ROST · Q3 2026 Earnings

Bullish

Ross Stores

Reported November 20, 2025

30-second summary

Ross blew past its own Q3 guide on every line: EPS of $1.58 versus a $1.31–$1.37 guide, comps of +7% against a +2–3% guide, operating margin of 11.6% versus 10.1–10.5%, and tariff costs of $0.05/share versus $0.07–$0.08. Management raised the FY25 EPS range to $6.38–$6.46 (midpoint +$0.30 vs prior $6.145), cut FY tariff drag from $0.22–$0.25 to $0.16/share, and lifted Q4 comp guidance to +3–4%. The "deteriorating consumer sentiment" framing that defined Q1 and the down-YoY FY guide reinstated in Q2 are both gone — replaced by management explicitly crediting the branded merchandise strategy for a 500bp sequential comp acceleration.

Headline numbers

EPS

Q3 FY2026

$1.58

Revenue

Q3 FY2026

$5.60B

+10.0% YoY

Gross margin

Q3 FY2026

28.0%

Operating margin

Q3 FY2026

11.6%

Key financials

Q3 FY2026

Metric	Q3 FY2026	YoY	Q2 FY2025	QoQ
Revenue	$5.60B	+10.0%	$5.53B	+1.3%
EPS	$1.58	—	$1.56	+1.3%
Gross margin	28.0%	—	27.6%	+40bps
Operating margin	11.6%	—	11.5%	+10bps

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)	Q3 FY2026	$1.31 to $1.37	$1.58	+$0.21–$0.27 above guide	Beat
Comparable Store Sales Growth	Q3 FY2026	up 2% to 3%	7%	+4 percentage points above high end of guide	Beat
Total Sales Growth	Q3 FY2026	5% to 7%	10%	+3 percentage points above high end of guide	Beat
Operating Margin	Q3 FY2026	10.1% to 10.5%	11.6%	+1.1–1.5 percentage points above guide	Beat
Tariff-Related Cost Impact (Q3)	Q3 FY2026	$0.07 to $0.08 per share	$0.05 per share	-$0.02–$0.03 better than guide	Beat

New guidance

Metric	Period	Guide	YoY
EPS (GAAP)	Q4 FY2025	$1.77 to $1.85	—
Comparable Store Sales Growth	Q4 FY2025	up 3% to 4%	—
Total Sales Growth	Q4 FY2025	6% to 8%	—
Operating Margin	Q4 FY2025	11.5% to 11.8% vs. 12.4% prior year	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
EPS (GAAP)	FY2025	$6.08 to $6.21	$6.38 to $6.46	+$0.30–$0.38 midpoint raised	Raised
Tariff-Related Cost Impact (FY2025)	FY2025	$0.22 to $0.25 per share	$0.16 per share	-$0.06–$0.09 improvement	Lowered

Platform metrics

Q3 FY2026

Segment	Q3 FY2026
Comparable Store Sales Growth	7%
Store Count	2,273
Ross Dress for Less Locations	1,909
dd's DISCOUNTS Locations	364

Profitability

Q3 FY2026

Segment	Q3 FY2026
Tariff-Related Cost Impact	$0.05 per share negative

Other KPIs

Q3 FY2026

Segment	Q3 FY2026
Share Repurchases (Q3)	$262 million

Management tone

Q4 FY24 confident outlook → Q1 guide withdrawn, "deteriorating consumer sentiment" → Q2 guide reinstated below LY → Q3 branded-strategy-driven re-acceleration, FY raised above LY.

From tariffs as a quantified multi-quarter headwind to tariffs as functionally done. Two quarters ago management gave a precise tariff calendar: $0.11 in Q2, $0.07–$0.08 in Q3, $0.04–$0.06 in Q4, $0.22–$0.25 for the year. This quarter the FY number is cut to $0.16 and Q4 is reduced to "negligible." Management's own words: "As a result, we now expect tariff-related costs in the fourth quarter to be negligible." The headwind that defined the entire H1 narrative has been mitigated faster than management itself guided 90 days ago. Worth noting: the Q2 brief flagged India tariff risk into spring 2026 — that risk was not quantified on this call, but the hedging language ("while tariffs uncertainties persist") suggests it has not gone away.

From defensive resilience vocabulary to assertive strategy attribution. Q1's script leaned on "seasoned executive team, flexible off-price model, strong financial foundation." This quarter, management took explicit credit for the comp acceleration: "We would attribute a portion of the sequential improvement in the business to the successful implementation of the branded strategy." Two quarters ago the branded strategy was a multi-quarter initiative being patiently rolled out; this quarter it is named as the proximate cause of a 500bp comp beat. The shift from "we are positioned to navigate" to "our strategy is working" is the single biggest tone change in the file.

