Ross Stores reported second-quarter earnings that exceeded expectations, driven by a $253 million tariff refund and stronger-than-anticipated sales. Earnings per share reached $2.66, surpassing estimates by 37.1% and prior-year results by 33%. Revenue totaled $6.30 billion, up 2.4% from the prior-year quarter and above the $6.15 billion consensus.
Gross margin expanded by 625 basis points, with the tariff refund contributing 405 basis points. Merchandise margin gains added 110 basis points, while distribution efficiencies contributed 100 basis points. Adjusted operating margin rose 205 basis points, excluding the tariff benefit. Comparable-store sales growth accelerated to 10%, marking the second consecutive quarter of double-digit increases.
The company raised its full-year EPS guidance to a range of $8.61 to $8.77, up from the prior $7.50 to $7.74. Analysts had expected $7.68. For the third quarter, Ross guided to 6% to 7% comp growth, well above the 3.1% consensus. July sales momentum remained strong, with traffic up 14.4% on a three-month average basis.
Home and cosmetics categories led growth, with home sales rising in the mid-teens. Ladies' apparel also performed well, particularly among younger shoppers. All major categories posted positive comps. The company accelerated its 2026 store opening plan to 115 locations, including 51 new stores in the third quarter. Recent openings are achieving 70% to 75% productivity rates, and Ross is entering new markets such as Puerto Rico and the New York Metro region.
Capital returns remained robust. The company repurchased 1.4 million shares for $319 million in the quarter and is on track to complete $1.275 billion in buybacks under a $2.55 billion authorization. The quarterly dividend was increased by 10% to $0.445 per share.
The stock rose 8.3% in after-hours trading to $248, following a 5.6% gain during the session. As of August 21, 2026, Ross Stores traded at $241.32, with a market capitalization of $73.46 billion. The trailing twelve-month P/E stood at 33.6x, while the forward P/E was 29.4x. InvestingPro’s fair value estimate of $186.27 implied a 22.8% downside.
Analysts remain divided on valuation. Citi maintained a Buy rating with a $290 price target, implying a 20.2% upside. UBS, while noting the $0.80 EPS beat, kept its Neutral rating with a $239 target. Bernstein and Morgan Stanley both held Market Perform and Equal-weight ratings, respectively, with targets near current levels.
