Ross Stores (NASDAQ:ROST) shares rallied in pre-market trading after the off-price retailer delivered stronger-than-expected second-quarter sales and earnings and raised its full-year profit outlook, supported by higher customer traffic and a tariff refund.
Sales for the quarter increased 13% year on year to $6.3 billion, while comparable-store sales climbed 10%, primarily reflecting stronger traffic. Net income jumped to $851.3 million from $508.0 million a year earlier, with diluted earnings per share rising to $2.66 from $1.56.
Ross shares were up more than 8% in early US pre-market trading by 04:13 ET.
Customer traffic drives strong comparable sales growth
The second-quarter performance extended Ross Stores’ recent momentum, with increased customer visits helping generate double-digit comparable-store sales growth.
Operating income rose to $1.1 billion from $638.3 million in the corresponding period last year.
Results also benefited from approximately $253 million of refunds related to tariffs imposed under the International Emergency Economic Powers Act. The refunds contributed around $0.60 to quarterly earnings per share.
Excluding the tariff benefit, Ross said its operating margin still expanded by 205 basis points, indicating that the improvement was not solely attributable to the one-off refund.
Ross raises fiscal 2026 earnings outlook
Following the strong quarter, Ross increased its fiscal 2026 earnings-per-share forecast to between $8.61 and $8.77, including the benefit associated with the tariff refunds.
The retailer expects comparable-store sales to increase by 6% to 7% in the third quarter before moderating to growth of 4% to 5% during the fourth quarter as comparisons become more demanding.
Third-quarter earnings per share are projected at $1.75 to $1.83, while fourth-quarter EPS is expected to range between $2.17 and $2.26.
The upgraded forecasts indicate management remains confident in the company’s momentum despite facing tougher year-on-year comparisons during the second half.
Store expansion plans increase to 115 locations
Ross also raised its store-opening target for fiscal 2026 to 115 locations, comprising approximately 90 Ross Dress for Less stores and 25 dd’s Discounts stores.
The company opened 47 locations during the second quarter alone, underscoring its continued investment in expanding its physical retail footprint.
For the first six months of the year, sales increased 17% to $12.3 billion and comparable-store sales advanced 13%. Net income reached $1.5 billion, up from $987.2 million, while diluted earnings per share increased to $4.69 from $3.03.
Jefferies raises Ross Stores price target
The results prompted Jefferies to increase its price target on Ross Stores to $285 from $265, with analysts pointing to “another blowout top-line quarter.”
“We remain confident in continued share upside from here,” Jefferies analysts said.
Ross also continued returning capital to shareholders during the quarter, repurchasing 1.4 million shares for $319 million.
The retailer remains on track to complete $1.275 billion of share repurchases during fiscal 2026, while its stronger earnings guidance and expanded store-opening programme signal continued confidence in the outlook for the business.
Ross Stores stock price
