ROST

Ross Stores, Inc. (NASDAQ:ROST) is showing that shoppers are still willing to spend when they feel they are getting a good deal. The retailer reported better-than-expected second-quarter results, with revenue climbing about 13% to $6.26 billion. The bigger story is the company's outlook. Ross raised its full-year EPS forecast to $8.61-$8.77 from $7.50-$7.74. It also expects comparable-store sales to grow 6%-7% in the third quarter and 4%-5% in the fourth quarter, both above analysts' expectations. That suggests Ross is benefiting as consumers become more careful with their money. Shoppers are moving away from more expensive department stores and specialty retailers and looking for branded merchandise at lower prices. Ross Stores, Inc. (NASDAQ:ROST)'s flexible buying strategy is helping as well. The company can take advantage of excess inventory in the market and turn those products into bargains for customers. It also received around $253 million in tariff refunds during the quarter, giving earnings an additional boost. Ross Stores, Inc. (NASDAQ:ROST) is in a good position for this consumer environment. When people want to cut spending without giving up shopping completely, off-price retailers can be a natural choice. Ross offers branded products at lower prices, giving shoppers a reason to visit even when household budgets are under pressure. The sales outlook is particularly encouraging. Management expects comparable-store sales to remain strong through the rest of the year. The third-quarter forecast of 6%-7% growth is well ahead of Wall Street's expectations. That suggests the second-quarter performance was not simply a one-off. Ross can also benefit from excess inventory. Its business model gives it flexibility that traditional retailers do not always have. When other retailers are left with too much merchandise, Ross can step in and buy products at attractive prices. That can help the company maintain its value proposition while protecting margins. Store improvements also seem to be paying off. Ross has been working on its merchandise assortment and upgrading its stores. Early signs suggest those efforts are making the shopping experience more appealing. If that continues, Ross could take customers from rivals such as TJX and other apparel retailers. The higher profit forecast gives investors more confidence. Raising the full-year earnings outlook by such a large amount shows that management is seeing better conditions than it expected earlier in the year. If the company continues to execute well, there could be room for earnings to outperform again. The tariff refund makes the quarter look better than the underlying business alone. Ross Stores, Inc. (NASDAQ:ROST) received about $253 million in tariff refunds in the second quarter. That helped earnings, but it is not a benefit investors can expect every quarter. The company will need continued sales and profit growth from its core operations to maintain this pace. A weaker consumer could eventually become a problem. Ross benefits when shoppers trade down, but there is a limit to how much consumers can cut. If unemployment rises or household finances deteriorate significantly, some customers may stop buying discretionary items altogether. Expectations are now higher. Ross Stores, Inc. (NASDAQ:ROST) shares jumped around 7% after the results. That kind of move can put more pressure on the company to keep delivering strong numbers. If comparable-store sales or earnings growth starts to slow, investors could react quickly. Ross also faces strong competition. TJX, Burlington, and other off-price retailers are chasing the same value-conscious shoppers and competing for the same excess merchandise. Ross needs to keep its product mix attractive and its stores relevant if it wants to continue gaining market share. Tariffs remain another potential risk. The company benefited from tariff refunds this quarter, but future tariffs could increase merchandise costs. Ross may not always be able to absorb those costs without putting pressure on margins. Ross Stores, Inc. (NASDAQ:ROST) has a lot going for it right now. Consumers are looking for value, and that plays directly into Ross' business model. Strong comparable-store sales, better-than-expected earnings, and a much higher profit forecast all point to a retailer that is gaining momentum. The main thing investors need to watch is the quality of that earnings growth. The tariff refund provided a meaningful boost this quarter, and it will not necessarily be repeated. Ross will need to keep growing sales and improving its stores without relying on one-time benefits. For now, the bull case appears stronger. Ross is benefiting from the shift toward value shopping while also improving its own execution. If consumer demand remains steady and the company continues to attract shoppers from higher-priced competitors, Ross could remain one of the better-positioned names in off-price retail. While we acknowledge the potential of ROST as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: Is Tractor Supply Company (TSCO) an Underrated Dividend Growth Opportunity? and D.E. Shaw Sees Value in Sysco (SYY) as AI and Restaurant Depot Offer New Growth Opportunities Disclosure: None. This article is originally published at Insider Monkey.

Ross Stores delivered a robust second quarter, with management attributing the performance to a surge in customer traffic and broad-based merchandise strength. CEO James Conroy noted that sales momentum improved each month, highlighting that "customer traffic once again served as a primary driver of our comparable store sales increase." The company reported gains from both new and returning shoppers, with a wider range of age groups and income segments engaging with the brand. Merchandising teams expanded vendor relationships and assortment breadth, while the store organization successfully enhanced the in-store experience, leading to higher transaction counts and deeper engagement across the store base. Is now the time to buy ROST? Find out in our full research report (it’s free). 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 (37% beat) EPS (GAAP) guidance for the full year is $8.69 at the midpoint, beating analyst estimates by 10.8% Operating Margin: 17.6%, up from 11.5% in the same quarter last year Locations: 2,328 at quarter end, up from 2,233 in the same quarter last year Same-Store Sales rose 10% year on year (2% in the same quarter last year) Market Capitalization: $77.37 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Matthew Robert Boss (JPMorgan): Asked how Ross Stores will sustain top-line momentum despite tougher comparisons. CEO James Conroy described strong underlying customer metrics and early-stage initiatives, indicating confidence in further growth opportunities. Lorraine Hutchinson (Bank of America): Questioned which ongoing initiatives have the most potential for future comp strength. Conroy referenced merchandising, store operations, and marketing efforts that remain only partially implemented across the chain. Michael Charles Binetti (Evercore ISI): Inquired if the business could maintain above-average comp growth or would return to historical 3–4% levels. Group President Michael Hartshorn stated it is too early to update the long-term algorithm, as many initiatives are still scaling. Ike Boruchow (Wells Fargo): Focused on margin trends and the impact of higher freight costs in the second half. Hartshorn explained that merchandise margin and distribution center efficiencies are expected to help, but rising fuel costs will remain a headwind. Marni Shapiro (Retail Tracker): Asked about marketing’s effect on attracting younger consumers and potential increases in marketing spend. Conroy confirmed younger customer acquisition is strong, with marketing spend planned to rise proportionally with sales. Over the coming quarters, the StockStory team will watch (1) whether customer traffic and new customer acquisition remain strong as marketing efforts evolve, (2) the ability of new store openings—especially in new geographic markets—to drive incremental growth, and (3) how effectively Ross Stores manages margin headwinds from freight and fuel costs. Continued vendor partnership expansion and merchandise innovation will also be important markers of progress. Ross Stores currently trades at $234.14, up from $228.99 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members). ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies. Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Thursday, Aug. 20, 2026 at 4:15 p.m. ET Chief Executive Officer - James G. Conroy Group President and Chief Operating Officer - Michael J. Hartshorn Executive Vice President and Chief Financial Officer - Bill Sheehan Senior Vice President, Investor Relations - Connie Kao Operator: Good afternoon, welcome to the Ross Stores Second Quarter 26 Earnings Release Conference Call. The call will begin with prepared comments by management followed by a question and answer session. As a reminder, this conference is being recorded. Before we get started, on behalf of Ross Stores, I would like to note that the comments made on this call will contain forward looking statements regarding expectations about future growth and financial results. Including sales and earnings forecast, new store openings, and other matters that are based on the company's current forecast of aspects of its future business. These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical performance or current expectations. Risk factors are included in today's press release and in the company's fiscal 2025 Form 10-Ks and fiscal 26 Form 10-Q and 8-Ks on file with the SEC. Now I would like to turn the call over to James G. Conroy, chief executive officer. James G. Conroy: Thank you, and good afternoon, everyone. Joining me on our call today are Michael J. Hartshorn, Group president and chief operating officer Bill Sheehan, executive vice president and chief financial officer and Connie Kao, senior vice president, investor relations. Before discussing our results, I want to recognize the outstanding team across the company and throughout the country. The robust sales and earnings growth in the quarter are a direct result of your hard work and commitment to the Ross organization. Thank you. Now turning to our results. We are extremely pleased with the 10% comparable store sales growth we delivered in the second quarter. marking the second quarter in a row with double digit comp growth. Sales were strong in May, and improved sequentially each month with July delivering our strongest performance despite cycling a strong back to school performance last year. Customer traffic once again served as a primary driver of our comparable store sales increase which underscores the durability of our growth and the momentum we are building. We believe the increased traffic reflects the effectiveness of our customer acquisition efforts. During the quarter, we saw gains from new and lapsed customers along with more frequent trips and higher spending from existing customers. Reflecting deeper engagement with both of our chains. Importantly, the new customers we are attracting span