From "deteriorating consumer sentiment" to consumer-prioritizing-value-and-engaging-with-our-assortment. Q1 named consumer sentiment as a risk; Q2 quietly dropped the phrase. Q3 inverts it: "From a pricing perspective, it is clear the consumer is prioritizing value and our updated assortment is driving stronger customer engagement." The same consumer that was deteriorating in Q1 is now the one validating Ross's value proposition. Whether this is the consumer changing or Ross's positioning catching up to where the consumer already was, management is now claiming the asymmetry as their own.

From withdrawn-and-down to raised-and-above-LY. The reinstated FY25 EPS guide three months ago printed at a midpoint $0.18 below FY24. The new guide of $6.38–$6.46 puts the midpoint $0.10 above FY24's $6.32. The trough was Q1's withdrawal; the return to YoY EPS growth has happened in two quarters, not the four-to-six many expected.

Marketing as new but disciplined. Per Corey Tarlow and Chuck Grom exchanges, marketing spend stepped up as a percentage of sales, a new agency was hired early in the year with first creative output in July and new holiday spots running now. Engagement on Meta and TikTok is improving. Critically, management would not commit to further spend increases: "It's too early to say we'll invest any more in it." Discipline retained even as the campaign appears to be working.

Recurring themes management leaned on this quarter:

Branded merchandise strategy driving sequential accelerationTariff headwinds moderating and expected to be negligible Q4Broad-based comp store sales strength across categories and geographiesInventory health and holiday season readinessValue proposition resonance with consumer prioritizationStrong execution in store operations and supply chain

Risks management surfaced:

Tariff-related cost uncertainties persist despite current optimismMacro environment challenges and uncertaintyPotential pricing pressure from consumer value prioritizationCEO transition costs impacting SG&ASupply chain and distribution cost volatility

Q&A highlights

Matthew Boss · J.P. Morgan

Break down the 500 basis points sequential acceleration in same-store sales. How much attributable to company-specific initiatives (marketing, store experience) versus macro backdrop? What drove strong November momentum?

Management credited broad-based strength across all merchandise categories and geographic regions. Acknowledged potential weather tailwinds but emphasized team execution in product assortment, tariff navigation, AUR management, and marketing as primary drivers. Noted macro uncertainties offsetting any tailwind benefits.

500 basis points sequential acceleration in comp salesBroad-based strength across all major merchandise categoriesStrong geographic performance including previously pressured regionsTariff navigation and strategic AUR management cited as key execution

Lorraine Hutchinson · Bank of America

Branded strategy as key driver of comp acceleration. How has this benefited built over time and how much more opportunity exists going forward, particularly in ladies?

Ladies business was a drag in Q4 LY, flattish in Q1-Q2, but became comp-enhancing in Q3. Investment in branded strategy over 4-5 quarters is paying off. Management expects outsized growth for next 3 quarters until anniversary, with substantial further opportunity given team momentum and innovation pipeline.

Ladies business progressed from drag to comp-enhancing in Q34-5 quarter branded strategy investment phaseExpectation of outsized growth for 3 quarters through anniversaryLadies business contributed positively to 7% comp (better than 7%)

Mark Altschwager · Baird

Tariff mitigation efforts and what's working. Comfort with fully offsetting costs. AUR trends and how to interpret Q4 guidance regarding tariff wraparound effects for early 2026.

Tariff costs came in lower than expected via: merchant balance of cost concessions with modest, market-driven price increases; closeout availability leverage; normalized ticketing. Barring policy changes, expecting pricing stability in 2026 and elimination of pricing decisions against moving target. Transactions was biggest comp driver; traffic and basket similar in contribution.

Tariff-related costs lower than expected in Q3Modest market-driven price increases balanced with cost concessionsLeveraged closeout availability to chase salesTariff costs expected negligible/neutral in Q4

Corey Tarlow · Jefferies

Major drivers of improvement from flat start to substantial acceleration. What changes are stickiest for multi-year growth trajectory? How has refreshed marketing resonated, particularly with younger customers?

Company inherited a strong operation; Q1 was anomaly with macro headwinds. Key changes: elevated marketing and stores voices to drive traffic and in-store experience. Refreshed creative messaging and contemporized marketing approach with new agency (first output July, new holiday spots). Marketing expense increased as % of sales. Cautious given only few months in, but encouraged by hard metrics and qualitative improvements. Brand modernization to resonate with younger customers is stickiest element.

