Key Highlights
- Second-quarter revenue for Ross Stores climbed 13% year-over-year to reach $6.3 billion, while comparable-store sales increased 10%
- Diluted earnings per share hit $2.06, surpassing analyst expectations of $1.93; net earnings soared to $851.3 million
- The company received a $253 million tariff refund through IEEPA, contributing approximately 60 cents to EPS
- Management elevated full-year EPS projections to a range of $8.61-$8.77; expansion plans now include 115 new store openings
- Shares of ROST surged more than 8% during premarket hours; Jefferies analysts increased their price target to $285
The discount retail giant Ross Stores delivered impressive second-quarter results that propelled shares upward by over 8% in Friday’s premarket session. ROST was changing hands near $248 ahead of the opening bell, representing a significant jump from Thursday’s closing price of $228.99.
The company reported second-quarter revenue of $6.26 billion, representing a 13% increase from the prior-year period and exceeding Wall Street’s consensus forecast of $6.15 billion. Same-store sales growth reached 10%, fueled predominantly by increased foot traffic across locations.
Diluted earnings per share of $2.06 beat the Zacks consensus projection of $1.93 and significantly outpaced the $1.56 figure reported in the year-ago quarter. The result represents a positive earnings surprise of 6.74%.
Net earnings for the three-month period totaled $851.3 million, a substantial increase from $508 million in the corresponding quarter of the previous year. Operating income advanced to $1.1 billion compared to $638.3 million.
IEEPA Tariff Reimbursement Enhanced Bottom Line
A significant portion of the earnings growth stemmed from an unanticipated development. Ross secured approximately $253 million in reimbursements for tariffs previously paid under the International Emergency Economic Powers Act.
This one-time benefit contributed around 60 cents to the company’s diluted earnings per share. Even when excluding this tariff-related windfall, the operating margin expanded by 205 basis points.
The discount retailer has now exceeded Wall Street’s earnings per share estimates for four consecutive quarters. The preceding quarter delivered an even more impressive earnings surprise of 18.82%.
Looking at the first half of fiscal 2026, total sales advanced 17% to $12.3 billion. Comparable-store sales registered a 13% increase, while net earnings grew to $1.5 billion from $987.2 million in the year-earlier period.
Company Elevates Annual Forecast and Accelerates Expansion Strategy
Leadership increased the full-year earnings per share outlook to a range of $8.61-$8.77, a figure that incorporates the tariff reimbursement benefit. For the third quarter, management anticipates comparable-store sales growth of 6%-7% alongside EPS between $1.75-$1.83. Fourth-quarter projections call for 4%-5% comparable sales growth with EPS ranging from $2.17-$2.26.
Ross also upgraded its 2026 store expansion objective to 115 new locations, an increase from previous targets. The plan encompasses approximately 90 Ross Dress for Less stores along with 25 dd’s Discounts locations. During the second quarter alone, the company launched 47 new stores.
Regarding capital allocation, Ross bought back 1.4 million shares for $319 million throughout the quarter and continues to target returning $1.275 billion to shareholders during this fiscal year.
Following these results, Jefferies elevated its price target on ROST to $285 from $265, characterizing it as “another blowout top-line quarter.” The investment firm expressed continued optimism about additional upside potential.
Year-to-date, ROST has appreciated approximately 30.3%, substantially outperforming the S&P 500’s 12.6% advance during the same timeframe.
Competitor Burlington Stores (BURL) is scheduled to announce its own second-quarter results on August 27. Analysts anticipate Burlington will report EPS of $2.18, reflecting 37.1% year-over-year growth, on revenues totaling $3.02 billion.
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