a broad range of income demographics and age cohorts. Including younger shoppers, which we believe reflects the broad appeal of our brand and the success of our marketing efforts in reaching and engaging a diverse customer base. Once in our stores, both new and existing customers are responding to our compelling values and a broader selection of fashion and brands. Merchants and planners have done a terrific job of opening new vendors and satisfying the demands of a wide variety of customers. Finally, our stores organization has done an excellent job enhancing the in store shopping experience and managing the elevated sales volumes. We feel great about the early success of our growth in strategies and have confidence in our ability to continue to gain market share. Consistent with the trends we saw in recent quarters, the strong performance at Ross was broad based across both merchandise categories and geographies. In the second quarter, home and cosmetics were our strongest businesses. By geography, we saw strength across all markets, with the Midwest performing the best. dd's DISCOUNTS also delivered solid sales, saw similar broad based performance across merchandise areas, and geographic regions. Turning to inventory. Consolidated inventories are quarter end increased 18%. Packaway represented 36% of total inventory compared with 38% last year. We are leveraging our inventory position to not only meet the demand of higher customer traffic in our stores, but also to broaden our merchandise offerings on the selling floor across our store base. These efforts are leading to higher sales, and improved merchandise margins while maintaining fast inventory turns. We are pleased with both the level and composition of our inventory and continue to have plenty of flexibility to capitalize on closeout opportunities as we enter the fall season. Turning to store growth. We are now planning to open 115 locations in 2026, up from 110 in our prior guidance. We are particularly encouraged by the strength of our recent openings in both existing and newer markets giving us added confidence in our ability to continue to grow our store base over time. Our plans also contemplate approximately 5 to 10 store relocations and closures. Overall, we remain confident that the actions we are taking across merchandising, marketing, and stores are enhancing the customer experience and driving strong performance. While the results to date are encouraging, we believe we are only beginning to realize the full potential of many of our initiatives. Our sustained sales performance reinforces our confidence that our more growth oriented approach is resonating with customers. The team is energized by the opportunities ahead and we see significant runway to build on the current momentum and drive continued sales gains over time. Now Bill will provide further details on our second quarter results and additional color on our outlook for the remainder of the year. William Sheehan: Thank you, Jim. Building on our success from the first quarter, we reported very strong sales and earnings results for the second quarter. Total sales for the period grew 13% $6.3 billion with comparable store sales increasing 10%. As Jim mentioned earlier, the double digit comp growth was primarily driven by an increase in the number of transactions. Gross margin improved by 25 basis points, driven primarily by 405 basis points of tariff refunds. Merchandise margin increased by 110 basis points while distribution costs were lower by 100 basis points. Given favorable timing of packaway related expenses higher productivity, and as we anniversaried last year's tariff related processing costs. In addition, occupancy costs leveraged by 25 basis points. Partially offsetting these benefits were buying costs. Which deleveraged by 5 basis points from higher incentives, and an increase in freight costs of 10 basis points due to higher fuel prices. SG&A for the period deleveraged by 15 basis points due to higher incentives given the earnings outperformance. Second quarter operating margin increased 610 basis points, which included the aforementioned 405 basis points from tariff refunds. Excluding this benefit, operating margin increased 205 basis points compared to the prior year. Second quarter net income was $851 million compared to $558 million last year. And earnings per share were $2.66 compared to $1.56 in the prior year period. Sales for the first 6 months of 2026 grew 17% to $12.3 billion up from $10.5 billion in the prior year. Comparable store sales for the first half of 2026 were up 13% and earnings per share were $4.69 compared to $3.03 for the first half of 25. As a reminder, both the second quarter and first 6 months results in 2026 include $253 million or approximately $0.60 in earnings per share of tariff refunds. Now to our shareholder return activity. As noted in today's release, we repurchased approximately 1.4 million shares during the quarter, for an aggregate total cost of $319 million under the 2-year $2.55 billion authorization approved by our board of directors in March of this year. We remain on track to buy back a total of $1.275 billion in stock during 2026. Now let's discuss our outlook for the remainder of 2026. As noted in today's press release, we exited the quarter with building momentum. And we are excited about the plans we have in place as we enter the fall season. Despite facing significantly more challenging year over year comparisons, in the back half of the year we are raising our outlook for both the third and fourth quarters. Comparable store sales are now forecasted to increase 6% to 7% in the third quarter, with earnings per share expected to be in the range of $1.75 to $1.83 versus $1.58 last year. Our guidance assumptions for the third quarter of 2026 reflect Total sales are forecast to increase 9% to 11% versus the prior year. If same store sales perform in line with our forecast, operating margin for the third quarter is planned to be in the range of 11.7% to 12.0%, compared to 11.6% last year. Our forecast reflects leverage from the expected comp store sales increase as well as slightly higher merchandise margins. Partially offsetting these benefits are higher freight costs, given the increase in fuel prices. As mentioned earlier, we raised our new store opening plans for the year. And now expect to open 51 stores during the third quarter, including 41 Ross and 10 dd's locations. Net interest income is estimated to be approximately $30 million. The tax rate is projected to be about 25% and diluted shares outstanding are expected to be approximately 319 million. Moving to the fourth quarter. Comparable store sales are now expected to increase 4% to 5% on top of a robust 9% increase last year. Earnings per share are planned to be in the range of $2.17 to $2.26 compared to $2 for the same period in 2025. If the second half of 2026 performs in line with these projections, earnings per share for the full year are now forecast to be in the range of $8.61 to $8.77 versus $6.61 last year. Included in this year's forecast is approximately $0.60 of earnings per share from tariff refunds. Now I will turn the call back to Jim for closing comments. James G. Conroy: Thank you, Bill. We delivered robust first half results and remain encouraged by the positive trends we are seeing across the business. While we are pleased with the progress we have made over the last several quarters, we remain focused on building on that momentum. The work underway across the organization is centered on continuing to strengthen our brand relevance, delivering world class merchandise assortments, and further improving the in store experience. We believe we have only begun to tap into the full growth potential of the business. At this point, we would like to open the call and respond to any questions that you may have. Operator: Thank you. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Matthew Boss with JPMorgan. Please state your question. Matthew Robert Boss: And congrats on a really great quarter. James G. Conroy: Thanks, Matthew. William Sheehan: Thank you, Matthew. Matthew Robert Boss: So Jim, could you elaborate on the build in top line momentum that you saw across the second quarter and drivers of this exit rate strength And just despite the tougher comparisons, you speak to the opportunity you see remaining in the back half of the year and beyond across the assortment, marketing and in-store execution? James G. Conroy: Sure. Happy to. The quarter was really solid, and we are thrilled by not only the underlying growth number, the 10% comp, but the quality of the comp it is really driven mostly by more transactions Those transactions are driven by customer capture, both new and regaining lapsed customers, We are seeing existing customers shop more frequently. We are seeing all customers spend more So from a the customer KPIs are just extremely solid. The merchandise KPIs are also solid. So we have seen broad based brands across all merchandise categories, in bulk chains, Ross, and DVDs. The geographic, metrics are equally strong, so it is in broad based strength across the country. As we went through the quarter, we had a little bit of--we felt World Cup a little bit in June We saw a really strong July, And if we you recall on our last year, call, we talked about July had a very nice acceleration from June. So putting a strong July, a very strong July, you could surmise had to be more than 10% if it was the strongest month of the quarter. Up against a very strong July last year. We the exit velocity was very, very good. We got into August where we continue to be very encouraged by the current business and momentum that is been building. Last year, August was the strongest month of the quarter. So if we continue to believe that we should not be concerned about cycling strong comps. And on prior calls, we have talked about sort of 2 schools of thought. Can you comp the comp? Versus are you building momentum, and can the flywheel continue to grow the business Hopefully, after the fourth quarter of really strong comps and laying out the next few quarters of we believe, pretty solid guidance. We can extinguish that concern, because the underlying metrics that we see are just extremely positive across the board. If you come all the way back to some of the initiatives that we started last year, they are all still in their early innings. And some of them have been implemented across the chain, but some are only in some stores. Some of them in have been in implemented across all merchandise categories, and others are still waiting to be further implemented. And, of course, we have also launched new initiatives. So I cannot underscore enough that our outlook for the balance of the year continues to be extremely positive. With a number of opportunities to continue the growth that we are seeing. Great color. Best of luck. Operator: Thank you. Your next question comes from Lorraine Hutchinson with Bank of America. Please state your question. Lorraine Hutchinson: Thanks. Good morning. Jim, you just did a 10% comp, and you are still talking about a lot of these initiatives being early stage. So can you