Marketing expense increased as percentage of salesNew agency first output in July, holiday spots recently releasedImproved engagement metrics via Meta and TikTok platformsEarly-stage changes (few months in) showing promise

Chuck Grom · Gordon Haskett

Marketing change details: Are you driving new/lapsed customers or increasing engagement with existing customers? Where is opportunity? No absolute increase in spend but spend far less than peers—will that change?

Difficult to isolate components but believed to be gaining new and re-engaging lapsed customers. Improved engagement per Meta/TikTok analytics. Evolution very early (hired agency start of year, July first output). Maintaining current percent of sales spend; model and financial operating structure to be respected. Current spend level paying dividends; no immediate plan for increased spend. 'It's too early to say we'll invest any more in it.'

Hiring agency early in year; first output July timeframeImproving engagement on Meta and TikTokMaintaining percent of sales marketing spendNo immediate plan for increased spend despite lower spend vs. peers

Answers to last quarter's watch list

Whether Q3 EPS lands in the upper half of the $1.31–$1.37 range. Printed at $1.58, $0.21 above the high end. The question was framed for a $0.06 spread; the actual outcome reframes the entire FY math.

Resolved positively

Whether Q3 comp prints at +3% or +2%. Printed at +7%, four percentage points above the high end of the guide. The "July strength carried" thesis was correct but understated — Ross materially exceeded the trajectory implied by the +2–3% guide range.

Resolved positively

Tariff impact tracking versus the $0.07–$0.08 Q3 guide. Printed at $0.05/share, $0.02–$0.03 below the low end. FY tariff drag cut from $0.22–$0.25 to $0.16. The mitigation outperformance is more dramatic than the prior watch-list framing anticipated.

Resolved positively

Whether management quantifies 2026 tariff exposure on the Q3 call. Management did not put a specific 2026 dollar figure on tariffs. Per the Altschwager exchange, Mark Altschwager described pricing stability into 2026 "barring policy changes" — directional comfort, not a quantified exposure. The India tariff risk Adrian Yee flagged in Q2 was not directly addressed.

Continue monitoring

Self-checkout expansion footprint and read-through to shrink. No specific store-count expansion target was disclosed on this call (or in the available extraction). The Q2 80-store pilot mention was not updated.

Not resolved

Pack-away inventory recovery in Q4. Management did not break out pack-away as a specific Q4 gross margin tailwind in the extracted commentary. The Q4 operating margin guide of 11.5–11.8% is -60 to -90bps versus 12.4% LY, suggesting some compression remains despite the recovery thesis — but the print is much better than the Q2 setup implied.

Continue monitoring

What to watch into next quarter

Whether Q4 comp lands at the +4% top end of the +3–4% guide or stretches above. Three of the last four quarters Ross has printed at or above the high end of comp guidance, and the Q3 +7% versus +2–3% guide suggests management is still calibrating to the new run-rate. A +5%+ Q4 would imply the branded strategy still has unmodeled upside.

Whether Q4 operating margin holds at or above 11.8% top-end despite the -60 to -90bps YoY framing. A print at 12%+ would mean tariff "negligible" plus operating leverage is delivering more than management guided; a print at 11.5% would confirm management's caution is real.

First quantified 2026 tariff exposure on the Q4 call. This was the Q2 watch question and the Q3 watch question; it remains unanswered. The India tariff risk has not been put to bed. Management's "pricing stability into 2026 barring policy changes" needs a number.

Whether the ladies' category comp tailwind anniversaries cleanly in Q2 FY26. Management explicitly told the Hutchinson exchange to expect "outsized growth for next 3 quarters until anniversary." That sets up a hard comparison around Q2 FY26 that is now baked into expectations.

Marketing spend trajectory. Management was emphatic on the Q3 call that current spend levels are appropriate. A change in posture — explicit step-up in spend as percent of sales — would signal management sees the campaign-driven traffic lift as durable enough to fund harder; continued discipline would signal they view it as already optimally sized.

Whether the FY25 EPS print lands above $6.46 high end. Beat magnitude in Q3 ($0.21 above high) suggests Ross has either embedded conservatism in the Q4 guide or is genuinely expecting moderation. Watch the magnitude of any Q4 beat as a tell on FY26 starting expectations.

Sources

Ross Stores Q3 FY2025 press release (Form 8-K Exhibit 99.1), filed 2025-11-20 — https://www.sec.gov/Archives/edgar/data/745732/000074573225000055/q325exhibit991.htm
Ross Stores Q3 FY2025 earnings call commentary (as reflected in extracted Q&A and prepared remarks)

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