Ross Stores Q2 Earnings Call Highlights

Ross Stores delivered strong Q2 fiscal 2026 results: Sales rose 13% to $6.3 billion, comparable-store sales increased 10%, and net income climbed to $851 million, or $2.66 per share. Growth was driven mainly by higher customer traffic and transaction volume across categories and regions. Margins benefited significantly from tariff refunds: Gross margin expanded 625 basis points, including $253 million—or about $0.60 per share—in tariff refunds. Excluding those refunds, operating margin still improved 205 basis points year over year. The company raised its second-half outlook and expansion plans: Full-year EPS is now expected at $8.61 to $8.77, while fiscal 2026 store openings increased to 115 from 110 previously. Ross also plans to repurchase approximately $1.275 billion of stock during the year.

Ross Stores NASDAQ: ROST reported strong second-quarter fiscal 2026 results, with sales rising 13% to $6.3 billion and comparable-store sales increasing 10%, driven primarily by higher transaction volume. The company said the quarter marked its second consecutive period of double-digit comparable-store sales growth and that sales strengthened through the quarter, with July producing the strongest performance. Chief Executive Officer Jim Conroy said customer traffic remained the primary contributor to the comparable-sales increase. The company saw gains from new shoppers, returning customers who had not visited in some time, and more frequent trips from existing customers. Those customers also spent more per visit, Conroy said.

“The underlying metrics that we see are just extremely positive across the board,” Conroy said, pointing to broad-based growth across customer groups, merchandise categories and geographic markets. Sales strength across categories and regions Ross said its customer gains spanned income levels, age groups and ethnicities, including younger shoppers. Conroy attributed the results to customer-acquisition efforts, marketing, improved store execution, broader merchandise assortments and expanded vendor relationships.

At the Ross banner, results were broad-based across merchandise categories and geographies. Home and cosmetics were the strongest businesses in the quarter, while the Midwest was the strongest region. The dd’s DISCOUNTS chain also posted solid and broad-based performance across merchandise and geographic areas, management said. Conroy said the company’s merchant teams have added vendors and brands, while store teams have improved organization, inventory recovery and checkout queues. He said Ross is also gaining access to more popular brands, though not necessarily at higher price points, and remains committed to maintaining value-oriented pricing.

“We absolutely want to have the best values in our store,” Conroy said. He added that the company expects modest, low-single-digit average unit retail increases during the second half of the year. Margins benefited from tariff refunds Second-quarter gross margin increased 625 basis points from the prior year, including 405 basis points of tariff refunds. Merchandise margin rose 110 basis points, while distribution costs declined 100 basis points, which the company attributed to favorable timing of packaway-related expenses, higher productivity and the anniversary of prior-year tariff-related processing costs. Occupancy costs leveraged by 25 basis points. Those gains were partly offset by a 5-basis-point increase in buying costs from higher incentives and a 10-basis-point increase...