talk a little bit about which of these initiatives you see having the most runway to continue to drive to this guided comp strength? James G. Conroy: Sure. I will talk at a at a relatively high level 1 of the things I have learned is my natural propensity to provide more detail just exposes us to other retailers sort of picking up what we are doing and trying to emulate them very quickly. But in with some desire to provide some transparency, let's anchor back to sort of merchandising stores and marketing. And I could list probably a dozen initiatives onto each of those. The merchant team has really done a great job of continuing to build great assortments, opening up new vendors and new brands, starting to tell better merchandise stories across categories The stores team has--if you--I would encourage everybody on the call to go to a store, and you will see very well organized stores, inventory being recovered quickly, queue lines are shorter. So the stores team has really been able to rise the challenge of a pretty sharp acceleration in sales over the last year or so. And then from a marketing standpoint, again, you can see what we are doing from a marketing standpoint. You can see our spots. You can follow us on social media. We are getting a tremendous amount of engagement. With our new creative messaging, We have tweaked our media mix. But if I went through each of those points that I just made, and the other, you know, dozen or so points that I have not explicitly called out If there is no way you could believe that we fully implemented all of them, So we sit and look at the business and just wake up every day with more ideas that continue to drive more growth. That was really helpful. Thank you of course. Operator: Thank you. Your next question comes from Corey Tarlowe with Jefferies. Please state your question. Corey Tarlowe: Great. Jim, the comp momentum continues to be very impressive, and a lot of the work that we have done around marketing continues to show really strong momentum there. I am just curious how you think about how the marketing is fueling new customer acquisition and whether or not these newer customers that you are acquiring are higher income in nature, and the types of products that these customers are purchasing as well relative to some of the products that you had in your prior assortments. Thanks. James G. Conroy: Sure. The marketing team, both the creative team and the analytics team and the folks that are buying our media, I think, are doing a tremendous job And I circle back to you, but we are still learning. We still think there is some more opportunity for us to improve We have absolutely seen brand new customers come into Ross and dd's that had not shopped with us in the past, as well as recapturing customers that perhaps used to shop with us, and they are returning. In terms of what the new cohort of customers look like, I could not describe a better report card, if I am honest. We have seen the quick answer is our new customer and the profile of them as a group look very similar to the composition of our current customers, which would imply that we are seeing growth across every single household income group that we track every single age group that we track, and every single ethnicity. So it is been just a broad based increase in customer capture across all dimensions. Which is handy because that means that the proposition that we have in the stores that we already know works for our current customer will work for sort of a new cohort of customer. Does that answer your question? Yes. it is very helpful. Thanks so much, and best of luck. Operator: Thank you. Your next question comes from Chuck Grom with Gordon Haskett. Please state your question. Chuck Grom: Hey, thanks a lot. Jim, could you talk about your success over the past year and how it is translated into stronger vendor flywheel, both in terms of new suppliers entering the mix, but also deeper relationships with existing vendors. And then my follow-up question is just on the lapsed customer opportunity. I do not think you brought that up in past. Can you maybe just size that up for us? Thank you. James G. Conroy: Sure. Having only been here for a little over 18 months now, I continue to marvel at the strength and partnership that we have with the vendor community. And they are true partners and they are the lifeblood of our growth. The team, and this absolutely predates me. I am learning off price. The team under Karen--and Karen in each of the divisions absolutely aim to be genuine partners and easy to work with our vendors, and I hear that all the time. The partnership with our current vendors and bringing on new vendors, I think, ties to the same 2 or 3 things that are happening within the business. Number 1, just our growth. Right? We are continuing to post nice growth. I think any vendor appreciates that, and maybe a rising tide rises lifts all boats. The second piece is some vendors that perhaps had been resistant to sell to off price or maybe specifically to Ross in the past, now go to the stores and see that, you know, their product will be showcased and merchandised in a sort of neat and tidy way and like what the stores team has done in enhancing the shopping experience in store has probably further helped the experience with our vendors because they know that the product will be treated sort of with great care. And then finally, I do hear oftentimes from our vendors as they see the change in the brand positioning, that they believe it is a fun and exciting brand now, and they want to participate in it. So when you put all those 3 things together, I think the partnership with our existing vendors continues to be quite strong. And the merchants and their persistence in trying to open up more and more brands has continued to become more successful. I am not convinced I answered both of your questions. Did I cover everything? You definitely answered the first 1. I was curious. You talked about a lot of the traffic being from new customers, but also from lapsed customers. So just was wondering if there was a way to size up that opportunity and maybe how the team is going after those lapsed customers maybe a little bit more aggressively. Sure. Let me just give you a little insight as we get how we get that information. We use a third party credit card vendor. it is widely available on the market, but no 1 wants to pay for it. So we can see credit card numbers that have not been in the store and period of time then when they return. Right? So that is how we are measuring it. it is somewhat of a new muscle We are strategically prospecting for them from a marketing standpoint and how we are spending our money. And now we have an ability to measure it based on that credit card data Albeit, it might be a little rough. it is certainly directional. And, you know, what the goal, of course, is to show them just a world class merchandise assortment once they get in the store. And have them have a great experience and encourage them to come back. And come back more frequently, and we are seeing that as well. Understood. Thank you. Operator: Your next question comes from Paul Lejuez with Citigroup. Please state your question. Paul Lejuez: Jim, I am curious if there is any way you can quantify for us the number of new customers that you are seeing on a year over year basis How does it look in 2Q sales coming from new customers versus what you saw in 1Q. And kind of the same question on the vendor side. Any way to frame the number of vendors you are currently working with today versus, let's say, a year ago? How would you characterize the new vendors? Is there a common thread? And what is ultimately the right number of vendors to be working with? Thanks. James G. Conroy: Sure. On the vendor question, there are times when we are trying to invite in a stronger national brand into the store, And when they come in, there is occasion when it is a net new ad, but there is also an occasion where they take the space from a vendor that perhaps is, you know, more tertiary in nature. So the vendor count would not really would not really get you there. I think if you walk the store and look at the vendor brand plates that are in the store, you will start to get a sense for not necessarily always higher price point vendors, but just the strength of the brands that we are carrying now which honestly is just an extension of the brand strategy that started a few years ago. In terms of the quantifying the customer capture it would be hard to provide that much data, and I suppose it is a little proprietary also. But if you parse out some of the things we have said, attend com, most of that was transactions. A small portion of it was an increase in basket. And of those transactions, it was a combination of brand new customers, returning customers that used to shop with us, and existing customers shopping more frequently. I would not say it is a third, a third, a third necessarily, but I would think of it in those 3 buckets. So it is each of them are meaningful in their own right. Meaning just the new customers that are coming or just recapturing the lapsed customers. Or just getting current customers to shop more frequently, And again, I think we can continue to find opportunities to do more of all of that. Got it. Thank you. Good luck. Operator: Your next question comes from Michael Binetti with Evercore ISI. Please state your question. Michael Charles Binetti: Hey, guys. Let me add my congrats on a nice quarter. I will ask 1, and then if it is okay, I will ask a follow-up after. But you have talked about a lot about vendor better vendor acceptance, stronger merchandise availability. As, you know, the sales and the store experience have improved, has that changed the quality of what each of these vendors is willing to offer you? Are you getting more access to the better and best side of the assortments? And more importantly, is buying in those higher tier categories from these vendors more competitive with other off pricers than what you have seen in the past? Operator: I did not quite follow the second of your question. James G. Conroy: The first part is, are we getting you know, more vendors and even higher end or better quality product? What was the second part of your question? Or is it as you get access to the better and best of the assortments, are you finding are the buyers finding those higher tier categories of these vendors more competitive with other off pricers? I see. I think the answer to the first part of your question is yes, we are getting more access to better brands. More popular brands, not necessarily a higher price point brand. And in terms of are they more competitive I think all of the off-pricers, and 1 of them is already reported. The opportunities from a supply side standpoint, from a closeout standpoint, are--they are outstanding. there is plenty of product to continue to fuel the fire And I think we have always been competing to some degree for that next buy And we have some formidable competition out there. We are helped a little bit right now because of the outsized growth. So I think, occasionally, we are getting the ability to open up