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What were the key takeaways from Ross Stores's earnings call?

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What were the key takeaways from Ross Stores’s earnings call?

- **Revenue Growth**: Q3 sales up 10% to $5.6B, with 7% comp store growth driven by cosmetics, shoes, and ladies apparel.
- **Tariff Mitigation**: Q4 tariff impact negligible, with 2025 full-year cost of $0.16 per share.
- **Holiday Guidance**: Raised Q4 EPS to $1.77-$1.85 (3%-4% comp growth) and full-year to $6.38-$6.46.
- **Store Expansion**: 90 new stores opened in 2025, with Northeast expansion successful. dd's growth to accelerate.
- **Branded Strategy**: Ladies business outperformed chain, with sequential improvement across categories.
- **Marketing Success**: New campaigns reengaged customers, with no increase in marketing spend as a percentage of sales.

**【CEO Summary Section】**
- Q3 2025 total sales grew 10% to $5.6 billion, with comparable store sales up 7%, driven by strong performance in cosmetics, shoes, and ladies categories.
- Tariff-related costs impacted EPS by $0.05 in Q3, but fourth-quarter tariff costs are expected to be negligible.
- Holiday season inventory is well-positioned, with 36% of total inventories in packaway merchandise.
- 36 new Ross stores and 4 dd's DISCOUNTS stores opened in Q3, with strong performance in new markets like New York Metro.
- Branded strategy has accelerated sales, particularly in ladies apparel, with sequential improvement across categories.

**【CFO Financial Commentary】**
- Q3 2025 EPS was $1.58 on net income of $512 million, compared to $1.48 in the prior year. Year-to-date EPS was $4.61.
- Operating margin was 11.6%, impacted by tariffs and distribution costs, but improved through cost control.
- Fourth-quarter guidance raised to EPS of $1.77-$1.85, reflecting 3%-4% comparable store sales growth and holiday momentum.
- Full-year 2025 EPS guidance updated to $6.38-$6.46, up from previous range.

**【Q&A Highlights】**
- **Sales Acceleration Drivers**: CEO attributes 7% comp growth to broad-based merchandise strength, marketing campaigns, and store execution. Tariffs and macro uncertainty were partially offset by strategic pricing and vendor partnerships.
- **Marketing Effectiveness**: New campaigns and refreshed branding have reengaged customers, with early success in TikTok and Meta analytics. Marketing spend as a percentage of sales remains unchanged.
- **Inventory Management**: Q3 ended with 15% average store inventory growth, positioning for holiday. Tariff-related costs in Q4 are expected to be negligible.
- **Store Expansion**: Northeast expansion is successful, with New York Metro stores outperforming expectations. dd's DISCOUNTS growth will accelerate in 2026.
- **Tariff Mitigation**: Merchant teams secured cost concessions and closeouts, offsetting tariff impacts. 2026 pricing stability expected if tariffs remain unchanged.
- **Ladies Business Growth**: Branded strategy drove ladies comp growth above chain average, with potential for continued outperformance.

**【Key Initiatives】**
- Self-checkout rolled out to 80 stores, reducing shrink and improving customer experience. Further rollout planned for 2026.
- Store refresh program halfway complete, with positive customer feedback on modern signage and wayfinding.

Ross Stores, Inc. (ROST) Q3 2026 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

ROST

ROST fundamentals

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