Ross Stores, Inc.
ROST · Nasdaq
Next quarter
Expected to report Nov 19, 2026 — estimated from last year’s reporting date.
Consensus is $1.82 EPS for Oct 2026 across 7 estimates, ranging $1.80 to $1.84.
ROST Jul 2026
- 6.74%
- +4.39%
- $1.93
- $2.06
- —
- $6.26B
Reported results
- $6.26B
- $1.10B
- $851.30M
- $2.66
Highlights
- Sales momentum: Second-quarter sales rose 13% year over year to $6.26 billion, with comparable-store sales up 10% on top of a 2% gain last year, driven primarily by customer traffic.
- Earnings growth: The release reported diluted EPS of $2.66 versus $1.56 a year ago and $2.02 in the prior quarter; the supplied comparison data lists reported EPS as $2.06 versus consensus of $1.93 and a 6.74% surprise.
- Tariff refunds: Operating income reached $1.10 billion, including approximately $253 million of IEEPA tariff refunds; the refunds contributed about $0.60 to EPS and 405 basis points of operating-margin expansion.
- Underlying margin: Operating margin expanded 610 basis points to approximately 17.6%; excluding the tariff refunds, margin still improved 205 basis points, above the planned 130-150 basis-point increase.
- Outlook raised: Fiscal 2026 EPS guidance increased to $8.61-$8.77, including the approximately $0.60 tariff-refund benefit, while third-quarter and fourth-quarter comparable-sales guidance was set at 6%-7% and 4%-5%, respectively.
- Store expansion: Ross opened 47 stores in the quarter, including 35 Ross locations and 12 dd's DISCOUNTS stores, and raised its fiscal 2026 opening plan to 115 locations.
- Shareholder returns: The company repurchased 1.4 million shares for $319 million in the quarter and remains on track to repurchase $1.275 billion of stock during fiscal 2026.
- Cash generation: First-half operating cash flow increased to $1.71 billion from $1.08 billion a year ago, while capital expenditures totaled $460 million.
Analysis
Ross Stores' second quarter was defined by unusually strong traffic-led sales growth, substantial operating leverage and a material one-time boost from IEEPA tariff refunds. Sales increased 13% year over year to $6.26 billion, while comparable sales rose 10%. Net income climbed 68% to $851 million from $508 million, and the release reported diluted EPS of $2.66 versus $1.56 last year and $2.02 in the prior quarter. The supplied expectations line, however, identifies reported EPS as $2.06 versus consensus of $1.93 and a 6.74% surprise, which conflicts with the release and condensed financial statements.
Operating income increased 73% to $1.10 billion, lifting operating margin to approximately 17.6% from 11.6%. About $253 million of tariff refunds accounted for 405 basis points of the 610-basis-point margin expansion, but the underlying 205-basis-point improvement still exceeded the company's 130-150-basis-point plan. Management raised full-year EPS guidance to $8.61-$8.77, including the refund benefit, and expects second-half comparable-sales growth despite tougher comparisons. The quarter also reinforced the expansion strategy, with 47 openings and a higher full-year target of 115 stores.
Traffic-led sales growth
Ross delivered broad-based top-line momentum through the quarter. Second-quarter sales increased 13% to $6.26 billion from $5.53 billion, while comparable-store sales rose 10% after a 2% increase in the year-ago period. Management attributed the comp performance primarily to customer traffic, supported by both new customers and greater engagement from existing shoppers. First-half sales increased 17% to $12.28 billion, with comparable sales up 13%.
- Customer traffic: Traffic was the primary driver of the 10% comparable-store sales gain, rather than a reported reliance on ticket growth.
- Demand backdrop: Management cited compelling merchandise, marketing initiatives and improvements to the in-store experience as contributors to the quarter's strength.
- Comparisons: The company expects more difficult year-over-year comparisons in the back half, but still projects third-quarter comparable sales up 6%-7% and fourth-quarter comps up 4%-5%.
Margin and tariff refunds
Profitability was the other defining feature of the quarter, although the reported result included a significant tariff refund. Operating income rose to $1.10 billion from $638.3 million, and operating margin expanded to approximately 17.6% from 11.6%. The roughly $253 million IEEPA refund contributed about $0.60 to EPS and 405 basis points of margin expansion. Excluding that benefit, margin still improved 205 basis points, well ahead of the company's 130-150-basis-point plan.
- Earnings impact: Net income increased to $851 million from $508 million, while the release reported diluted EPS of $2.66 versus $1.56 a year ago.
- Underlying execution: The 205-basis-point margin improvement excluding the refund indicates that sales productivity and cost discipline contributed materially beyond the one-time benefit.
- Six-month performance: First-half operating income reached $1.91 billion versus $1.24 billion a year ago, and net income rose to $1.50 billion from $987 million.
Raised fiscal outlook
Ross raised its fiscal 2026 outlook after the strong first half and the improved second-half sales assumptions. Full-year diluted EPS is now expected at $8.61-$8.77, including approximately $0.60 from the tariff refunds recognized in the second quarter. The quarterly outlook calls for EPS of $1.75-$1.83 in the third quarter and $2.17-$2.26 in the fourth quarter.
- Full-year EPS: The new $8.61-$8.77 range incorporates both the strong first-half performance and the approximately $0.60 tariff-refund contribution.
- Second-half sales: Comparable-store sales are expected to increase 6%-7% in the third quarter and 4%-5% in the fourth quarter.
- Execution risk: The guidance assumes continued momentum while annual comparisons become significantly more challenging in the second half.
Store growth strategy
Ross continued to expand both concepts and raised its store-opening plan. The company opened 47 locations during the quarter, bringing the period-end store count to 2,328 versus 2,233 a year earlier. Fiscal 2026 openings are now planned at 115, comprising approximately 90 Ross Dress for Less stores and 25 dd's DISCOUNTS locations.
- Quarterly openings: The 47 new stores included 35 Ross locations and 12 dd's DISCOUNTS stores.
- Updated plan: The 115-store fiscal target is higher than the prior plan and reflects management's confidence in expansion across new and existing markets.
- Concept mix: Ross remains the larger growth vehicle, while dd's DISCOUNTS adds a lower-priced format aimed at more moderately priced merchandise demand.
Capital allocation and cash
Cash generation strengthened alongside earnings, supporting continued repurchases, dividends and store investment. First-half operating cash flow was $1.71 billion versus $1.08 billion a year ago. The company spent $460 million on property and equipment, paid $286 million in dividends and repurchased $637.5 million of stock during the first six months, including $319 million in the second quarter.
- Repurchases: Ross bought back 1.4 million shares in the quarter and remains on track for $1.275 billion of fiscal 2026 repurchases under its $2.55 billion two-year authorization.
- Liquidity: Cash and cash equivalents stood at $4.29 billion at quarter-end, compared with $3.85 billion a year earlier.
- Balance sheet: Long-term debt was $777 million at quarter-end, down from $1.02 billion a year earlier, after $500 million of debt repayment in the first half.
