Ross Stores ROST 2026Q1 Earnings Preview Downside Risk Amid Macroeconomic Headwinds

Forward-Looking Analysis
Ross Stores is expected to report a decline in earnings for the first quarter of fiscal 2025, despite anticipated revenue growth. Analysts project earnings per share (EPS) between $1.33 and $1.47, compared to $1.46 in the same quarter last year. The company forecasts comparable store sales to range from a 3% decline to flat, reflecting a cautious outlook amid macroeconomic uncertainties and unseasonable weather conditions. Ross Stores’ forward price-to-earnings ratio stands at 24.94, slightly above the trailing ratio of 24.18, signaling investor expectations for future growth despite current challenges. Analysts anticipate higher revenues, driven by improved assortments and strategic store expansions, but these gains might be offset by declining merchandise margins and potential disruptions in consumer traffic due to geopolitical volatility. The company's cautious guidance underscores its strategy to navigate through current challenges while maintaining focus on delivering value to customers through its off-price retail model.

Historical Performance Review
In the fourth quarter of 2025, Ross Stores reported revenue of $5.91 billion, with net income reaching $586.78 million. The earnings per share (EPS) stood at $1.80. Gross profit for the quarter was $1.57 billion. These results met the high end of company expectations, benefiting from customers' positive responses to improved assortments and quality branded bargains during the holiday season. However, operating margins remained flat year-over-year, reflecting challenges from merchandise margin declines and timing of costs.

Additional News
Ross Stores announced a 10% increase in its quarterly cash dividend to $0.405 per share, reflecting its commitment to returning excess cash to shareholders. The company repurchased 7.3 million shares for $1.05 billion in fiscal 2024, with plans to complete the buyback program in fiscal 2025. CEO Jim Conroy stated that despite solid results in 2024, the company is adopting a cautious approach for 2025 due to softening sales trends and external headwinds. The company continues to focus on expanding its footprint and managing costs effectively to support its growth strategy.

Summary & Outlook
Ross Stores demonstrates a strong financial position with healthy revenue growth and strategic shareholder returns. However, risks from macroeconomic volatility and unseasonable weather pose challenges. The cautious EPS outlook for 2025 reflects these risks, yet the company's ability to adapt with strategic store expansions and capital management suggests a balanced approach. Current market conditions and strategic initiatives indicate a neutral stance on future prospects, as Ross navigates both growth opportunities and economic uncertainties. The company’s commitment to shareholder returns and operational efficiency remains a positive growth catalyst.