Ross Stores, Inc.
ROST · Nasdaq
Next quarter
Reports Aug 20, 2026, after the close.
Consensus is $1.92 EPS for Jul 2026 across 7 estimates, ranging $1.86 to $2.03.
ROST Apr 2026
- 18.82%
- +8.11%
- $1.70
- $2.02
- —
- $6.01B
Reported results
- $6.01B
- $804.03M
- $649.96M
- $2.02
Highlights
- Sales: First-quarter sales rose 21% year over year to $6.01 billion, with comparable-store sales up 17% versus flat sales a year ago.
- Earnings: Diluted EPS was $2.02, up 37% from $1.47 and $0.32 above the $1.70 consensus estimate, an 18.82% surprise.
- Traffic: Comparable-sales growth was driven by an approximately 11% increase in transactions and a 6% increase in basket size.
- Margins: Operating margin expanded to 13.4% from 12.2% a year ago and exceeded the company’s 11.8%-12.1% plan, primarily because of the sales outperformance.
- Profit: Operating income increased 33% to $804.0 million, while net income rose 36% to $650.0 million.
- Outlook: Ross forecast second-quarter comparable-store sales growth of 6%-7% and EPS of $1.85-$1.93, representing 19%-24% growth from $1.56 last year.
- Fiscal outlook: The company raised fiscal 2026 comparable-sales guidance to 6%-7% and EPS guidance to $7.50-$7.74, or 13%-17% growth from $6.61 in fiscal 2025.
- Capital returns: Ross repurchased 1.5 million shares for $318.7 million during the quarter under a new $2.55 billion authorization and remains on track to repurchase $1.275 billion in fiscal 2026.
Analysis
Ross Stores’ first quarter of fiscal 2026 was a substantial upside print, led by unusually strong store productivity. EPS of $2.02 exceeded the $1.70 consensus by 18.82% and rose 37% from $1.47 a year ago. Sales increased 21% to $6.01 billion, including 17% comparable-store growth versus flat comps in the prior-year quarter. Against the immediately preceding quarter, revenue rose from $5.60 billion to $6.01 billion, operating income from $648.5 million to $804.0 million, net income from $511.9 million to $650.0 million, and EPS from $1.58 to $2.02.
The defining feature was broad-based customer demand, with traffic up approximately 11% and basket size up 6%; management also cited stronger merchandise execution, marketing, the in-store experience and higher spending related to tax refunds. Gross margin benefited from an 85-basis-point improvement in merchandise margin and 60 basis points of occupancy leverage, lifting operating margin 120 basis points to 13.4%. Ross converted the strength into higher guidance, while continuing store expansion and shareholder returns: it opened 17 locations, plans approximately 110 for the year, and generated $836 million of operating cash flow.
Sales and traffic
- Comparable growth: Comparable-store sales increased 17%, contributing approximately $841 million of the $1.03 billion year-over-year sales increase.
- Customer drivers: Transactions increased approximately 11% and average basket increased 6%. Management attributed the momentum to compelling assortments, higher customer acquisition and engagement, marketing initiatives and improvements to the in-store experience.
- Merchandise mix: Home accents and bed and bath represented 25% of sales, ladies 23%, accessories, lingerie, fine jewelry and cosmetics 15%, men’s 14%, shoes 14% and children’s 9%. Shoes gained one percentage point of mix while home declined one point.
- Store base: Ross ended the quarter with 1,917 Ross Dress for Less stores and 365 dd’s DISCOUNTS stores, or 2,282 locations in total versus 2,205 a year earlier.
Margin expansion
Operating income rose 33% to $804.0 million, and operating margin expanded 120 basis points to 13.4% from 12.2% a year ago. The result was well above Ross’s 11.8%-12.1% plan, with management attributing the outperformance primarily to stronger sales and the resulting expense leverage.
Cost of goods sold declined to 70.4% of sales from 71.8%. Merchandise margin improved 85 basis points, occupancy leveraged 60 basis points, and distribution and domestic freight costs improved 15 and 10 basis points, respectively. These benefits more than offset a 25-basis-point increase in buying costs and a 25-basis-point increase in SG&A as a percentage of sales, primarily from higher incentive compensation. The effective tax rate also fell to 22.4% from 25.2%, primarily because of stock-based compensation tax effects.
Raised fiscal outlook
- Second quarter: Ross expects comparable-store sales to increase 6%-7% for the 13 weeks ending August 1, 2026, with EPS of $1.85-$1.93. That implies 19%-24% EPS growth against $1.56 in the prior-year second quarter.
- Full year: Fiscal 2026 comparable-store sales guidance increased to 6%-7%, on top of a 5% gain in fiscal 2025. EPS guidance increased to $7.50-$7.74, implying 13%-17% growth from $6.61 in fiscal 2025.
- Expansion: The company opened 13 Ross stores and four dd’s stores during the quarter, and remains on track for approximately 110 new stores in fiscal 2026, including about 85 Ross and 25 dd’s locations. It expects to open 47 stores in the second quarter.
- Execution risk: Management’s outlook assumes continued strength after a quarter that may have benefited from tax-refund-related spending, while the company continues to flag consumer spending, tariffs, merchandise availability and inventory management as key risks.
Cash and capital returns
Operating cash flow more than doubled to $836.0 million from $409.7 million a year ago, helped by higher earnings, stronger accounts-payable leverage and larger incentive-compensation accruals. Inventory was $3.0 billion at quarter-end, up from $2.7 billion a year ago, while packaway inventory represented 36% of total inventory versus 41% last year.
Ross spent $209.0 million on capital expenditures during the quarter and projects approximately $1.1 billion of fiscal 2026 capital spending. It ended the quarter with $4.1 billion of unrestricted cash and $1.3 billion of undrawn revolving-credit capacity. The company repurchased 1.5 million shares for $318.7 million under its new $2.55 billion authorization, paid $143.6 million of dividends, declared a quarterly dividend of $0.445 per share, and repaid $500 million of senior notes at maturity.
