Ross Stores Raises Its 2026 Outlook After Traffic Fuels a Standout Quarter

Ross Stores delivered a stronger-than-expected second quarter and raised its outlook for the rest of fiscal 2026, offering a closely watched signal about how American shoppers are responding to value-focused retail. Total sales rose 13 percent from a year earlier to $6.3 billion, while comparable-store sales increased 10 percent, driven primarily by customer traffic.

Net income reached $851 million, up from $508 million in the comparable quarter, and earnings per share increased to $2.66 from $1.56. The headline result included a significant benefit from tariff refunds: Ross said approximately $253 million of refunds added about $0.60 per share and lifted operating margin by roughly 405 basis points.

The company’s underlying performance was still strong after removing that one-time boost. Ross said operating margin improved by about 205 basis points excluding the tariff-refund benefit, above its earlier plan. That detail is important because investors need to distinguish between durable gains from sales and execution and temporary gains that will not repeat in every quarter.

Chief Executive Jim Conroy said the retailer attracted new customers while also seeing stronger engagement from existing shoppers. That combination supports the case that off-price retail is gaining share rather than relying only on loyal bargain hunters. When household budgets feel pressured, consumers often trade down from department stores while continuing to buy branded apparel, footwear and home products.

Ross operates through Ross Dress for Less and dd’s DISCOUNTS, using a buying model that acquires merchandise opportunistically and sells it below many traditional retail prices. The model can benefit when brands and other retailers have excess inventory, but it also requires disciplined purchasing. Too much inventory can create markdown risk, while too little can make stores feel repetitive.

The second-quarter growth was broad enough for Ross to lift its projections. The company now expects comparable-store sales to rise 6 to 7 percent in the third quarter and 4 to 5 percent in the fourth. It forecast third-quarter earnings per share of $1.75 to $1.83 and fourth-quarter earnings per share of $2.17 to $2.26.

Full-year earnings per share are now projected at $8.61 to $8.77, including the approximately $0.60 contribution from tariff refunds. Ross also increased its 2026 store-opening plan to 115 locations, consisting of about 90 Ross stores and 25 dd’s DISCOUNTS. It opened 47 stores during the second quarter alone.

Expansion at that pace reflects confidence, but it carries execution risks. New locations need suitable real estate, trained staff and a merchandise flow that preserves the treasure-hunt experience shoppers expect. Management must also make sure new stores add sales rather than simply shifting customers away from nearby existing locations.

The results stand out because the American consumer picture remains mixed. Higher borrowing costs and uneven inflation have encouraged caution, yet spending has not collapsed. Ross’s traffic suggests many customers are still willing to buy discretionary products when the price feels compelling. That is different from a broad consumer boom and may favor retailers with a clear value proposition.

Shareholders also received capital through buybacks. Ross repurchased 1.4 million shares for $319 million during the quarter under a two-year authorization approved in March. The company said it remains on track to repurchase $1.275 billion of stock during fiscal 2026, adding another use for cash alongside store growth and operations.

The quarter also raises a competitive question for department stores and full-price apparel chains. If shoppers increasingly begin their search at off-price stores, traditional retailers may need sharper promotions or leaner inventory plans. Ross, meanwhile, must protect the price gap and product discovery that brought those customers through the door in the first place.

The next two quarters will show how much momentum is structural. Investors should watch traffic, merchandise margin, inventory levels and performance excluding any unusual refund benefits. If Ross can sustain solid comparable sales while opening more stores and protecting margins, the quarter will look like evidence of lasting share gains. If growth slows sharply, the tariff refund may make the current earnings jump appear more exceptional than repeatable.