Second quarter of fiscal 2026
Filed Aug 20, 2026Ross Stores Reports Strong Second Quarter Sales and Earnings Results Raises Second Half and Fiscal 2026 Outlook
Second-quarter sales increased 13%, comparable store sales rose 10% primarily on customer traffic, operating income reached $1,103,618, and diluted EPS of $2.66 was above the company’s $1.85 to $1.93 guidance. Results included approximately $253 million of IEEPA tariff refunds, while operating-margin expansion excluding that benefit was still above plan.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total sales, second quarterGAAP | $6,264,886 | – | increased 13% |
| Comparable store sales, second quarterother | up a very strong 10% | – | – |
| Operating income, second quarterGAAP | $1,103,618 | – | – |
| Operating margin, second quarterGAAP | increased 610 basis points | – | including 405 basis points from the tariff refunds; excluding this benefit, operating margin increased by 205 basis points |
| Net earnings, second quarterGAAP | $851,299 | – | – |
| Diluted earnings per share, second quarterGAAP | $2.66 per diluted share | – | – |
| Basic earnings per share, second quarterGAAP | $2.68 | – | – |
| Cost of goods sold, second quarterGAAP | $4,145,215 | – | – |
| Selling, general and administrative expense, second quarterGAAP | $1,016,053 | – | – |
| Interest income, net, second quarterGAAP | $(31,144) | – | – |
| Earnings before taxes, second quarterGAAP | $1,134,762 | – | – |
| Provision for taxes on earnings, second quarterGAAP | $283,463 | – | – |
| Weighted-average diluted shares outstanding, second quarterGAAP | 319,450 (000) | – | – |
| Store count at end of periodother | 2,328 | – | – |
| Total sales, first six monthsGAAP | $12,275,362 | – | increased 17% |
| Comparable store sales, first six monthsother | up 13% | – | – |
| Operating income, first six monthsGAAP | $1,907,644 | – | – |
| Net earnings, first six monthsGAAP | $1,501,263 | – | – |
| Diluted earnings per share, first six monthsGAAP | $4.69 | – | – |
| Net cash provided by operating activities, first six monthsGAAP | $1,711,767 | – | – |
| Additions to property and equipment, first six monthsGAAP | $(460,217) | – | – |
Third quarter, fourth quarter, second half and fiscal 2026 outlook
- NoteThird-quarter comparable store sales are expected to increase 6% to 7%.
- NoteFourth-quarter comparable store sales are expected to increase 4% to 5%.
- NoteThird-quarter earnings per share are projected to be $1.75 to $1.83.
- NoteFourth-quarter earnings per share are projected to be $2.17 to $2.26.
- NoteFiscal 2026 earnings per share projections are $8.61 to $8.77, including an approximate $0.60 earnings per share benefit from IEEPA tariff refunds recognized in the second quarter.
- NoteFiscal 2026 new store opening plan increased to 115 locations, consisting of approximately 90 Ross Dress for Less and 25 dd’s DISCOUNTS stores.
Capital returns
- During the 2026 second quarter, 1.4 million shares of common stock were repurchased for an aggregate price of $319 million under the Company’s two-year $2.55 billion authorization approved in March 2026.
- The Company remains on track to buy back a total of $1.275 billion in common stock during fiscal 2026.
- For the first six months, repurchase of common stock was $(637,500), treasury stock purchased was $(136,595), and excise tax paid on repurchase of common stock was $(9,496).
- Dividends paid were $(286,191) for the first six months, compared with $(265,637) in the prior-year period.
- Issuance of common stock related to stock plans was $13,183 for the first six months.
What drove it
- Comparable store sales growth was primarily driven by customer traffic.
- The company cited an increase in new customers and higher engagement from existing customers.
- Management attributed performance to compelling merchandise offerings, engaging marketing initiatives, and continued enhancements to the in-store experience.
- Second-quarter operating profit included approximately $253 million from IEEPA tariff refunds, benefiting EPS by approximately $0.60.
- The company opened 47 stores during the quarter, including 35 Ross and 12 dd’s DISCOUNTS locations.
Concerns
- The company expects significantly more challenging year-over-year comparisons in the back half.
- Second-quarter operating profit and EPS included approximately $253 million and approximately $0.60 per share, respectively, from IEEPA tariff refunds.
- The filing identifies risks from tariff increases or threats of increases and uncertainty in U.S. trade or tax policy.
- The filing identifies risks related to consumer spending, sourcing attractive brand-name merchandise, inventory management, markdowns, supply-chain disruptions, labor costs, and adverse weather.
What to watch
- Third-quarter comparable store sales guidance of 6% to 7% and fourth-quarter guidance of 4% to 5%.
