Key Highlights
- First-quarter revenue reached $6.01 billion, marking a 21% increase versus the prior year and exceeding Wall Street’s $5.64 billion projection.
- Comparable store sales climbed 17%, nearly double the consensus forecast of 9.4%, fueled by increased foot traffic and elevated tax refund-related spending.
- Earnings per share hit $2.02, representing a 37% jump and significantly surpassing both internal projections of $1.60–$1.67 and analyst expectations of $1.73.
- The operating margin reached 13.4%, exceeding the retailer’s guidance range of 11.8%–12.1%.
- Full-year fiscal 2026 outlook upgraded, with the company now forecasting comparable sales increases of 6%–7% and earnings per share between $7.50–$7.74, reflecting 13%–17% year-over-year growth.
Shares of Ross Stores climbed 5.3% during Friday’s premarket session, trading above $228, following the discount retailer’s exceptional first-quarter performance that surpassed analyst projections across all key financial indicators.
Quarterly revenue for the period concluded in early May increased 21% to reach $6.01 billion. The Street had anticipated $5.64 billion.
Comparable store sales expanded 17% — significantly outpacing the 9.4% consensus projection. Chief Executive Officer Jim Conroy characterized the expansion as “broad-based” spanning all product categories, customer income brackets, demographic groups, and geographic markets.
“We maintained strong momentum throughout the entire quarter,” Conroy stated. He attributed the success primarily to elevated customer traffic, enhanced marketing initiatives, and improvements to the in-store shopping experience.
Increased tax refund activity provided additional support. According to Conroy, heightened consumer spending linked to tax refund receipts contributed positively to sales during this timeframe.
Earnings per share registered at $2.02, up 37% compared to $1.47 in the year-ago quarter. This substantially exceeded the company’s internal forecast range of $1.60–$1.67 and analyst consensus of $1.73.
The operating margin achieved 13.4%, comfortably above Ross’ projected range of 11.8%–12.1%, propelled primarily by improved merchandise margins and occupancy cost leverage resulting from robust sales performance.
Quarterly net income advanced to $650 million from $479 million in the corresponding prior-year quarter.
Performance Drivers Behind the Results
All primary product categories achieved comparable sales expansion in the mid-to-high teens or greater. Women’s apparel and cosmetics emerged as top performers, with Conroy highlighting new brand partnerships and Korean beauty product trends as significant contributors to cosmetics growth.
The company’s dd’s DISCOUNTS banner similarly delivered strong revenue performance across all categories and regions. From a geographic perspective, the Midwest region led growth, though strength was evident nationwide.
Conroy reported that customer transaction counts on a comparable-store basis increased by double digits, with gains spanning all income segments, ethnic backgrounds, and age demographics — including younger consumer groups. “Transaction volume has been the primary driver of our comparable sales performance for three consecutive quarters,” he noted.
Regarding expenses, merchandise margins improved by 85 basis points, while occupancy costs leveraged favorably by 60 basis points on the strengthened sales foundation. Elevated fuel costs partially offset freight expense benefits, and incentive compensation increased proportionally with the exceptional earnings performance.
The retailer concluded the quarter with consolidated inventory levels up 12%. Packaway inventory represented 36% of total inventory, declining from 41% in the prior year. Conroy characterized closeout merchandise availability as “outstanding.”
Expansion Plans and Forward Outlook
Ross concluded the first quarter operating 2,282 locations after opening 17 new stores across 11 states. The company’s plan calls for approximately 110 new store openings during fiscal 2026, representing roughly 5% unit growth. This includes about 85 Ross stores and 25 dd’s DISCOUNTS locations, net of 10–15 planned closures or relocations.
For the second quarter, Ross anticipates comparable sales growth of 6%–7% and earnings per share ranging from $1.85–$1.93, representing 19%–24% year-over-year growth. Total second-quarter revenue is projected to increase 9%–11%.
For full fiscal year 2026, the company elevated its guidance to reflect comparable sales growth of 6%–7% and earnings per share of $7.50–$7.74, up from $6.61 in the prior fiscal year.
Conroy emphasized that the quarter represented “the strongest same-store sales growth in the company’s 40-year operating history.”
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