ROST · Q2 2026 Earnings

Bullish

Ross Stores

Reported August 20, 2026

30-second summary

Ross printed a +10% comp on top of last quarter's +17%, with revenue of $6.26B (+13.3% YoY) and GAAP EPS of $2.66 — $0.73 above the high end of the prior $1.85–$1.93 guide. A one-time tariff refund contributed $253M ($0.60/share), but even ex-refund the operational beat is material: operating margin expanded 205bps YoY ex-refund, above the guided 130–150bps expansion. Management raised the FY26 EPS guide to $8.61–$8.77 (midpoint $8.69, +$1.07 vs prior $7.62), lifted Q3 comp guidance to +6–7%, set Q4 comps at +4–5%, and formalized a $1.275B buyback commitment — while explicitly flagging "significantly more challenging year-over-year comparisons in the back half."

Headline numbers

EPS

Q2 FY2026

$2.66

Revenue

Q2 FY2026

$6.26B

+13.3% YoY

Gross margin

Q2 FY2026

33.8%

Operating margin

Q2 FY2026

17.6%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$6.26B	$5.53B	+13.2%	$6.01B	+4.2%
EPS	$2.66	$1.56	+70.5%	$2.02	+31.7%
Gross margin	33.8%	27.6%	+620bps	29.6%	+420bps
Operating margin	17.6%	11.5%	+610bps	13.4%	+420bps

Guidance

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
EPS (GAAP)	Q2 FY2026	$1.85 to $1.93	$2.66	+$0.73 above high end of guide	Beat
Revenue	Q2 FY2026	9% to 11% YoY growth	13.3% YoY growth	+2.3–4.3 percentage points above guide range	Beat
Comparable Store Sales Growth	Q2 FY2026	6% to 7%	10%	+3 percentage points above high end of guide	Beat
Operating Margin	Q2 FY2026	12.8% to 13.0%	17.6%	+4.6–4.8 percentage points above high end of guide	Beat
New Store Openings	Q2 FY2026	47 stores (35 Ross, 12 dd's)	47 stores	in-line	Met

New guidance

Metric	Period	Guide	YoY
Share Repurchase	FY2026	$1.275 billion	—
Comparable Store Sales Growth	Q3 FY2026	6% to 7%	—
EPS (GAAP)	Q3 FY2026	$1.75 to $1.83 (midpoint $1.79)	—
EPS (GAAP)	Q4 FY2026	$2.17 to $2.26	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
EPS (GAAP)	FY2026	$7.50 to $7.74 (midpoint $7.62)	$8.61 to $8.77 (midpoint $8.69)	+$1.07–$1.11 or +14.0–14.9%	Raised
New Store Openings	FY2026	~110 stores (85 Ross, 25 dd's)	115 stores (approximately 90 Ross, 25 dd's)	+5 stores total (+5 Ross stores)	Raised

Platform metrics

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Comparable Store Sales Growth	10%	2%	—
Total Store Count	2,328	2,233	—
Ross Stores Count	1,952	—	—
dd's DISCOUNTS Count	376	—	—
New Store Openings (Q2)	47	—	—
Tariff Refund Benefit	$253 million ($0.60 per share)	—	—

Profitability

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Operating Margin (excluding tariff refunds)	11.5%	—	—

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Share Repurchases (Q2)	$319 million (1.4 million shares)	$262 million	—

Management tone

No transcript was available for this quarter; the tone read below is derived from the press-release commentary and the multi-quarter arc in prior briefs.

Q1 FY25 guide withdrawal → Q2 FY25 reinstatement below LY → Q3 FY25 branded-strategy re-acceleration → Q4 FY25 "the best is yet to come" → Q1 FY26 flywheel articulation → Q2 FY26 durability confirmation and back-half caution introduced.

From "the best is yet to come" to "significantly more challenging year-over-year comparisons in the back half." Six months ago management was leaning fully into forward optimism. This quarter's press release explicitly flags tougher comps ahead — the first cautionary framing management has introduced since Q2 FY25's reinstated-below-LY guide. Notably, this is offered while simultaneously raising both Q3 and Q4 EPS guides. The message: momentum is real, but the +10% and +17% comp base makes the arithmetic harder. Investors should expect a comp deceleration to +6–7% in Q3 and +4–5% in Q4 not as weakness but as management calibrating to the base.

From tariffs as headwind to tariffs as windfall. Two quarters ago FY25 tariff drag was $0.16/share versus $0.22–$0.25 originally guided. This quarter Ross received a $253M refund ($0.60/share) — the tariff story has gone from "cost we mitigate" to "capital returned to us." Whether more refunds are coming was not addressed in the press release; the watch item from Q1 ("Quantification of tariff refund impact if/when it lands") is now partially resolved but the forward exposure — including the India 25%/50% tariff risk Adrian Yee flagged four quarters ago — remains unquantified.