vendors because we are growing more or 1 of our competitors may not want more product or need more product. So I think there is a number of factors And we still we still have plenty of work to be done in front of us to, continue to knock on doors and just be persistent with brands that we would like to bring into the store. That I am I am calling vendors from time to time trying to open them up if I can help. Michael Charles Binetti: And then if I could ask a As you As you think beyond this year, which has been kind of remarkable, do you believe this business--the business ultimately settles back into what we think of as a traditional off price you know, 3% to 4% algorithm on same store sales? Or do the ongoing pilot and implementation of the initiatives that you talk about in marketing merchandising, customer acquisition? Do those support comp potential above that for another year? What would mean to continue working for the latter to be true? Michael J. Hartshorn: Michael, it is Michael Hartsorn. Hi, Michael, how are you? We are clearly pleased with the current performance and trend and as Jim's said multiple times, many of the things that we are testing in store, testing in merchandising, and even testing in marketing at very early stages. So we think we can certainly grow, beyond, where we are trending today and be able to comp on top of the very strong comps this year. I think from a is it time to update the long term algorithm? I think the right time to do that would be you know, further along in some of the initiatives we have in place. So at this point, we would not update kind of the long-term year over year algorithm. And hope to beat that. That long term algorithm in the short term. Okay. Thanks a lot, guys. Congrats again. Thank you. Operator: Your next question comes from Alexandra Straton with Morgan Stanley. Please state your question. Alexandra Straton: Perfect. Thanks so much. Maybe Jim, as you look forward, do those initiatives you have spoken to or require a structurally higher level of investment to sustain that high comp growth? Or do you believe most of the investment is already reflected in the current cost structure? And I just have 1 follow-up. Michael J. Hartshorn: This is Michael again. With within the cost structure, and you can see it in the results in the P&L from the capital structure. Clearly, we have expanded our unit growth which that takes additional investment, but that is the best investment we can make in the company. Usually, that capital pays back in a matter of 2 to 3 years. In all the initiatives, the biggest impact you can have is across 2.3 thousand stores. And we have very good test and learn capabilities. So the investments we are making were first testing in pilot stores. And if it makes sense, it is gonna make sense not only in the if it is a capital investment, it is going to make sense through the P&L and l. So despite the initiatives we had in place, we have been able to leverage store payroll this year. We have been able to leverage the SG&A as a whole. You know, we will continue to test if it works on the total p and l, we will make the investment. And we have been very happy with how we have been able to manage putting these new initiatives in place and managing our capital and expenses. Great. I will leave it there. Thanks. Operator: Your next question comes from Brooke Roach with Goldman Sachs. Please state your question. Brooke Siler Roach: Had a follow-up on Alexandra's question, which is that given the success of each of these growth initiatives, are there any areas where you think you should lean in and increase the pace of these investments, whether it is marketing or otherwise? Maybe said another way, is there a change in your thinking about the typical level of flow through that we should see per point of comp outperformance versus your guide? James G. Conroy: Maybe I can start that 1. And Michael or Bill could add if necessary. We have not asked that question. You know, should we be doing even more? Could we drive even more growth? We are pretty pleased with the underlying growth that we have right now. And so demand generation has not has not been a huge challenge for us. With all of these things, working together and our flow-through? You know, 1 of the questions when we get ourselves organized to prepare for a call we say, alright. Well, the sales have been really strong. What about our flow-through? Are we gonna meet those expectations? And the answer to that question for the last 4 or 5 quarters has been yes. So for the time being, we are gonna continue to work largely within the economic model that we had with the flow through assumptions that are out there. If I guess I would just signal. If there was a point in time in the future where we thought we were going to overinvest or over club something, betting on the come for future sort of longer term value We I would really like to bring that to the market before we do it and then surprise you at the end of the quarter. So right now, you know, with the exception of some small things here or there that have been subsumed in the growth that we are seeing. And we are working within the financial construct of the business that is been in place for years now. Michael J. Hartshorn: So, yeah, Brooke, I mean, that same you know, 10 to 15 bps per 1% of comp model still holds. Great. Thanks so much. Of course. Thank you, Brooke. Operator: And your next question comes from Mark Altschwager with Baird. Please state your question. Mark Altschwager: Thank you. Good afternoon. Maybe first question, just following up again on the margin, maybe a little bit near term focus. I guess if my math is correct, think the implied raise in the back half, is a bit more than that 10 to 15 basis points. If we look at just how much the earnings went up relative to the comp raise. I guess, is that right? And maybe what are the other factors affecting the flow through assumptions in the back half? You know, aside from better leverage on higher sales, has anything changed in terms of your view on the margin puts and takes, for the back half? Thank you. Michael J. Hartshorn: Yeah. I think that back half, we are in line with the comp raise that we have there on the 6 to 7, the 4 to 5 comp raise. I think we are seeing that you know, top-line momentum and we feel good about what is in place there. But our guidance, you know, reflects some of what we have talked about there, higher merchandise margins, some lower DC costs, So it is it is in line. Okay. Mark Altschwager: And then maybe a bigger picture 1 on the competitive backdrop. A number of the large national chains are leaning harder into price investment this year and the back half of this year, reinvesting some of the tariff refunds given the acceleration through the quarter that you cited in August trend, it does not seem like that is having an impact. But even so, how are you thinking about protecting the value gap in this environment and what are your assumptions for ticket growth in the back half and how that might change as you maintain your competitive pricing? James G. Conroy: Sure. Starting with the overarching premise that we always want to have, you know, sort of that pricing umbrella and be underneath mainstream retail. The second piece is 1 of the things if you were to retroactively go back through the last 4 quarters we were very hesitant to pass through AUR increases. So much so that we called out some impact to our earnings when tariffs first came to bear last year. So I think a lot of other retailers took a different position in trying to pass that along and maybe now sort of reversing course. You know, we have tried to maintain a little bit more stability and, you know, in today's environment, today's inflationary economy, we absolutely want to have the best values in our store. And if that were if that were to if we were to see something where we did not have that price umbrella under mainstream retail, we would make a change. But I think we are we are still safe where we are now. For the back half of the year, you will likely see some very modest AUR increase sort of at the same sort of levels that we are seeing now. You know, low single digit, And you know, we really want to be there for a customer that is battling higher gas prices and all the other inflation pressures that they have in their life. So it is an important question. it is a strategic question. But I am liking sort of the consistency of our pricing strategy right now. And I think as it stands, if we were to do some competitive price shopping, we would look very, very competitive. Thank you. Of course. Operator: Your next question comes from Ike Boruchow with Wells Fargo. Please state your question. Ike Boruchow: Hey, let me add my congrats. I was wondering if we could dig into the back half margins. Just curious if you can maybe let us know what is going on in the gross margin within your plan for the third quarter and the fourth quarter? And then specifically, I know you called out freight as a 10 bps headwind in the second quarter. Does that worsen in the back half? What kind of--what have you seen with contracts over the last since the last time we heard from you? Just kind of curious how to think about the freight line within that. Michael J. Hartshorn: Yeah. Certainly, you saw that you heard the specifics on Q3. We will obviously provide more specifics on Q4 margin. When we report the Q3 results, but we do anticipate merchandise margin will remain a tailwind and some benefit in DC costs. I think similar to Q3, we are projecting domestic freight to deleverage due to higher fuel costs. And as you can surmise, that raised sales guidance in Q4 would imply some EBIT margin improvement versus last year. So on fuel, you know, we do not hedge fuel costs. The biggest component of our of our freight is fuel. So if things are gonna change materially on the fuel side from where they are today, that would have an impact. but we do have embedded in our guidance right now higher fuel. Ike Boruchow: Is that impact more detrimental in the third quarter and fourth quarter than it was in the second quarter? I think it kind of depends what happens with fuel prices. Michael J. Hartshorn: Okay. Alright. We have our best estimate from where they are now, but, again, it kind of depends on where it goes from here. Got it. Alright. Thank you. Thank you. Operator: Your next question comes from Jay Sole with UBS. Please state your question. Jay Sole: Great. Thank you so much. Jim, I am curious about trying to understand the comp channel a little bit better because it sounds like transactions was a big driver, which presumably means traffic. But a lot of the key initiatives, like getting better brands, holding more inventory to store, those are not really traffic drivers. Whereas marketing, which would be a traffic driver or better in store execution, could drive transactions. But those sort of sound secondary. Are we sort of missing--you know--missing the point that maybe the marketing's a bigger driver of traffic in some of the merchandise initiatives have yet to really you know, show the results that you are expecting that you are starting to