Preliminary brief— based on press release only. Full analysis including management tone and Q&A will be added when the transcript is available.

ROST · Q4 2025 Earnings

Ross Stores

Reported March 3, 2026

30-second summary

Ross delivered a Q4 the company itself didn't see coming: comps of +9% versus a +2–3% guide, EPS of $2.00 versus $1.77–$1.85 guided, and operating margin of 12.3% versus an 11.5–11.8% plan. Revenue grew 12.2% YoY to $6.64B on a 9% comp, and management followed through with a Q1 FY2026 guide of +7–8% comp and $1.60–$1.67 EPS — calling for momentum to carry, not normalize. The "deteriorating consumer sentiment" thesis that anchored the prior two quarters has been replaced by "the best is yet to come."

Headline numbers

EPS

Q4 FY2025

$2.00

Revenue

Q4 FY2025

$6.63B

+12.2% YoY

Gross margin

Q4 FY2025

27.2%

Operating margin

Q4 FY2025

12.3%

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$6.63B	+12.2%	$5.53B	+20.0%
EPS	$2.00	—	$1.56	+28.2%
Gross margin	27.2%	—	27.6%	-40bps
Operating margin	12.3%	—	11.5%	+80bps

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	Q4 FY2025	$1.31 to $1.37	$2.00	+$0.63 to $0.69 above guide	Beat
Comparable Store Sales Growth	Q4 FY2025	2% to 3%	9%	+6 to 7pts above guide	Beat
Total Sales Growth	Q4 FY2025	5% to 7%	12.2%	+5.2 to 7.2pts above guide	Beat
Operating Margin	Q4 FY2025	10.1% to 10.5%	12.3%	+1.8 to 2.2pts above guide	Beat

New guidance

Metric	Period	Guide	YoY
EPS	FY 2026	$7.02 to $7.36	+6.2% to +11.3% YoY
Comparable Store Sales Growth	FY 2026	3% to 4%	—
Total Sales Growth	FY 2026	5% to 7%	—
Operating Margin	FY 2026	12.0% to 12.3%	—
EPS	Q1 FY2026	$1.60 to $1.67	+8.8% to +13.6% YoY
Comparable Store Sales Growth	Q1 FY2026	7% to 8%	—
Total Sales Growth	Q1 FY2026	10% to 12%	+100% to +140% YoY
Operating Margin	Q1 FY2026	—	—

Platform metrics

Q4 FY2025

Segment	Q4 FY2025
Comparable Store Sales Growth	9%
Total Store Count	2,267
Ross Dress for Less Store Count	1,904
dd's DISCOUNTS Store Count	363

Management tone

Q1 2025 guidance withdrawal → Q2 2025 reinstatement below LY → Q3 2025 momentum building → Q4 2025 outright bullish posture.

From "deteriorating consumer sentiment" to "the best is yet to come." Three quarters ago Ross pulled FY guidance and named consumer sentiment as a primary risk factor — defensive resilience language replaced forward language. Two quarters ago the language quietly disappeared but the FY guide printed below LY. This quarter, the CEO closed with "the best is yet to come" and management articulated "another dozen levers that we can pull for additional growth going forward." The arc from capitulation to confidence is fully complete, and the FY2026 EPS guide of $7.02–$7.36 — well above the $6.61 just delivered — is the financial signature of that shift.

From tariffs as margin headwind to tariffs as competitive opportunity. A year ago tariffs were quantified as $0.22–$0.25/share of FY2025 drag with mitigation framed defensively (vendor negotiations, closeouts, selective price increases). Actual FY2025 tariff impact came in at $0.16/share — meaningfully below the original estimate — and this quarter management framed the same dynamic as a source of vendor-side opportunity and "better buying" that contributes to the FY2026 margin expansion guide. The cost-side worry has been operationalized into a sourcing advantage.

From "first quarter as a source of weakness" to "first quarter as a platform for momentum." Last year's Q1 was the quarter Ross withdrew guidance. This quarter management guided Q1 FY2026 to +7–8% comp and +10–12% total sales — the highest forward comp range Ross has issued in years — citing "a very strong start to the first quarter." Bill's quote that "we are in the inverse position we were last year" is the cleanest articulation of the regime change. Ross is no longer asking investors to look through Q1; it is asking them to anchor on it.

From conservative marketing posture to openness to incremental investment. For multiple quarters Ross emphasized expense-neutral execution and unchanged marketing spend. This quarter Jim allowed that marketing "certainly seems like it could be a lever for us to use going forward, so we might experiment with some slight increase there." For a company whose discipline-first messaging has been a brand attribute, even hedged openness to incremental investment is a meaningful posture shift.

From new store productivity as adequate to "one of our best years in a while." The gap between +9% Q4 comp and +12.2% total sales growth is the numerical proof of the call-out — and is what gives management confidence to push 85 new Ross and 25 new dd's in FY2026 (up from 80 and 10 in FY2025) alongside the Northeast/urban expansion. Unit growth is no longer a check-the-box contributor to the algorithm; it is being repositioned as an acceleration vector.

