Off-price retail company Ross Stores (NASDAQ:ROST) reported Q2 CY2026 results topping the market’s revenue expectations, with sales up 13.3% year on year to $6.26 billion. Its GAAP profit of $2.66 per share was 36.7% above analysts’ consensus estimates.
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Ross Stores (ROST) Q2 CY2026 Highlights:
- Revenue: $6.26 billion vs analyst estimates of $6.15 billion (13.3% year-on-year growth, 1.8% beat)
- EPS (GAAP): $2.66 vs analyst estimates of $1.95 (36.7% beat)
- EPS (GAAP) guidance for the full year is $8.69 at the midpoint, beating analyst estimates by 10.9%
- Operating Margin: 17.6%, up from 11.5% in the same quarter last year
- Free Cash Flow Margin: 10%, up from 8.4% in the same quarter last year
- Same-Store Sales rose 10% year on year (2% in the same quarter last year)
- Market Capitalization: $75.28 billion
Mr. Conroy commented, "Looking ahead, we exited the second quarter with building momentum and are excited for the plans we have in place entering the Fall season. Despite facing significantly more challenging year-over-year comparisons in the back half, we are raising our outlook for both the third and fourth quarters. Comparable store sales are now expected to increase 6% to 7% in the third quarter and 4% to 5% in the fourth quarter. If the second half of 2026 performs in line with these sales projections, our earnings per share ranges for the third and fourth quarters are projected to be $1.75 to $1.83 and $2.17 to $2.26, respectively."
Company Overview
Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ:ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $24.51 billion in revenue over the past 12 months, Ross Stores is one of the larger companies in the consumer retail industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because there is only so much real estate to build new stores, placing a ceiling on its growth. To accelerate sales, Ross Stores likely needs to optimize its pricing or lean into international expansion.
As you can see below, Ross Stores’s 8.5% annualized revenue growth over the last three years was mediocre, but to its credit, it opened new stores and increased sales at existing, established locations.
This quarter, Ross Stores reported year-on-year revenue growth of 13.3%, and its $6.26 billion of revenue exceeded Wall Street’s estimates by 1.8%.
Looking ahead, sell-side analysts expect revenue to grow 5.1% over the next 12 months, a deceleration versus the last three years. We still think its growth trajectory is attractive given its scale and indicates the market sees success for its products.
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Store Performance
Number of Stores
Over the last two years, Ross Stores opened new stores quickly, averaging 3.7% annual growth. This was faster than the broader consumer retail sector.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
Note that Ross Stores reports its store count intermittently, so some data points are missing in the chart below.
Same-Store Sales
The change in a company’s store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
Ross Stores has been one of the most successful retailers over the last two years thanks to skyrocketing demand within its existing locations. On average, the company has posted exceptional year-on-year same-store sales growth of 6.1%. This performance suggests its rollout of new stores is beneficial for shareholders. We like this backdrop because it gives Ross Stores multiple ways to win: revenue growth can come from new stores, e-commerce, or increased foot traffic and higher sales per customer at existing locations.
In the latest quarter, Ross Stores’s same-store sales rose 10% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.
Key Takeaways from Ross Stores’s Q2 Results
It was good to see Ross Stores beat analysts’ EPS expectations this quarter. We were also excited its gross margin outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 3.6% to $238.36 immediately following the results.
Ross Stores had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).