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Ross Stores, Inc. ROST reported fourth-quarter fiscal 2025 results, with earnings and sales surpassing the Zacks Consensus Estimate. Net sales and earnings per share also increased from the prior-year period.
Ross Stores, a leading off-price apparel retailer, posted earnings of $2.00 per share, exceeding the Zacks Consensus Estimate of $1.88 and well above the company’s guidance of $1.77 to $1.85. Excluding a gain of 14 cents per share from the 2024 packaway facility sale, earnings per share rose 21%.
Total sales reached $6.64 billion, rising 12% year over year and beating the Zacks Consensus Estimate of $6.4 billion. Comparable store sales (comps) improved 9% year over year. Results benefited from compelling, well-curated holiday assortments in its stores, stronger customer engagement driven by new marketing campaigns, and well-executed in-store initiatives that elevated the overall shopping experience.
Shares of the Zacks Rank #3 (Hold) company have gained 11.1% in the past three months, outpacing the industry's 10.8% growth.
Cost of goods sold (COGS) rose 11.2% year over year to $4.8 billion. COGS, as a percentage of sales, declined 65 basis points (bps) year over year. Occupancy expenses improved by 30 bps, driven by strong sales leverage, while distribution and domestic freight costs declined by 20 and 15 bps, respectively, reflecting ongoing supply-chain efficiencies. The merchandise margin expanded by 10 bps. Partially offsetting this improvement, buying costs increased by 10 bps, primarily reflecting higher incentive compensation tied to the earnings outperformance.
SG&A expenses increased 18.2% year over year to $990.1 million and rose 75 bps, as a percentage of sales, due to the prior-year gain from the packaway facility sale. Excluding this impact, SG&A declined 30 bps, reflecting improved expense discipline.
The company’s operating income rose 11.4% year over year to $$814.1 million, with the operating margin contracting 10 bps to 12.6%, including a 105-bps benefit from the sale of a packaway facility.
Ross Stores, Inc. price-consensus-eps-surprise-chart | Ross Stores, Inc. Quote
Ross Stores ended fiscal 2025 with cash and cash equivalents of $4.6 billion, after funding business growth and capital requirements. The company has a long-term debt of $1.02 billion and a total shareholders’ equity of $6.2 billion.
Consolidated inventories increased 8% year over year, with packaway accounting for 37% of the total inventory, down from 41% in the prior year. Management remains encouraged by the improved composition and confident in its year-end inventory position.
In the fiscal fourth quarter, Ross Stores repurchased 1.5 million shares for an aggregate cost of $262 million. In fiscal 2025, the company repurchased 7.1 million shares for $1.05 billion, completing its planned two-year share repurchase program.
The company approved a two-year $2.55 billion share repurchase authorization for fiscal 2026 and 2027, marking a 21% increase from $2.1 billion in common stock repurchased across fiscal 2024 and 2025.
In addition, the board authorized a 10% hike in the quarterly cash dividend to 44.5 cents per share, payable March 31, 2026, to shareholders of record as of March 13, 2026.
The company’s expanded repurchase program and higher dividend underscore its commitment to returning excess cash to shareholders while continuing to invest in growth and other strategic capital priorities.
In fiscal 2025, the company’s store expansion program marked another year of disciplined growth as it entered new markets and strengthened its presence in existing ones. In fiscal 2025, the company opened 80 Ross Dress for Less stores and 10 dd’s DISCOUNTS locations. Notably, the company expanded into several new markets for Ross, including its first stores in the New York Metro area and Puerto Rico.
After accounting for nine closures, the company ended fiscal 2025 with 2,267 stores, comprising 1,904 Ross Dress for Less, and 363 dd’s DISCOUNTS locations.
Building on this momentum, the company expects to expand its store base by 5% in fiscal 2026. The company plans to open 110 locations in fiscal 2026, including 85 Ross stores and 25 dd’s DISCOUNTS. This expansion reflects a reacceleration of dd’s DISCOUNTS. These figures exclude the anticipated closure or relocation of 10-15 older stores.
For first-quarter fiscal 2026, the company plans to open 17 stores, including 13 Ross locations and four dd’s DISCOUNTS stores, continuing its measured expansion across both banners.
As the company continues to uncover attractive real estate opportunities across markets, it remains confident in the long-term potential to expand the Ross chain to 2,900 locations and dd’s DISCOUNTS to 700 stores, further broadening its reach and serving more customers over time.
The company exited the fiscal fourth quarter with solid momentum and is encouraged by a very strong start to the Spring season. For first-quarter fiscal 2026, the company projects comps to increase 7-8%, with total sales estimated to increase 10-12% year over year. Assuming performance aligns with this outlook, the fiscal first-quarter earnings per share are expected to be $1.60-$1.67 compared with $1.47 in the quarter ended May 3, 2025.
For first-quarter fiscal 2026, the operating margin is expected to be 11.8-12.1% compared with 12.2% in the prior-year period. The anticipated decline primarily reflects higher distribution center costs associated with the facility opened in the second quarter of fiscal 2025, as well as unfavorable timing of packaway-related expenses. The company also expects higher incentive compensation versus fiscal 2025, when results fell short of plan. Partially offsetting these headwinds, the company anticipates an improvement in the merchandise margin.
The company anticipates net interest income of $27 million for the fiscal first quarter, with a tax rate of 23-24%. ROST expects average shares outstanding to be 322 million at the end of the first quarter of fiscal 2026.
For fiscal 2026, ROST expects comps growth of 3-4%, with total sales anticipated to increase 5-7%. The company projects earnings per share of $7.02-$7.36 compared with $6.61 in fiscal 2025. Assuming comps perform in line with its outlook, the company expects the operating margin to improve to 12-12.3% from the 11.9% reported in fiscal 2025. This projection reflects anticipated gains in merchandise margin and lower distribution costs throughout the year.
The company anticipates net interest income of $92 million for fiscal 2026. Depreciation and amortization expenses, including stock-based amortization, are expected to be $740 million for fiscal 2026. The effective tax rate is forecast at 24-25%, with shares outstanding estimated at 319 million. The company projects capital expenditure for fiscal 2026 at $1.1 billion, reflecting a series of strategic investments embedded in its plans for the year.
American Eagle Outfitters, Inc. AEO operates as a multi-brand specialty retailer in the United States and internationally. At present, American Eagle sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AEO’s fiscal 2026 sales and earnings implies growth of 3.4% and 23.1%, respectively, from the year-ago reported figures. AEO delivered a trailing four-quarter earnings surprise of 35.1%, on average.
Deckers Outdoor Corporation DECK is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. At present, DECK flaunts a Zacks Rank #1
The Zacks Consensus Estimate for Deckers’ fiscal 2026 sales and earnings implies growth of 8.9% and 8.5%, respectively, from the year-ago reported figures. DECK delivered a trailing four-quarter earnings surprise of 36.9%, on average.
Costco Wholesale Corporation COST sells high volumes of food and general merchandise (including household products and appliances) at discounted prices through membership warehouses. Costco currently has a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Costco’s fiscal 2026 sales and earnings implies growth of 8.1% and 12.5%, respectively, from the year-ago reported figures. COST delivered a trailing four-quarter earnings surprise of 0.5%, on average.
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This article originally published on Zacks Investment Research (zacks.com).
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