Ross Stores, Inc.

What they do

Ross Stores operates two off-price retail brands: Ross Dress for Less and dd's DISCOUNTS. Ross offers first-quality, in-season, brand name and designer apparel, accessories, footwear, and home fashions at savings of 20% to 60% off department and specialty store regular prices. dd's DISCOUNTS offers more moderately-priced merchandise at savings of 20% to 70% off moderate department and discount store regular prices. As of August 1, 2026, the company operated 1,952 Ross stores and 376 dd's DISCOUNTS stores.

Revenue drivers

• Ross Dress for Less — The largest segment, with 1,952 locations as of August 1, 2026, targeting middle-income households and offering brand name apparel and home fashions at 20-60% off department and specialty store prices.
• dd's DISCOUNTS — A smaller chain of 376 stores as of August 1, 2026, targeting lower to moderate income households with more moderately-priced merchandise at 20-70% off moderate department and discount store prices.
• Comparable store sales growth — Driven by customer traffic and basket size; comps increased 10% in the second quarter of fiscal 2026, following a 2% gain in the prior year quarter.

Recent performance

For the second quarter of fiscal 2026, sales increased 13% to $6.3 billion, with comparable store sales up 10%. Operating income was $1.1 billion, including a $253 million benefit from IEEPA tariff refunds, and operating margin was 17.6%. Net earnings were $851 million, or $2.66 per diluted share, compared to $508 million and $1.56 per share in the prior year period. For the first six months of fiscal 2026, sales increased 17% to $12.3 billion, with comparable store sales up 13%.

Strategy

Management's key initiatives focus on merchandising, marketing, and store experience. The company plans to open approximately 115 new stores in fiscal 2026, consisting of about 90 Ross stores and 25 dd's DISCOUNTS stores, reflecting reaccelerated growth for dd's DISCOUNTS. In the second quarter of fiscal 2026, the company repurchased 1.4 million shares for $319 million under a two-year $2.55 billion authorization and remains on track to buy back $1.275 billion in common stock during fiscal 2026. Long-term growth is based on market penetration, demographics, competition, and profitability.

Risks

• Macroeconomic and tariff uncertainty — The company monitors tariffs, inflation, and geopolitical conditions that could affect costs and consumer demand.
• Consumer spending sensitivity — As an off-price retailer, performance depends on value-driven customers, who may reduce spending during economic downturns.
• Execution of growth strategy — The planned opening of 115 new stores in fiscal 2026 carries risks related to site selection, competition, and profitability.
• Inventory and supply chain — The off-price model relies on purchasing later in the buying cycle; imbalances in manufacturer supply could impact merchandise availability.

Outlook

For the third quarter of fiscal 2026, management expects comparable store sales to increase 6% to 7% and earnings per share of $1.75 to $1.83. For the fourth quarter, comparable store sales are expected to increase 4% to 5% with earnings per share of $2.17 to $2.26. Full-year fiscal 2026 earnings per share are projected at $8.61 to $8.77, including an approximate $0.60 benefit from IEEPA tariff refunds recognized in the second quarter.