see, and maybe that is why you see you know, only the beginning of the improvement at Ross, you know, being able to continue for longer term? James G. Conroy: So it is a great question, Jay. Hopefully, hopefully, we are being clear. I think all 3 pieces work together. The part we do not have great we do not have a great ability to parse out is if we see an increase in transactions, there are probably times when it is a customer that maybe was going to shop anyway. And was not always gonna buy, but now the assortment is great or the store looks better, and now they get converted. And we cannot connect that last piece of the arithmetic because we do not have traffic counters. But I if you think about what is driving the traffic, I mean, the logical place to go is great creative, a great way of spending the media and, you know, work continuing to tweak our media mix and capturing sort of a whole cadre of customers, new and customers that used to shop with us and perhaps and perhaps encouraging existing customers to come back more. Now there is a thesis, and part of this is true, I am sure, that there is an existing customer that had shopped with us with some periodic frequency And now she comes in, and she feels great about the assortment, and the store looks better, and she does not wait in line as long. Now she's just shopping more frequently. I cannot fully or we cannot fully attribute that to marketing It might just be a better experience that she is now shopping more frequently, and potentially telling others. So we try to split it into 3 handy buckets, meaning marketing drives sales and the store experience, and, of course, the assortment converts. Marketing drives traffic, and the assortment and store experience converts that traffic into buyers. But it is not it is not quite that clearly delineated between the different pieces. So I am not sure I have answered your question, but we are absolutely challenging marketing to continue to fill top of funnel customers that is working. We are challenging the merchants to bring the best assortments continue to add new vendors. That seems to be working. And the store experience has absolutely improved, not only sort of anecdotally when we shop the stores, but we have metrics and customer survey instruments that are telling us that. So all of them work together, and I we continue to call it sort of this flywheel or the virtuous--and, you know, we are going to continue to try to roll that forward. that is helpful. Jay Sole: Tim, let me ask you 1 more if that is okay. Just kind of want to help understanding how you are thinking about brand relevance. Because we all saw what happened at Boot Barn, how much, you know, brand relevance increased over a multiyear period. But can you just tie the importance of improving brand relevance at Ross to getting better brands in the store? How much are you making sort of that where it is not just about getting more consumers or a higher income consumer, but it is also about telling Ross to the vendors who are gonna give you the products that you really want? there is a very astute connection of 2 dots there, Jay. James G. Conroy: The we want Ross and dd's to both resonate with consumers in their own right as brands. And the underlying proposition of both of them right now are very, very strong value orientation. And we do not wanna lose that. We do think we can be more than that, and what we are trying to do. And you can see it in it is no secret, unfortunately. But you can see it in our Instagram post. Right? Where we will swing from product and value stories and posts, and then we will push towards sort of more storytelling and creative stretches and that is intentional. And it seems to be working. Got it. Okay. Thank you so much. Of course. Thanks, Jay. Operator: And your next question comes from Dana Telsey with Telsey Advisory Group. Dana Lauren Telsey: Everyone. Congratulations. it is so nice to see the progress. As you think about the categories that you called out, Jim, cosmetics and home being strong drivers, last quarter, I think it was ladies and cosmetics. Cosmetics has been consistent. Any update on apparel or on ladies and how that performed? And then the uptick in the new store openings, any in the Northeast, or where do you see them? Going? Where do you see them opening? And is the size at all different? And does the acceleration this year in new store openings does it suggest that we could see an accelerated pace of new store openings going forward in future years? Thank you. James G. Conroy: Okay. I will start, and then Michael will do the storage piece. On the category growth, yes, it you know, let me just start off with the ones that you called out. You know, cosmetics was strong. Michael Kudum, Siyah. And Stephanie Levin, those that team--Stephen Levin's team has done a really nice job quarter after quarter. Of growing that business. The home business, was very strong in this quarter. And to sort of play back the tape. You know, that was a business that while growing, was growing slightly less than company average and is now we have kind of we have home businesses outpacing company average. So we have seen particular strength in both Ross and dd's. And even really unique strength in sort of the more fashionable parts of home. You know, decorative home and housewares. And, you know, with that growth in mid-teens. So hats off to Gurmit and his team. From a ladies perspective, the ladies business continues to be very strong. We did not call it out, so it is not 1 of the top 2. But you often kind of remind us of how that was part of the brand strategy, etcetera. And in Q1, it was comp enhancing and Q2, it is slightly below the company average, but pretty much in line. We have seen some nice growth in the younger parts of that business, particularly juniors, so that part of the strategy continues to be strong. But as I stare at a sheet of paper in front of me that, admittedly, I recognize you cannot all see. it is just really encouraging to look down a column of numbers and see every major merchandise category comping positive. Michael J. Hartshorn: Dana, on real estate, the team has done just a outstanding job and really growing our pipeline. And the intent is to grow that so that we have year over year 5% unit growth is what is what is in our model. This year, we had you know, these 5 stores that we added were stores that were teetering on you know, could we open them this year, get through the negotiation and construction, or should we open them in Spring Of Next Year And Team Again Did A Good Job And They are Ready To Go. This Year. So that is that is Really The Increase In Terms Of Where We are Going Clearly, See Us Entering The Northeast. We have been very happy with that performance. Our overall new store performance this year, we had planned the year around 70% to 75% We have half of the fleet in place this year and they are running ahead of that. So we will see how they fall openings do, but we are very excited about growth in the Northeast. You also mentioned store size. We really have not changed our store size, but it is on a side by side basis. Sometimes we will take on more real estate and sometimes less than the average. But, we are really excited about our expansion opportunities. Thank you of course. Operator: Your next question comes from Adrienne Yee with Barclays. Please state your question. Adrienne Yih: Great. Thank you very much. And I will add my congratulations Really great quarter. My I guess my first question is, are you seeing any shift in the inventory availability from closeouts at retail versus wholesale partners and vendors? And then secondarily, if you can talk about any categories. I mean, obviously, home's been great, cosmetics, beauty, etcetera. Are you seeing any categories that are becoming more competitive or that where you think you are underpenetrated and you can be more competitive in the landscape. Thank you very much. James G. Conroy: Sure. No meaningful shifts. To the first part. Of your question. The closed out opportunities are very strong. But we do see categories where we think we can grow, where we think we are underpenetrated relative to where we should be or where relative to where some of our off price competitors are. So there are certain places we are pressing for more growth. I would rather not consider divulge specifically what they are. But that is something that we look at all the time, which is sort of you know, what is our percentage of business by category and how do we think that compares to some of the other folks out there? Terms of competing for goods, there is definitely a piece of that in off price. However, their availability is strong. there is a lot of goods being canceled. So there is, you know, the as you see some of the softness in mainstream retail right now, you know, there is a lot of goods becoming available, and we expect that to continue so, you know, we will get our fair share. Competitors will get their fair share, and, you know, it off price at the end of day will probably continue to be a winning sector, and we hope to be you know, what leading that sector. Adrienne Yih: Great. And then my follow on question is a little bit of a higher level question. As you think about how sort of AI and agentic search is gonna be much more direct directed directing the consumer to where they need to purchase. How do you think that impacts off price? Over time? James G. Conroy: Look. AI is everywhere. it is in every conference room and every boardroom across the country. So it is gonna be important to us Of course, yeah, way before I got here, Michael and the IT team had already started investing in sort of a foundational data element that you will you know, we need to rely on to integrate AI And then as we go function by function across the business, you know, we do not look at any new process or any sort of system application without figuring out a way to enhance it further with AI. So that could be analytics or whatever we are doing, planning and allocation, And, of course, the software developers are using it every day. Well, it is unlikely that we will do, and we have seen other companies view this as stand up an entire separate functional area within your that only does that. We would much rather have it integrated within how we operate the business. So it will be a it will be an enhancer to how we operate. I am sure we will get questions on it in the future. I can tell you I am personally very bullish on AI, but I also see tremendous opportunity for us to just execute on sort of basic blocking and tackling and continuing to improve the customer experience, improve our assortment, and continue to drive sales growth. And AI could just be icing on the cake on top of that. Great. Thank you very much. Best of luck. Operator: Thank you. Our next question comes from Krisztina Katai with Deutsche Bank. Please state your question. Krisztina Katai: Hi. Good afternoon, and congratulations on a really excellent quarter. So you described the new customer cohort as having, I believe you said the word exceptionally strong report card. Can you talk about the metric or the various metrics