- Third-quarter EPS guidance of $1.75 to $1.83 and fourth-quarter EPS guidance of $2.17 to $2.26.
- Whether operating-margin performance continues after the second-quarter IEEPA tariff refund benefit.
- Execution of the increased fiscal 2026 plan for 115 new stores, including approximately 90 Ross Dress for Less and 25 dd’s DISCOUNTS locations.
- Progress toward the stated fiscal 2026 common-stock repurchase target of $1.275 billion.
Balance sheet and cash flow
- Cash and cash equivalents were $4,288,124 as of August 1, 2026, versus $3,847,016 as of August 2, 2025.
- Total cash, cash equivalents, and restricted cash and cash equivalents were $4,356,924, versus $3,913,293.
- Merchandise inventory was $3,087,370, versus $2,608,485.
- Accounts payable were $2,621,740, versus $2,205,613.
- Current portion of long-term debt was $241,459, versus $499,122, and long-term debt was $777,053, versus $1,017,218.
- Net cash provided by operating activities was $1,711,767 for the first six months, versus $1,078,077.
- Net cash used in investing activities was $(460,217), versus $(409,105).
- Net cash used in financing activities was $(1,556,599), versus $(1,552,141).
- Payment of long-term debt was $(500,000), versus $(700,000).
- Net decrease in cash, cash equivalents, and restricted cash and cash equivalents was $(305,049), versus $(883,169).
Analysis
Ross delivered a strong second quarter, with sales of $6,264,886 increasing 13% and comparable store sales up a very strong 10% on top of a 2% gain last year. Management said the comparable-store performance was primarily driven by customer traffic, supported by both new-customer growth and higher engagement from existing customers. The company also cited merchandise offerings, marketing initiatives, and in-store experience enhancements as contributors.
Profit growth was substantial. Operating income was $1,103,618 compared with $638,274 last year, while net earnings were $851,299 versus $507,995 and diluted EPS was $2.66 versus $1.56. Operating margin increased 610 basis points, including 405 basis points from approximately $253 million of IEEPA tariff refunds. Excluding that benefit, the company said operating margin increased 205 basis points, above its plan for an increase of 130 to 150 basis points. The tariff refunds also benefited second-quarter EPS by approximately $0.60.
The first-half results show continued strength, with sales of $12,275,362, up 17%, comparable store sales up 13%, operating income of $1,907,644, and diluted EPS of $4.69. Operating cash flow for the first six months was $1,711,767, while additions to property and equipment were $(460,217). The balance sheet reported $4,288,124 of cash and cash equivalents, merchandise inventory of $3,087,370, and long-term debt of $777,053 as of August 1, 2026.
Capital allocation included $319 million spent to repurchase 1.4 million shares in the second quarter. For the first six months, repurchase of common stock was $(637,500), dividends paid were $(286,191), and payment of long-term debt was $(500,000). The company remains on track to repurchase $1.275 billion of common stock in fiscal 2026. Store expansion accelerated, with 47 stores opened in the quarter and the fiscal 2026 opening plan raised to 115 locations.
Management raised its second-half and fiscal 2026 outlook despite citing significantly more challenging year-over-year comparisons in the back half. It now expects comparable store sales to increase 6% to 7% in the third quarter and 4% to 5% in the fourth quarter, with EPS projected at $1.75 to $1.83 and $2.17 to $2.26, respectively. Fiscal 2026 EPS is projected at $8.61 to $8.77, including the approximate $0.60 per-share IEEPA tariff refund benefit recognized in the second quarter. The principal reporting focus is whether traffic-led comparable-store growth and underlying margin expansion continue after the discrete tariff-refund contribution.
Management, verbatim
We achieved stellar sales and earnings growth in the second quarter. I am incredibly proud of our teams across the Company, whose dedication and strong execution drove these outstanding results.
Jim Conroy, Chief Executive Officer
Looking ahead, we exited the second quarter with building momentum and are excited for the plans we have in place entering the Fall season.
Jim Conroy, Chief Executive Officer
The year is off to a very strong start with the entire organization executing at a high level.
Jim Conroy, Chief Executive Officer
Not in the filing
stated, not guessed- Separate prior-quarter outlook section was not provided; therefore, no actual-versus-prior-guidance comparisons are included.
- Gross margin was not reported.
- Free cash flow was not reported.
- Quarterly operating cash flow was not reported.
- Segment revenue, segment profit, and comparable-store sales by banner were not reported.
- Non-GAAP financial measures were not reported.
- Revenue, gross-margin, operating-expense, and tax-rate guidance were not reported.
- Absolute operating margin and effective tax rate were not reported.
- Fiscal 2026 revenue guidance was not reported.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.