Ross Stores 2026 Q1 Earnings Misses Targets as Net Income Declines 1.8%

Ross Stores (ROST) reported its fiscal 2026 Q1 earnings on May 22nd, 2025. The company slightly missed analysts' expectations with its EPS of $1.48, compared to the consensus estimate of $1.43, and reported a revenue of $4.98 billion, slightly above the estimate of $4.96 billion. However, the guidance for Q2 earnings per share fell short of Wall Street's expectations at $1.40 to $1.55, with a negative impact from tariffs. Ross Stores withdrew its annual forecasts due to ongoing tariff pressures, reflecting cautiousness in the current economic climate.

Revenue

Ross Stores reported a 2.6% increase in total revenue for 2026 Q1, reaching $4.98 billion, up from $4.86 billion in the previous year.

Earnings/Net Income

Ross Stores' EPS rose slightly by 0.7% to $1.48 in 2026 Q1 from $1.47 in 2025 Q1. However, net income declined to $479.25 million, marking a 1.8% decrease from $487.99 million in the previous year. Overall, EPS performance was modest, indicating a stable financial position.

Price Action

The stock price of Ross Stores edged down 0.74% during the latest trading day, increased 0.24% during the most recent full trading week, and jumped 10.41% month-to-date.

Post-Earnings Price Action Review

Over the past three years, a strategy of purchasing Ross Stores shares after a revenue drop in the financial report release and holding for 30 days has yielded strong results. This approach has achieved an overall return of 77.08%, outperforming the benchmark return of 45.97% by 31.11%. Despite a maximum drawdown of -25.64% and a Sharpe ratio of 0.73, which signal some risk and moderate returns, the strategy's 21.14% CAGR and excess return demonstrate its effectiveness in capturing subsequent upward movements in ROST's stock price.

CEO Commentary

James Conroy, Chief Executive Officer, noted that total sales grew 3% to $5 billion, with comparable store sales remaining flat compared to last year. He highlighted strong performance in cosmetics and the dd's DISCOUNTS brand, which continues to appeal to shoppers. Conroy acknowledged challenges such as elevated tariffs impacting profitability but expressed confidence in the company's strong inventory and strategies to gain market share, despite uncertainties in consumer demand and broader economic factors.

Guidance

For the 13 weeks ending August 2, 2025, Ross Stores projects comparable store sales to be flat to up 3%. Earnings per share for the second quarter are expected to range from $1.40 to $1.55, incorporating a cost impact of $0.11 to $0.16 from tariffs. Total sales are forecasted to increase 2% to 6% year-over-year, with an anticipated operating margin of 10.7% to 11.4%, reflecting a negative impact from tariffs primarily on merchandise margin. The company plans to open 31 stores in the second quarter.

Additional News

Ross Stores recently opened 19 new locations in March 2025, expanding its presence across 14 states with 16 Ross Dress for Less and three dd's DISCOUNTS stores. This expansion is part of the company's fiscal 2025 plan to add approximately 90 new stores, comprising 80 Ross and 10 dd's DISCOUNTS locations. Additionally, Ross Stores maintains a long-term growth target of 2,900 Ross locations and 700 dd's DISCOUNTS stores, driven by consumer focus on value and convenience. The company also remains committed to its shareholder payout program, having repurchased 2 million shares for $263 million in Q1 2025, under its two-year $2.1 billion authorization.