Ross Stores Raises Full Year Earnings Outlook To $8.77
The off-price retailer reported second quarter earnings per share of $2.66, which included a $0.60 benefit from tariff refunds.
Ross Stores (ROST) reported a second quarter marked by significant earnings growth and a one-time regulatory windfall, though the pace of sales growth decelerated from the start of the fiscal year. The off-price apparel and home fashion retailer reported second-quarter sales of $6.3 billion, a 13% increase from $5.5 billion in the prior-year period.
Comparable-store sales rose 10% for the quarter, an acceleration from the 2% gain seen in the same period a year earlier. However, this growth represents a deceleration from the first quarter of fiscal 2026, when comparable-store sales rose 17%. Total sales growth also slowed to 13% in the second quarter from 21% in the first quarter.
Net income for the quarter was $851 million, up from $508 million a year earlier. Earnings per share were $2.66, compared to $1.56 in the prior-year period. These results exceeded the company's guidance of $1.85 to $1.93.
The company's profitability was bolstered by approximately $253 million in IEEPA tariff refunds, which added about $0.60 to earnings per share. This benefit contributed 405 basis points to an overall operating margin increase of 610 basis points. Excluding the tariff refunds, operating margin increased by 205 basis points, above the planned increase of 130 to 150 basis points.
For the first six months of fiscal 2026, sales increased 17% to $12.3 billion, compared to $10.5 billion in the same period in 2025. Net income for the six-month period was $1.5 billion, up from $987 million a year earlier, while earnings per share were $4.69, compared to $3.03.
Ross Stores is accelerating its physical expansion and raising its financial targets. The company increased its 2026 new-store opening plan to 115 locations, comprising approximately 90 Ross Dress for Less and 25 dd’s DISCOUNTS stores. During the second quarter, it opened 47 new stores, including 35 Ross and 12 dd’s DISCOUNTS locations.
Management raised the outlook for the second half of the year despite more challenging year-over-year comparisons. Comparable-store sales are now expected to increase 6% to 7% in the third quarter and 4% to 5% in the fourth quarter. If these projections are met, earnings per share are projected to be $1.75 to $1.83 in the third quarter and $2.17 to $2.26 in the fourth quarter.
Based on the first-half results and updated second-half guidance, the company raised its full-year fiscal 2026 earnings per share projections to a range of $8.61 to $8.77, up from previous guidance of $7.50 to $7.74. This full-year projection includes the $0.60 per-share benefit from the tariff refunds recognized in the second quarter.
On the capital front, the company repurchased 1.4 million shares for $319 million during the second quarter. Ross Stores remains on track to buy back a total of $1.275 billion in common stock during fiscal 2026.