the 2025 Credit Facility) on June 27, 2025.
• The 2025 Credit Facility provides the Company with up to $1.3 billion in borrowing availability.
• This new facility replaces the Company's previous $1.3 billion senior unsecured revolving credit facility (the Prior Credit Facility), which was entered into in February 2022.
• The commercial terms and borrowing capacity limits of the new facility are substantially unchanged from the Prior Credit Facility.
• The 2025 Credit Facility expires in June 2030, with an option for the Company to extend it for up to two additional one-year periods, subject to lender consent.
• It includes a $300 million sublimit for the issuance of standby letters of credit.
• The Company has an option to increase the size of the credit facility by up to an additional $700 million, with the agreement of committing lenders.
• Interest on borrowings is based on Term SOFR plus an applicable margin (between 0.675% and 1.25%) or a Base Rate plus a margin (between 0% and 0.25%), depending on the Company's long-term debt credit rating.
• A quarterly commitment fee, ranging from 0.05% to 0.125% per annum, is payable on the aggregate unused commitments.
• As of the Effective Date, no borrowings were outstanding under either the 2025 Credit Facility or the Prior Credit Facility.

Sentiment

Score: 7

Explanation: The document reflects a positive sentiment as it secures long-term liquidity, extends debt maturity, and maintains favorable borrowing terms, indicating stable financial management and access to capital for future operations.

Positives

• The new 2025 Credit Facility maintains the Company's $1.3 billion borrowing capacity, ensuring continued access to liquidity.
• The maturity of the credit facility is extended to June 2030, providing long-term financial flexibility.
• The option to extend the facility for up to two additional one-year periods offers further flexibility beyond 2030.
• The inclusion of an option to increase the facility size by an additional $700 million provides potential for future expansion of borrowing capacity if needed.
• The facility includes a $300 million sublimit for standby letters of credit, supporting operational needs.

Risks

• The Company must adhere to customary covenants, including a Consolidated Adjusted Debt to Consolidated EBITDAR ratio of no greater than 3.50 to 1.00 as of the last day of any fiscal quarter.
• Restrictions on indebtedness of the Company and its subsidiaries are in place, with aggregate subsidiary indebtedness limited to 20% of consolidated tangible net worth.
• Limitations on sales of assets are included in the agreement.
• Limitations on liens are present, with a general lien basket of $100 million.
• Customary events of default could lead to termination of commitments and acceleration of outstanding loans by the administrative agent.

Future Outlook

The new credit facility extends the Company's borrowing capacity until June 2030, with options for further one-year extensions, providing long-term financial flexibility and the potential to increase borrowing capacity by an additional $700 million if future needs arise.

Management Comments

• Adam Orvos, Executive Vice President, Chief Financial Officer, signed the report on behalf of Ross Stores, Inc.

Industry Context

This refinancing of a revolving credit facility is a standard financial management practice for mature retail companies like Ross Stores. It ensures ongoing liquidity and access to capital for general corporate purposes, capital expenditures, and working capital, which is crucial in the dynamic retail sector. The terms, being substantially unchanged, suggest a stable credit profile for the Company within the current economic environment.

Comparison to Industry Standards

• The $1.3 billion facility size is substantial, aligning with the scale of a major off-price retailer like Ross Stores, comparable to similar facilities secured by peers such as TJX Companies or Burlington Stores, which also maintain significant revolving credit lines for operational flexibility.
• The Term SOFR-based interest rate structure is standard for corporate credit facilities in the current market, reflecting a common benchmark used by large corporations.
• The Consolidated Adjusted Debt to Consolidated EBITDAR covenant of 3.50 to 1.00 is a common leverage ratio for investment-grade or near-investment-grade retail companies, indicating a prudent approach to debt management relative to earnings before interest, taxes, depreciation, amortization, and rent.
• The option to increase the facility by $700 million provides flexibility similar to 'accordion features' seen in credit agreements of other large retailers, allowing for scalable financing without renegotiating the entire facility.

Corporate Governance

Related Party Transactions

• Many of the lenders under the 2025 Credit Facility and the Prior Credit Facility have in the past performed, and may in the future from time to time perform, investment banking, financial advisory, lending and/or commercial banking services, or other services for the Company and its subsidiaries, for which they have received, and may in the future receive, customary compensation and expense reimbursement.

Stakeholder Impact

• Shareholders: The new credit facility ensures continued access to liquidity, supporting ongoing operations and strategic initiatives, which can contribute to long-term shareholder value by maintaining financial stability.
• Creditors: The facility provides clear terms and covenants, offering transparency and security to lenders, while the extension of maturity reduces immediate refinancing risk.
• Employees, Customers, Suppliers: Stable access to capital supports the Company's ability to operate smoothly, pay employees, maintain inventory for customers, and fulfill obligations to suppliers, contributing to overall business continuity.

Next Steps

• The complete terms and conditions of the 2025 Credit Facility will be filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ending August 2, 2025.

Key Dates

Recommendation

Keywords

Ross Stores, Credit Facility, Revolving Credit, Debt Financing, SEC Filing, 8-K, Corporate Finance, Liquidity, Term SOFR, Retail