that have exceeded your expectations the most And then secondly, Jim, when you were discussing still being in the early innings, I think you said initiatives have been implemented chain wide. Some in certain stores, some in certain categories. So when we sort of take a step back, like, what percentage of stores are currently operating under this new playbook? Could you just sort of frame that up for us in terms of opportunity. James G. Conroy: Alright. Now I will try to help clarify both of those because it sounds like maybe I was not crystal clear on either. On the first piece, I think what I said, or at least what I was trying to say is the performance indicators from a customer standpoint are extremely strong. And what I mean by that is the dimensions perhaps are there is 4 of them. 1 is, are you seeing customer capture from new customers? People that have essentially never shopped Ross before. Yes. We are. We are also seeing shoppers that have shopped with us in the past and perhaps have gone away and we have not heard from them in 2 or 3 years. And they have returned. So we have seen that. We have seen an increase year over year versus last year in that group. Then we can measure the frequency of our existing shoppers, and we are seeing them shop more frequently. Then we can see our basket go up so they are all checked. Spending more money. So that is the sort of report card Rounding out that part of your question, the new customers look and feel very similar to our current customers. it is a diversity of age groups, of income levels, of ethnicities, it is kind of a mirror image of the customers that are in the store already. In terms of the initiatives, I suppose that was more of a conceptual response. But if you think of we have got a list, and we can break it into 3 buckets. Merchandising stores and marketing, but there are others too. Right? HR, supply chain. there is a million things going on. And some things we have tried and they have worked, Michael, a few minutes ago, mentioned the test and learn capability that the company has. So there will be something that will say, occasionally, we will say, this is a great idea. Let's just roll it out. Oftentimes, we will say, this is an idea that might work, Let's put it in 200 stores. And that team within this test and learn is essentially a department here. will--of extremely talented smart people will come back 4, 6, 8 weeks later. This is what we are seeing. And if we feel good about the return, we will expand it. If it is a no brainer, we will put it in all stores. If we wanna learn a little bit more, we will expand it to half the chain. So it would be--it would be hard for us to say, go to Store 1.23 thousand. You will see everything. Because every store is a little different. They are different sizes. They are in different types of shopping centers, etcetera. So all the initiatives that we are rolling out kind of behave a little bit differently depending on the store, the store location, the merchandise category that we might be talking about if we are doing something from a merchandising standpoint. So it is it is not it is not easy to say, here's the quote, unquote, new store prototype and has every bell and whistle, and you will see all the new marketing and all the new brands that it is not like that. it is it is a series of things that are all ramping up over time. Okay. Well, that was great color. Thank you so much. Best of luck. You are welcome. Thank you. Operator: Your next question comes from Aneesha Sherman with Bernstein. Please state your question. Aneesha Sherman: Thank you so much. So I want to ask about your strategy of increasing in store inventories. We are seeing some signs of a weaker U. S. Consumer across the board. How do you think about the risk to a higher inventory strategy if we do see some softening in the consumer trend and perhaps if you start to see a slowdown in turns, And then a quick follow-up, Jim, on your comment just now around new customers being very similar, demographics as your current ones. When you look at customer surveys or performance by store, do you believe there is some share shifts going on within off price? Or do you believe these new customers are entering the off price space from mainstream retail? Thank you. Michael J. Hartshorn: Anish, on inventory, you are right. I mean, we did carry store level inventory, higher store level inventory during the quarter. Partly to support the stronger consumer demand Despite that higher level of inventory, our in store turns remained very strong. And at the same time, we delivered higher merchandise margins. With the inventory levels, we our clearance levels have historically been low. They remained low for us. I mean, the key for us is to maintain flexibility in the open to buy. And we will always be positioned to take advantage of closeouts that is in the marketplace or if there is a pullback, we will have some flexibility to adjust the inventory levels. James G. Conroy: Yeah. I agree with Michael on that point, and we have seen merchandise margin increase in each of the last few quarters. So, I do not really ascribe any real risk to our inventory position right now. A share shift within off price, I suppose there is 2 ways to respond. The first way trying to not be immodest at all, just mathematically, over the last 4 quarters, we have grown stronger than each of the other 2 players. So mathematically, we have captured more share. So we are--of the off price retail market, we are a bigger piece than we were a year ago because we have outgrown them. In terms of is our business uniquely impacting 1 or both of the other off pricers I do not think we can comment on that. they are both very formidable companies. They are both extremely well run. We are all competing against each other, but we are also capturing share from a whole bunch of other places in the retail industry. So to some degree, we want off price to win, and we just wanna be slightly bigger winner. And so I could not I could not comment on whether we are specifically impacting either of the other 2 players and 1 of which is much bigger than us and does a truly world class job. So I am not terribly worried about that. Okay. Thank you so much. Of course. Operator: Your next question comes from Marni Shapiro with Retail Tracker. Please state your question. Marni Shapiro: Hey, guys. Right in under the wire, and congratulations. So I had a couple of quick ones. Just I have been very impressed with your Instagram, by the way, and I think a lot of fun and it is young. Do you have any data showing that it is driving in the younger consumer? I think we could assume it, but I am curious if you have any data. And are you going to increase your spend in marketing in the back half and into 2027? James G. Conroy: So on the data front, as you can imagine, we are constantly pouring through data Mhmm. We have a pretty strong indication that our marketing efforts, both the creative and how we mix the media, are driving traffic, including younger customers, I sometimes pause because I think I think people often draw 2 direct of a line between you run a post or reel and the next day, traffic goes up. And I think you are trying to build a bridge over time. In terms of marketing spend, yeah, as our business continues to grow, we plan our marketing as a rate of sales and so we will get some increased spend in the back half. We had planned the business to be, you know, bigger than it was last year in the back half. In terms of rate of sales, we might see some slight escalation there. But, you know, we will see how it goes. Marni Shapiro: Great. And then just 1 follow-up. You mentioned FIFA. We are now back to school. I am curious if the team is leaning a little bit more or plans to lean a little bit more into these holidays and events. It seems that is when the shopper is coming out across all income levels. But definitely more so in the last couple of years and I am curious. it is not just you know, back to school, but Halloween, Valentine's Day graduation Mother's Day, you know, all the events during the year. Is there a change of thinking there? James G. Conroy: I guess I agree. The concept of event driven in store selling I think, existed now for a couple of years. Mhmm. I think we have done a pretty good job. I know each of the chief merchants are trying to further hone that ability. I would not call it a sharp change in our strategy or direction. Maybe just, you know, doubling down a little bit on each of the events. We have had the good fortune, though. I was just looking in preparation for this call, at weekly comps and they are pretty consistent. it is not like we are comping massively around an event. And then falling off and then capturing you know, catching it all back up at the next event. You know, it will be interesting with a later potentially, a later back to school season if people will call that out given that Labor Day was shifted. If back to school extends longer or comes later, but I think we have somewhat strongly hinted that our business right now is pretty strong also. So you are not seeing kind of the ups and downs between the holidays that some other retailers might see? Correct. Or not to the extent that you need to call it out, I guess. I will tell you this. I looked at the last 4 weeks in July, and they were almost exactly the same number. For 4 weeks in a row. Now there is not a lot of massive events I think at the end of the month to start getting the back-to-school. But we are not we are not seeing comps build massively around, you know, Mother's Day, Father's Day, Father's Day shifted. But and then fall back to low single digits and then come back up to mid-teens. it is just not operating like that. it is been it is the--on a year-over-year basis--while the volume might change during an event week, the year over year comp that we are seeing has been pretty darn consistent. Each week. Well, that is great. Stable and boring is a good thing. Congratulations. Best of luck for the best of Thank you very much. I appreciate it. Operator: And our final question for the day comes from Bob Drbul with BTIG. Please state your question. Analyst: Hi. Thanks for taking the question. I guess 2 questions, if I could. I guess the first 1 is when you think about the new vendor adds and what is happening in the business, is your mix of good, better, best shifting dramatically, you know, over historical years of the company? I guess the second question, I would just love to hear your take on the dd's business, where you feel that is? And the opportunity that you are seeing especially as it relates to the performance at the Ross division? James G. Conroy: The quick answer on the price point, good, better, best is we are we are not seeing a massive shift there. In fact, we are sort of planfully trying to maintain know, that good price point because that is that is kind of our bread and butter. Where we recognize that the environment that we are in right now a lot of retailers are under pressure. A lot of discount retailers are under pressure and it would sort of be a foolhardy strategy to take this moment in time to elevate the assortment and bring our price points up in a meaningful way. The dd's business is in a great spot. I mean, we talk about good, better, best within Ross. dd's sort of tucks in beneath those price points. And you know, they we do not split them out specifically, but they had a very strong quarter as well. On a 1 year basis, not quite as strong as Ross, but on a 2 year basis, almost exactly in line with Ross. So, you know, Karen and Kim are the leads in those folks who are doing a really good job running that business. So if we absolutely want new and better brands, national brands, at all price points, Sometimes, they shade higher, but not all the time. And we are we are very, very cognizant to make sure that we are not overshooting our customer, particularly in the current environment. Great. Thank you. Thank you. Operator: Thank you. I will now hand it over to Jim Conroy for closing remarks. James G. Conroy: Very good. Well, thank you, everyone, for joining us today. And we look forward to speaking with you on our next earnings call. Take care. Operator: Thank you. And this concludes today's conference. All parties may disconnect. Have a good day. Before you buy stock in Ross Stores, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Ross Stores wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $439,308!