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Company: Ross Stores (ROST)
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  Is Growth Slowing as Economy Rebounds from Recession?

Ross Stores has benefited remarkably from the economic downturn of the late 2000s. As consumers felt more pressure on their wallets, they opted to trade down from more expensive stores like Macy's and Nordstrom to more affordable stores like Ross. As a result, Ross experienced higher customer traffic and higher sales. Its stock price reflected this by more than doubling during the downturn. However, now as the economy emerges from the recession, Ross Stores is now facing competition again from the Macy's and Nordstroms that are looking to take back the customers they lost. Depending on how quickly consumers flock back to the high end stores, Ross Stores is in an uncertain growth situation. Despite strong sales in FY 2010, the company is expecting only modest growth in FY 2011.

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  dd Discount Stores Further Lowers Margins

Discount retailers have always been faced with the problem of low profit margins which they attempt to make up by volume. ROSS's opening of its new dd Discount stores will put ROST in a similar position as it could see its margins decrease. Management may also be not be attentive to the needs of its other stores during this time as well, having the potential for management issues.

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  Consumers forego non-necessities during tough economic times

As unemployment and falling house values continue to plague the current economy, consumers are cutting costs by passing up expenditures on apparel and sticking to daily necessities. As discretionary income decreases for consumers during this recession, even ROST's discount apparel will attract fewer shoppers this holiday season.

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