TLDR
- Q2 revenue at Ross Stores climbed 13% year-over-year to reach $6.3 billion, with comp sales increasing 10%
- Earnings per share of $2.06 exceeded analyst expectations of $1.93; net profit surged to $851.3 million
- The company received a $253 million IEEPA tariff refund, contributing approximately 60 cents to EPS
- Management upgraded full-year EPS guidance to a range of $8.61-$8.77; store expansion plan increased to 115 new locations
- Shares of ROST climbed more than 8% in premarket sessions; Jefferies upgraded its price target to $285
The discount retailer Ross Stores delivered an impressive second-quarter performance, propelling shares more than 8% higher in Friday’s premarket session. ROST traded near $248 ahead of the opening bell, marking a significant jump from Thursday’s closing price of $228.99.
Second-quarter revenue totaled $6.26 billion, representing a 13% increase from the prior-year period and surpassing the Wall Street consensus of $6.15 billion. Comparable-store sales surged 10%, fueled primarily by increased foot traffic across locations.
The company delivered earnings per share of $2.06, eclipsing the Zacks consensus projection of $1.93 and significantly exceeding last year’s $1.56 result. This represented a 6.74% positive earnings surprise.
Net profit for the three-month period totaled $851.3 million, a substantial increase from $508 million during the comparable quarter last year. Operating profit climbed to $1.1 billion versus $638.3 million in the year-ago period.
IEEPA Tariff Refund Provides Significant Earnings Lift
A substantial portion of the profit surge stemmed from an unanticipated development. Ross collected approximately $253 million in tariff refunds that were originally levied under the International Emergency Economic Powers Act.
This one-time benefit contributed around 60 cents per diluted share. Even when excluding this tariff-related gain, the company’s operating margin expanded by 205 basis points.
The retailer has now surpassed consensus earnings expectations for four consecutive quarters. The preceding quarter delivered an even more substantial earnings surprise of 18.82%.
During the first six months of fiscal 2026, total revenue increased 17% to $12.3 billion. Comparable-store sales advanced 13%, while net income grew to $1.5 billion compared to $987.2 million in the year-earlier period.
Company Upgrades Annual Forecast, Accelerates Store Growth
Leadership increased the full-year earnings per share projection to a range of $8.61-$8.77, incorporating the tariff refund benefit. For the third quarter, the company anticipates comparable-store sales growth of 6%-7% with EPS between $1.75-$1.83. Fourth-quarter guidance projects 4%-5% comp sales growth and earnings per share of $2.17-$2.26.
Ross also increased its 2026 store expansion objective to 115 new locations, an increase from previous projections. This expansion includes approximately 90 Ross Dress for Less units and 25 dd’s Discounts stores. The company opened 47 new locations during Q2 alone.
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 the quarterly results, Jefferies increased its price target on ROST to $285 from $265, characterizing it as “another blowout top-line quarter.” The investment firm expressed continued confidence in additional upside potential.
Year-to-date, ROST has appreciated approximately 30.3%, significantly outpacing the S&P 500’s 12.6% gain over the same timeframe.
Industry peer Burlington Stores (BURL) is scheduled to announce its Q2 results on August 27. Analysts anticipate Burlington will report earnings per share of $2.18, reflecting 37.1% year-over-year growth, on revenues of $3.02 billion.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