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,286,826!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 27, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Ross Stores (ROST) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Ross Stores, Inc. ROST delivered an impressive second-quarter fiscal 2026 performance, with both earnings and sales surpassing the Zacks Consensus Estimate and increasing year over year. The off-price retailer benefited from robust customer traffic, broader merchandise assortments and stronger engagement from new, lapsed and existing shoppers. Ross Stores also exited the quarter with solid business momentum, prompting management to raise its outlook for the second half and fiscal 2026.Shares of Ross Stores have rallied 34.1% in the year-to-date period compared with the Retail - Discount Stores industry's growth of 10.8%. Image Source: Zacks Investment Research Ross Stores posted adjusted earnings of $2.06 per share, which beat the Zacks Consensus Estimate of $1.93 by 6.7% and increased from $1.56 in the year-ago quarter. Reported earnings were $2.66 per share, including an approximately 60-cent benefit from IEEPA tariff refunds.Quarterly sales increased 13% year over year to roughly $6.27 billion, surpassing the Zacks Consensus Estimate of $6.14 billion. Comparable-store sales advanced 10%, primarily driven by increased transactions and customer traffic. Management noted that new and lapsed customers contributed to the gains, while existing shoppers visited more frequently and increased their spending.The strength was broad based across merchandise categories and geographic markets at both Ross Dress for Less and dd's DISCOUNTS. Home and cosmetics were ROST's strongest businesses during the quarter, while the Midwest led geographic performance. Management also highlighted continued strength in ladies apparel and particularly encouraging trends in juniors.Profitability improved substantially. Gross margin expanded 625 basis points year over year, including a 405-basis-point benefit from tariff refunds. Merchandise margin increased 110 basis points, while distribution costs declined 100 basis points on favorable packaway expense timing, productivity gains and the anniversary of tariff-related processing costs. Operating margin expanded 610 basis points and, excluding the tariff-refund benefit, improved 205 basis points.Ross Stores also exited the quarter with a healthy financial position. Cash and cash equivalents were about $4.29 billion, while long-term debt stood at roughly $777 million and stockholders' equity totaled $6.74 billion. Net cash provided by operating activities for the first six months of fiscal 2026 was $1.71 billion, while capital expenditures totaled about $460 million. Ross Stores raised its expectations for both the third and fourth quarters despite facing tougher year-over-year comparisons. Comparable-store sales are now projected to increase 6-7% in the third quarter and 4-5% in the fourth quarter. Third-quarter earnings are expected in the range of $1.75-$1.83 per share, while fourth-quarter earnings are projected at $2.17-$2.26 per share.For fiscal 2026, earnings are now forecast at $8.61-$8.77 per share compared with $6.61 in fiscal 2025. The outlook includes the approximately 60-cent-per-share benefit from tariff refunds recognized in the second quarter. Ross Stores also increased its fiscal 2026 store-opening plan to 115 locations, comprising approximately 90 Ross stores and 25 dd's DISCOUNTS locations. Ross Stores' improving customer-engagement trends remain a key pillar of its growth story. The company's 10% comparable-store sales increase was driven primarily by transactions, reflecting gains from new shoppers, returning lapsed customers and higher visit frequency among existing customers. Management is also seeing customer acquisition across income and age groups, including younger shoppers, suggesting that ROST’s value proposition is resonating with a broader audience.Merchandising initiatives are strengthening that proposition. Ross Stores is expanding relationships with existing vendors, adding new brands and improving how merchandise is presented across categories. Management noted that the company is gaining access to better and more popular brands, while closeout availability remains strong. Combined with improved stores and brand positioning, the stronger vendor ecosystem could help ROST sustain compelling assortments and reinforce its competitive positioning in off-price retail.Inventory investments are also supporting the company's sales momentum. Consolidated inventory increased 18% at the end of the quarter as Ross Stores positioned merchandise to accommodate higher traffic and broaden selling-floor assortments. Importantly, management said the company continued to deliver fast inventory turns and higher merchandise margins while retaining flexibility to capitalize on closeout opportunities.Ross Stores also has a meaningful runway for physical expansion. Management increased its 2026 opening plan to 115 locations and remains confident in its long-term model of roughly 5% annual unit growth. New stores have been performing ahead of initial expectations, while management remains encouraged by its expansion into the Northeast and opportunities across both established and newer markets. Despite the strong momentum, Ross Stores faces increasingly difficult comparisons in the second half following outsized comparable-sales growth. The company must continue attracting shoppers and converting traffic while preserving its value advantage at a time when consumers remain exposed to inflation and higher costs for necessities. Management also expects higher fuel prices to pressure domestic freight expenses, which could partly offset merchandise-margin gains and operating leverage from higher sales.Investors should also distinguish between underlying operating improvement and the unusually large benefit from tariff refunds. Second-quarter operating margin benefited by 405 basis points and reported earnings received an approximately 60-cent-per-share boost from the refunds. Meanwhile, tariffs, trade-policy uncertainty and inflation remain potential sources of cost and demand volatility. Elevated inventories could also become a concern if consumer demand weakens unexpectedly, although management currently points to healthy inventory turns, low clearance levels and sufficient open-to-buy flexibility. Ross Stores remains well-positioned to build on its recent momentum, supported by strong traffic, improving customer acquisition, better merchandise assortments, healthy closeout availability and an expanding store footprint. The company’s marketing, merchandising and store-experience initiatives remain relatively early in their development, suggesting further scope for market-share gains. The raised second-half outlook also reflects management’s confidence in sustaining the underlying business momentum.While tougher comparisons, higher freight costs, macroeconomic uncertainty and the nonrecurring tariff-refund benefit remain factors to watch, Ross Stores’ strong operating trends and growth initiatives appear to outweigh these concerns. Given its improving fundamentals and favorable business outlook, this Zacks Rank #2 (Buy) stock appears to be a compelling investment pick at present. We have highlighted three other top-ranked stocks, namely, Target Corporation TGT, Dollar Tree Inc. DLTR and Dollar General Corporation DG.Target offers guests fashionable, differentiated merchandise and everyday essentials at discounted prices. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Target’s current financial-year sales and EPS indicates growth of 4.6% and 35%, respectively, from the year-ago reported numbers. TGT delivered a trailing four-quarter earnings surprise of 10.5%, on average.Dollar Tree is an operator of discount variety stores offering a broad assortment of everyday consumables and discretionary merchandise. The company currently carries a Zacks Rank of 2.The Zacks Consensus Estimate for Dollar Tree’s current financial-year sales and EPS indicates growth of 6.5% and 22.1%, respectively, from the year-ago reported numbers. DLTR delivered a trailing four-quarter earnings surprise of 32.1%, on average.Dollar General is one of the largest discount retailers in the United States, selling low-priced merchandise, typically $10 or less. The company currently has a Zacks Rank of 2.The Zacks Consensus Estimate for Dollar General’s current financial-year sales and EPS is expected to rise 3.9% and 7.6%, respectively, from the year-ago reported figures. DG delivered a trailing four-quarter earnings surprise of 21%, on average. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ross Stores, Inc. (ROST) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Dollar General Corporation (DG) : Free Stock Analysis Report Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Ross Stores (NasdaqGS:ROST) reports strong second quarter results, with double-digit sales and comparable store sales growth. Management raises full-year guidance following robust year-over-year sales and profit performance. The company accelerates expansion plans to open 115 new stores, marking a significant increase in planned locations. Stronger customer engagement underpins confidence in continued market share gains beyond routine earnings updates. Ross Stores is far from the only retailer exposed to this theme of demand resilience and shareholder returns, so it is worth comparing this update with ideas highlighted in 12 dividend fortresses. Ross Stores operates Ross Dress for Less and dd’s DISCOUNTS off-price chains across the US, so this push to open 115 additional locations directly expands its footprint in a segment where customers look for branded apparel and home goods at lower price points. 