Recurring themes management leaned on this quarter:

Traffic-led comp acceleration driven by customer count growth rather than basketBroad-based merchandise category strength across ladies, men's, shoes, cosmetics, and recovered homeMarketing campaign refresh and in-store operational improvements as non-investment-based drivers of trafficNew store productivity outperformance enabling 5% growth acceleration (85 Ross, 25 DDs vs prior year)Northeast market entry (NY metro, Puerto Rico) validating higher-rent, urban expansion opportunityTariff headwind transition from margin pressure to upside via better buying and vendor relationships

Risks management surfaced:

Macro environment uncertainty and early-stage sustainability of comp accelerationFirst quarter seasonal challenges including DC cost lapping and pack-away expense timing pressureWeather impact (January storms reduced Q4 comps by ~1 percentage point)Incentive compensation pressure from earnings outperformance vs. planLong-term ability to sustain 7-8% comp growth vs. historical 3-5% normalization

Answers to last quarter's watch list

Whether Q4 comp prints at +3% or stays at +2%. Comp printed +9%, six points above the high end of the +2–3% guide. The +9% was traffic-led — customer count growth, not basket — which is the highest-quality form of comp and the signal that drove management to guide Q1 FY2026 to +7–8%. Weather (January storms) cost approximately 1 point of comp; the underlying run-rate was even stronger.

Resolved positively

Tariff impact tracking versus the Q4 guide. Management disclosed FY2025 tariff impact of $0.16/share, materially below the $0.22–$0.25 originally estimated. The 12.3% operating margin print (versus 11.5–11.8% guided) implies tariff mitigation continued to outperform plan, consistent with the Q2 and Q3 pattern.

Resolved positively

Whether management quantifies 2026 tariff exposure. Management did not give a discrete FY2026 tariff dollar figure but did frame the FY2026 12.0–12.3% operating margin guide as embedding tariff cost easing relative to FY2025. The India 25%/50% escalation risk Adrian Yee flagged in Q2 was not specifically updated. Investors get a directional answer (easing) without the calendar Ross provided for FY2025.

Continue monitoring

Self-checkout expansion footprint. Michael confirmed self-checkout has been in pilot "for some time now" and Ross plans to expand to more stores in 2026 given positive results, though no discrete store count was given. Status: Resolved directionally; quantification pending.

Pack-away inventory recovery in Q4. Q4 gross margin of 27.2% and operating margin of 12.3% (versus 11.5–11.8% guided) confirm the Q3-to-Q4 pack-away timing recovery management promised — and then some. Pack-away ended at 37% of total inventory versus 41% last year, and management's commentary that they are "pleased with our inventory levels and are seeing ample availability in the marketplace" suggests the inventory position entering FY2026 is clean.

Resolved positively

What to watch into next quarter

Whether Q1 FY2026 comp prints in the upper or lower half of +7–8% — a +8% print would imply the Q4 traffic-led momentum carried fully into the new year; +7% would suggest some deceleration off the exit rate even as it remains an exceptional print versus historical norms.

Whether Q1 FY2026 EPS lands above the $1.67 high end — Q4 cleared its guide by $0.15–$0.23. A repeat of that scale of beat would push FY2026 EPS visibly above the $7.36 high end early in the year.

Traffic versus basket composition of the Q1 comp — Q4's strength was traffic-led, which is the durable signal. A shift back to basket-led growth in Q1 would weaken the "new customer acquisition" thesis management has begun to lean on.

Whether the FY2026 +3–4% comp guide gets raised on the Q1 call — guiding +7–8% for Q1 and +3–4% for the full year implies sub-3% comps in Q2–Q4. If Q1 prints near +8% and Q2 sets up strong, the FY guide will look conservative and pressure to raise will build.

Marketing spend trajectory — Jim opened the door to "slight increase" experimentation. Watch for an explicit marketing investment commitment on the Q1 call, which would be a discipline-first-policy break and a signal management sees the customer-acquisition window as durable.

Home category sustainability — home flipped from FY2025 drag to Q4 contributor. Whether it sustains as a positive contributor through Q1 FY2026 will indicate whether the tariff-pressured category recovery is structural or a one-quarter rebound.

Northeast/urban store productivity — NY metro and Puerto Rico entries were called out as validating higher-rent expansion. Specific productivity data on the Q1 call would either accelerate or temper the unit-growth narrative.

Sources

Ross Stores Q4 FY2025 press release (Form 8-K Exhibit 99.1), filed 2026-03-03 — https://www.sec.gov/Archives/edgar/data/745732/000074573226000003/q4fy25exhibit991.htm
Ross Stores Q4 FY2025 earnings call commentary (as reflected in extracted prepared remarks and tone analysis)

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