Ross Stores Warns of Potential Price Increases Amid Tariff Pressures and Inflation

As tariffs and inflation continue to ripple through the U.S. economy, retailers face tough decisions on how to manage rising costs without alienating customers.

Ross Stores, the parent company of Ross Dress for Less and DD’s Discounts, recently joined a growing list of retailers signaling that price hikes could be on the horizon.

In its first-quarter earnings call on May 22, company executives expressed concerns about the impact of tariffs on profitability and revealed plans to carefully navigate these challenges in the months ahead.

This article examines Ross Stores’ current financial performance, the evolving tariff landscape, strategies retailers are adopting to offset costs, and the likely implications for consumers.

Ross Stores’ Latest Financial Snapshot: Stable Sales, Slight Profit Dip

Ross Stores reported flat sales for the 13-week period ending May 3, compared to the same timeframe in the previous year.

Net income came in at $479 million, a slight decrease of nearly 2%, but in line with analysts’ expectations.

While monthly sales showed growth during the quarter, Chief Executive Officer Jim Conroy highlighted ongoing pressures from inflation and tariffs.

He stated, “Heightened macroeconomic and geopolitical uncertainty persists, most notably prolonged inflation and evolving trade policies.”

This uncertainty continues to affect the retail environment, forcing companies like Ross to remain agile and strategic.

Table 1: Ross Stores Key Financial Figures Q1 2025

The Tariff Landscape: Temporary Relief but Persistent Concerns

The U.S.-China trade war has been a significant driver of cost increases for many retailers, including Ross.

Earlier in May 2025, a 90-day agreement between the two countries temporarily lowered tariffs on Chinese imports—from a staggering 145% on many goods down to 30%.

Simultaneously, China eased tariffs on American goods from 125% to 10%.

This truce provided a momentary easing of pressure, but many experts and retailers remain cautious. As Jim Conroy noted, “Half of the goods sold at our stores come from China.”

Given this reliance, any sustained tariff levels could continue to squeeze Ross’s profitability.

Despite the agreement, the retail sector is bracing for tariffs and inflation to translate into higher consumer prices, especially starting in late June or early July.

Chief Operating Officer Michael Hartshorn underscored this timeline during the earnings call, warning that the impact will soon be noticeable at checkout counters.

Strategies to Combat Tariff-Driven Cost Increases

Ross Stores is not alone in facing tariff-related cost pressures.

Retail giants such as Walmart, Amazon, and Best Buy have publicly prepared customers for the likelihood of price increases.

However, Ross is committed to careful management to avoid alienating its value-conscious shoppers.

Several strategies are underway:

1. Diversifying Sourcing
   Ross is actively exploring suppliers outside China to reduce dependency on goods vulnerable to tariffs. Alternative sourcing from countries with lower tariff burdens or closer proximity could mitigate some cost increases.

2. Negotiating Better Costs with Suppliers
   Collaborating closely with suppliers to improve pricing terms has already yielded some benefits in the second quarter. This approach can help maintain profit margins without shifting the entire burden to consumers.

3. Cautious Price Increases
   While raising prices is a direct way to offset tariffs, Ross intends to be “very careful” with this tactic. Hartshorn explained, “We don’t want to be the first one to raise prices, and we want to keep our value or pricing umbrella versus mainstream retail.” The company aims to balance profitability with maintaining its reputation as an off-price retailer.

Consumer Implications: What Shoppers Can Expect

Consumers should anticipate some price adjustments on certain products in the coming months, but Ross’s commitment to value means increases may be gradual and measured.

The timing of price shifts will likely begin around late June to early July, aligning with when tariff costs fully impact supply chains.

With inflation and tariffs creating an environment of uncertainty, shoppers may notice:

• 🏪Slightly higher prices on some imported goods, especially those sourced from China.

• 🏪Continued availability of discounted merchandise due to Ross’s focus on cost management and supplier negotiations.

• 🏪Possible product mix changes as sourcing shifts away from tariff-impacted regions.

The Broader Retail Landscape: Tariffs Affecting Everyone

Ross Stores’ situation reflects wider trends in retail:

• 🏪The 50% tariffs on European Union imports, temporarily delayed to July 9, have created additional uncertainty.

• 🏪Other off-price retailers and mainstream chains are balancing cost pressures with competitive pricing.

• 🏪The combination of inflation and trade policy shifts is driving cautious consumer spending and tighter margins.

Chris Larkin, managing director of trading and investing at E*TRADE, notes that macroeconomic events and policy deliberations will heavily influence market performance in the near term.

Summary Table: Ross Stores Tariff Impact and Response Overview

Looking Ahead: What to Watch for in 2025

Ross Stores projects modest sales growth of up to 3% in the current quarter, down from last year’s 4%.

The retail giant’s ability to navigate tariffs, inflation, and supply chain disruptions will be critical to its financial health.

Consumers, investors, and industry watchers should monitor:

• 🏪How long the current U.S.-China tariff truce lasts and whether tariffs increase again.

• 🏪Ross’s success in sourcing alternatives and managing supplier costs.

• 🏪Consumer price sensitivity and spending patterns amid inflationary pressures.

• 🏪Competitive dynamics as other retailers adjust pricing strategies.

Conclusion

The evolving tariff environment and inflation continue to challenge retailers like Ross Stores, forcing them to weigh profitability against customer value.

While temporary tariff reductions offer some relief, the long-term outlook includes rising costs that may necessitate price increases.

Ross’s balanced approach—diversifying supply chains, negotiating costs, and cautiously raising prices—aims to protect both its bottom line and its reputation as a value leader.

For consumers who frequent Ross Dress for Less and DD’s Discounts, these developments signal potential price changes in the near future.

However, the retailer’s commitment to affordability suggests increases will be measured and strategically implemented.

As 2025 progresses, the interplay between trade policies, inflation, and consumer behavior will continue to shape the retail sector’s challenges and opportunities.