2 things going right for Ross Stores that this headline doesn't cover. The current Ross Stores Narrative is built on the idea that a bigger, more efficient off-price footprint can support earnings as value-focused shoppers seek discounts and vendors offload excess inventory. This quarter’s double-digit comps, raised guidance and 115-store plan go straight to that premise. Read the full Ross Stores narrative to see the case behind these numbers This update pushes the expansion and margin-efficiency storyline forward rather than just repeating it. Double-digit sales growth, higher EPS and 47 new stores in the quarter show Ross Stores leaning into the off-price scale thesis that underpins its edge against rivals like TJX and Burlington. At the same time, the Narrative’s flagged risks are more visible. Faster openings to 115 locations in 2026 sharpen questions around store cannibalisation, dependence on closeout supply and the lack of e-commerce, any of which could pressure same-store performance if execution slips. The same numbers can read as confirmation for a scale-and-efficiency bull view or as added exposure for a cautious Narrative that worries about over-expansion and channel risk. To ensure you're always in the loop on how the latest news impacts the investment narrative for Ross Stores, head to the community page for Ross Stores to never miss an update on the top community narratives. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ROST. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Ross raised its full-year 2026 earnings guidance to between $8.61 and $8.77 per share. Citi called the quarter “outstanding” and said it sees further upside to 2026 earnings estimates. Barclays said Ross’ short-term execution advantage over competitors remains “wide.” Shares of Ross Stores (ROST) were in the spotlight on Friday, following positive Wall Street action after a blowout second quarter that included a 10% growth in comparable-store sales. At the time of writing, ROST shares were up 4%. See what 10M+ investors are talking about. Get the Stocktwits Daily Rip for what retail is watching right now, free to your inbox UBS expects Ross Stores to deliver an 8% compound annual growth rate (CAGR) in earnings over the next five years, supporting a roughly 27X price-to-earnings multiple. However, UBS cautioned that the stock’s current price already appears to reflect much of that optimism. UBS raised Ross’ price target to $239 from $232 and kept a ‘Neutral’ rating, according to The Fly. The stock is already trading above the updated target. Second-quarter (Q2) sales rose 13% to $6.3 billion, while comparable-store sales jumped 10%, the second consecutive double-digit quarter. Earnings came in at $2.66 per share. Both sales and earnings beat Wall Street’s estimates, according to Fiscal.ai data. Ross said customer traffic drove the comparable-sales increase, with the retailer attracting new and returning customers, and existing shoppers visiting more frequently and spending more. Home goods and cosmetics were the strongest categories. The company expects comparable sales to rise 6% to 7% in the third quarter and 4% to 5% in the fourth quarter. The retailer also raised its full-year 2026 earnings guidance to between $8.61 and $8.77 per share. Citi called the quarter “outstanding” and said it sees further upside to 2026 earnings estimates. Truist raised its price target on Ross to $310 from $290 and maintained a ‘Buy’ rating. The firm said trends remained strong across merchandise categories and customer demographics. Barclays lifted its target to $298 from $260, kept an ‘Overweight’ rating, and added that comparable-store sales growth topped the 7.6% consensus estimate. It added that Ross’ short-term execution advantage over competitors remains “wide.” Retail sentiment surrounding ROST on Stocktwits turned ‘extremely bullish’ from ‘bullish’ a day earlier, amid a 450% increase in message volumes. One user said if the stock breaks $250 and holds, it could see further surge. It is currently trading near $246. Another user sees the stock climb up to $280 if it breaks past $250. ROST stock has gained more than 27% so far this year. Also read: Tesla Issues Biggest Ever Recall In China – Here’s What The EV Maker Will Look To Fix For updates and corrections, email newsroom[at]stocktwits[dot]com. Arnab Paul has no position in any of the stocks mentioned in this article. StockTwits' news team content is for informational purposes only and is not intended as investment advice. For more, see our editorial policy. This article was originally published on StockTwits. Related: Apple Reportedly Shifts Focus To AI And Smart Glasses With Job Cuts In Siri And Vision Pro Teams FNMA Faces Senior Leadership Shake-Up — Fannie Mae Reportedly Cuts At Least 10 High-Ranking Jobs As Housing Market Risks Mount CAPR Stock Sinks As Investors Brace For Imminent FDA Call On Deramiocel

Ross Stores, Inc. ROST reported second-quarter fiscal 2026 results, with earnings and sales surpassing the Zacks Consensus Estimate. Net sales and earnings per share (EPS) also increased from the prior-year period.Ross Stores posted fiscal second-quarter earnings of $2.06 per share, beating the Zacks Consensus Estimate of $1.93 by 6.7% and exceeding the company’s guidance of $1.85-$1.93 per share.The company delivered strong operating momentum as total sales rose 13% year over year to $6.27 billion, exceeding the Zacks Consensus Estimate of $6.14 billion by 1.9%. Sales growth was supported by strong customer traffic and a 10% comparable store sales increase. Customer acquisition, higher shopping frequency and improved merchandise offerings contributed to the quarter’s performance. Our model predicted comps growth of 6.9% for the second quarter of fiscal 2026.Shares of the Zacks Rank #3 (Hold) company have rallied 27.1% in the year-to-date period compared with the industry's 11.4% growth. Image Source: Zacks Investment Research Ross Stores saw comparable store sales increase 10% year over year in the second quarter of fiscal 2026, primarily driven by higher transaction volume. Management noted strength from new customers, returning lapsed customers and increased engagement from existing shoppers.The company reported broad-based performance across merchandise categories and geographies. Home and cosmetics were the strongest businesses during the quarter, while the ladies business continued to show solid growth, particularly among younger shoppers. Ross Stores, Inc. price-consensus-eps-surprise-chart | Ross Stores, Inc. Quote Ross Stores benefited from stronger merchandise availability and improved vendor relationships. Management highlighted increased access to brands and continued opportunities to expand assortments while maintaining the company’s value-focused positioning.Inventory at the end of the quarter increased 18% year over year, with packaway inventory representing 36% of the total inventory compared with 38% a year ago. The company said that inventory levels supported higher customer demand while maintaining strong inventory turns and merchandise margins. The gross margin improved 625 basis points (bps), helped by tariff refunds, higher merchandise margins and lower distribution costs. These gains were partially offset by higher buying costs, increased incentives and freight cost pressure from higher fuel prices.Our model predicted gross profit to increase 14.5% year over year and the gross margin to expand 140 bps to 29% for the fiscal second quarter.ROST reported the fiscal second-quarter operating income of $1.1 billion compared with $638.3 million in the prior-year period. The operating margin expanded 610 bps, including a 405-bps benefit from tariff refunds. Excluding that benefit, the operating margin improved 205 bps year over year. Our model predicted 20.8% year-over-year growth in operating income, with a 130-bps operating margin expansion to 12.8% in the fiscal second quarter. The company ended the fiscal second quarter with cash and cash equivalents of $4.3 billion, and total stockholders’ equity of $6.7 billion. Management emphasized continued investment in growth initiatives, store expansion and customer experience improvements. The operating cash flow reached $1.7 billion for the first half of fiscal 2026.ROST continued its capital return program in the fiscal second quarter, repurchasing 1.4 million shares for $319 million under its two-year $2.55-billion authorization. The company remains on track to repurchase $1.275 billion of stock in fiscal 2026. ROST increased its store opening plans for fiscal 2026 to 115 locations, including 90 Ross Dress for Less stores and 25 dd’s DISCOUNTS locations. The company said that the recent store openings in existing and newer markets have performed ahead of expectations.Management raised its outlook for the back half of fiscal 2026. Comparable store sales are expected to increase 6-7% in the third quarter of fiscal 2026 and 4-5% in the fourth quarter. Third-quarter earnings are projected at $1.75-$1.83 per share, whereas fourth-quarter earnings are expected at $2.17-$2.26 per share. Ross Stores expects ongoing initiatives across merchandising, marketing and store operations to support continued sales growth. Management noted that many of these efforts remain in early stages and are being expanded through testing across stores and categories.The company continues to focus on improving brand relevance, expanding assortments and enhancing the shopping experience. Management believes that these actions can help drive additional market share gains while maintaining the company’s value proposition. We have highlighted three better-ranked stocks, namely, Target Corporation TGT, Dollar Tree Inc. DLTR and Dollar General Corporation DG.Target offers guests fashionable, differentiated merchandise and everyday essentials at discounted prices. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Target’s current financial-year sales and EPS indicates growth of 4.4% and 11.4%, respectively, from the year-ago reported numbers. TGT delivered a trailing four-quarter earnings surprise of 10.5%, on average.Dollar Tree is an operator of discount variety stores offering a broad assortment of everyday consumables and discretionary merchandise. The company currently carries a Zacks Rank of 2. The Zacks Consensus Estimate for Dollar Tree’s current financial-year sales and EPS indicates growth of 6.5% and 21.7%, respectively, from the year-ago reported numbers. DLTR delivered a trailing four-quarter earnings surprise of 32.1%, on average.Dollar General is one of the largest discount retailers in the United States, selling low-priced merchandise, typically $10 or less. The company currently has a Zacks Rank of 2.The Zacks Consensus Estimate for Dollar General’s current financial-year sales and EPS is expected to rise 3.9% and 7.6%, respectively, from the year-ago reported figures. DG delivered a trailing four-quarter earnings surprise of 21%, on average. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ross Stores, Inc. (ROST) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Dollar General Corporation (DG) : Free Stock Analysis Report Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research