Ross Stores 2026 Q2 Earnings Beats Expectations with 4.6% Revenue Growth

Ross Stores reported its fiscal 2026 Q2 earnings on August 21, 2025, delivering revenue that beat expectations, though net income declined slightly year-over-year. The company reaffirmed its annual guidance amid ongoing tariff uncertainties and shared cautious optimism for the remainder of the fiscal year.

Revenue
Ross Stores generated $5.53 billion in revenue for Q2 2026, representing a 4.6% increase compared to $5.29 billion in the same period a year earlier. The rise was driven by improved sales trends, particularly in July, where back-to-school demand was strong.

Earnings/Net Income
Despite the revenue increase, earnings per share (EPS) dipped to $1.57 in Q2 2026, a 1.9% decline from $1.60 in Q2 2025. Net income also fell to $508 million from $527.15 million. The EPS shortfall was attributed to a 95-basis-point decline in operating margin, primarily due to elevated tariff-related costs.

Price Action
Over the latest trading day, ROST stock fell 0.33%, while the week-over-week decline reached 1.19%. However, the stock has shown resilience with a 7.26% gain month-to-date.

Post-Earnings Price Action Review
A strategy of purchasing ROST shares on the earnings report date and holding for 30 days yielded a 42.92% return, slightly underperforming the benchmark index, which returned 53.84%. This resulted in an excess return of -10.92%. The strategy demonstrated a low-risk profile with a Sharpe ratio of 0.45 and no maximum drawdown, supporting the notion of steady but moderate growth.

CEO Commentary
CEO Jim Conroy highlighted sequential improvements in sales performance, noting strong May sales and a rebound in July. He attributed better-than-expected Q2 earnings to lower-than-anticipated tariff costs. Conroy emphasized a cautious approach due to macroeconomic uncertainties and outlined strategic initiatives to diversify sourcing and adjust pricing to mitigate ongoing trade policy impacts.

Guidance
Ross Stores projects 2–3% comparable store sales growth for Q3 and Q4. It anticipates earnings per share of $1.31–$1.37 for Q3 and $1.74–$1.81 for Q4. For fiscal 2026, the company expects total EPS in the range of $6.08–$6.21, reflecting a $0.22–$0.25 per share impact from tariffs. The company also plans stock repurchases of $1.05 billion for the fiscal year.

Additional News
In related news, Ross Stores exceeded quarterly profit estimates and reinstated its annual earnings forecast for fiscal 2026, citing strong demand for discounted apparel and accessories during the back-to-school and holiday shopping seasons. The company reported adjusted earnings of $1.56 per share, surpassing estimates. In response to tariff pressures, Ross Stores is diversifying sourcing and adjusting pricing strategies. The company noted that more than half of its products are sourced from China. It expects third-quarter earnings per share to be below consensus estimates but forecasts a strong holiday quarter with earnings above expectations. Rival TJX recently raised its annual profit outlook, citing similar trends in discounted apparel and home goods demand. Ross Stores’ Q2 sales fell slightly short of estimates at $5.53 billion.