From "we're in the early stages" to a formalized capital-return commitment. Last quarter management repeatedly used "early stages" language to signal runway beyond the raised FY guide. This quarter the tone hardens: a specific $1.275B FY26 buyback dollar figure is disclosed (versus the prior directional "buyback target" framing), the store plan is raised, and CapEx-heavy activities like store refresh — which management paused in Q1 to redesign the prototype — go unmentioned in the press release. The tone is shifting from investment-mode to return-of-capital-mode as the tariff windfall lands.

Comp composition disclosure this quarter: the press release explicitly states comp growth was "primarily driven by customer traffic" and supported by "both an increase in new customers and higher engagement from existing customers." This continues the Q1 flywheel narrative even though the specific "double-digit customer count growth" phrasing is not repeated.

Answers to last quarter's watch list

Whether Q2 FY2026 comp prints in the upper half of +6–7% or above. +10% comp, three percentage points above the high end of the guide. The Q1 +17% did not draw forward demand — Q2 sustained a durability signal materially stronger than the guide implied.

Resolved positively

Whether Q2 EPS lands above the $1.93 high end. $2.66, $0.73 above the high end. Approximately $0.60 came from the tariff refund; the remaining $0.13 reflects operational outperformance on the comp beat. FY guide raised $1.07 at the midpoint.

Resolved positively

Whether customer count growth remains double-digit on a comp-store basis. The press release confirms traffic-driven comp with both new and existing customer engagement contributing, but does not quantify customer count growth this quarter. The flywheel thesis is directionally supported but not numerically confirmed. Status: Partially resolved.

Quantification of tariff refund impact if/when it lands. Resolved: $253M refund, $0.60/share, disclosed as a discrete Q2 item. Whether additional refunds are pending in future quarters was not addressed. Status: Resolved positively (for this quarter's refund); forward refund exposure remains to be monitored.

Whether the store refresh program restarts and at what scale. No mention of store refresh restart in the press release. The pause introduced in Q1 continues without disclosed resolution.

Not resolved

Pricing experimentation on new brands. No explicit AUR commentary or merchandise margin step-up disclosure in the press release. Ex-refund operating margin expansion of 205bps ran above the 130–150bps guide, suggesting flow-through remains healthy, but the merchandise/SG&A split is not disclosed.

Not resolved

Whether management quantifies any 2026 tariff exposure. Not addressed in the press release. The India tariff risk from four quarters ago and the go-forward exposure past this refund remain unquantified.

Continue monitoring

What to watch into next quarter

Whether Q3 FY26 comp lands at the +7% top end or stretches above — management guided +6–7% against a +7% Q3 FY25 base. A +8%+ print would suggest management has again embedded conservatism and would pressure another FY raise; a +6% print would validate the "harder comparisons" framing at the low end and signal genuine deceleration.

Whether ex-refund operating margin expansion sustains above the guided range — Q2 delivered +205bps ex-refund vs +130–150bps guided. Whether Q3 sustains a similar cushion versus its own guided expansion is the cleanest read on run-rate profitability, independent of any further refund noise.

Whether additional tariff refunds land in Q3 or Q4 — the $253M Q2 refund was presented as discrete but management has not disclosed whether more is pending. Any further refund disclosure would push FY EPS above the $8.77 high end and change the run-rate framing entirely.

Confirmation of customer count and transaction composition in the Q3 call — Q1 was explicit about double-digit customer count growth; Q2 confirmed traffic-driven comp with new and existing customer contribution but did not quantify. Whether Q3 restores explicit quantification is the single most important disclosure for the durability thesis.

Whether the store refresh program restarts — two quarters into the pause with no update. A Q3 restart with a specific store count would signal the redesign is complete; continued silence would raise questions about the prototype path.

First quantified FY27 tariff exposure or forward refund pipeline commentary — this watch item has now been open for four quarters and remains unresolved. The India tariff risk specifically has not been readdressed.

Whether the $1.275B FY26 buyback pace is maintained or accelerated — Q1 $262M + Q2 $319M = $581M through H1, implying $694M across H2 to hit target. If the tariff refund creates capital-return upside, watch for either a raised buyback target or an accelerated pace against the current $1.275B.

Sources

Ross Stores Q2 FY2026 press release (Form 8-K Exhibit 99.1), filed 2026-08-20 — https://www.sec.gov/Archives/edgar/data/745732/000074573226000038/q226exhibit991.htm

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