Ross Stores Inc. reported second-quarter 2026 earnings that exceeded Wall Street estimates, sending shares up 7.92% in extended trading. The discount retailer posted adjusted earnings per share of $2.66, surpassing the consensus forecast of $1.94 by 37.1%, and rising 69.9% from $1.56 in the same period a year earlier.
Quarterly revenue reached $6.3 billion, topping expectations by $150 million and climbing 13% from $5.57 billion in Q2 2025. Net income rose 67.5% to $851 million. Comparable store sales increased 10% year-over-year, marking the second consecutive quarter of double-digit growth.
Gross margin expanded by 625 basis points to 32.5%, driven primarily by $253 million in tariff refunds, higher merchandise margins, and lower distribution costs. Operating margin rose 610 basis points to 13.1%, excluding tariff refunds, the increase was 205 basis points. Inventory at quarter-end stood at $5.4 billion, up 18% from the prior year, with packaway merchandise representing 36% of total stock.
The company repurchased 1.4 million shares for $319 million during the quarter under a $2.55 billion buyback authorization approved in March 2026. For the first half of 2026, earnings per share totaled $4.69, up 54.8% from $3.03 in the same period of 2025, while sales increased 17% to $12.3 billion.
Full-year 2026 guidance was raised to $8.61-$8.77 per share, up from $6.61, including approximately $0.60 from tariff refunds. Adjusted EPS excluding refunds is projected at $8.01-$8.17. The company now plans to open 115 new stores in 2026, up from 110 previously. Third-quarter guidance calls for comps to rise 6%-7%, total sales growth of 9%-11%, and EPS of $1.75-$1.83. Fourth-quarter comps are expected to increase 4%-5%, with EPS projected at $2.17-$2.26.
CEO Jim Conroy noted the company is "only beginning to realize the full potential" of its initiatives, citing improved vendor access as a key driver. Operating margin is forecast to reach 11.7%-12.0% in Q3, compared with 11.6% in the prior year. The stock, which fell 2.43% to $228.99 during regular trading, surged to $247.12 in after-hours activity.
