Ross Stores (ROST) Stock Soars 8% on Robust Q2 Earnings and Upgraded Forecast

Key Highlights

• Second-quarter revenue climbed 13% year-over-year to $6.3 billion with comparable sales advancing 10%
• Diluted earnings per share reached $2.06, surpassing analyst projections of $1.93; net earnings soared to $851.3 million
• Approximately $253 million in tariff refunds under IEEPA contributed roughly 60 cents per share to earnings
• Annual EPS outlook elevated to $8.61-$8.77 range; expansion strategy increased to 115 new store openings
• Shares jumped more than 8% during premarket hours; Jefferies upgraded price target to $285

The discount apparel retailer delivered robust second-quarter results that propelled shares higher by over 8% in early Friday trading. The stock was changing hands near $248 in premarket activity, representing a significant jump from Thursday’s closing price of $228.99.

Ross Stores, Inc., ROST

Second-quarter sales totaled $6.26 billion, representing a 13% increase from the prior-year period and exceeding Wall Street’s consensus projection of $6.15 billion. Comparable-store sales advanced 10%, primarily fueled by increased foot traffic across locations.

Diluted earnings of $2.06 per share exceeded the Zacks consensus forecast of $1.93 and substantially outperformed last year’s $1.56 result. The figure represents a 6.74% positive earnings surprise.

The quarter’s net earnings totaled $851.3 million, climbing from $508 million during the comparable quarter last year. Operating profit increased to $1.1 billion versus $638.3 million in the year-ago period.

IEEPA Tariff Reimbursement Provided Significant Earnings Lift

A substantial portion of the profit expansion 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 approximately 60 cents to diluted earnings per share. Even when excluding this tariff-related gain, operating margin still widened by 205 basis points.

The retailer has now surpassed consensus earnings projections for four consecutive quarters. The preceding quarter delivered an even more substantial earnings beat of 18.82%.

For the first six months of fiscal 2026, aggregate sales increased 17% to $12.3 billion. Comparable-store sales advanced 13%, while net earnings grew to $1.5 billion compared to $987.2 million in the prior-year period.

Company Elevates Annual Guidance and Accelerates Expansion

Leadership upgraded the full-year earnings forecast to a range of $8.61-$8.77 per share, incorporating the tariff reimbursement. For the third quarter, the company anticipates comparable-store sales growth between 6%-7% with earnings per share of $1.75-$1.83. Fourth-quarter projections call for comparable sales gains of 4%-5% and earnings of $2.17-$2.26 per share.

Ross also increased its 2026 expansion blueprint to 115 new locations, up from previous plans. This includes approximately 90 Ross Dress for Less units and 25 dd’s Discounts stores. The company launched 47 new stores during the second quarter alone.

Regarding capital allocation, the retailer bought back 1.4 million shares for $319 million during the quarter and continues to target $1.275 billion in total shareholder returns for the current fiscal year.

Investment firm Jefferies elevated its price objective on the stock to $285 from $265 following these results, characterizing it as “another blowout top-line quarter.” The firm expressed continued optimism for additional upside potential.

Year-to-date, shares have appreciated approximately 30.3%, significantly outpacing the S&P 500’s 12.6% advance over the same timeframe.

Competitor Burlington Stores (BURL) is scheduled to announce its second-quarter results on August 27. Analysts anticipate Burlington will report earnings of $2.18 per share, reflecting 37.1% year-over-year growth, on revenues of $3.02 billion.

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