Why Ross Stores Stock Is Up Today
Key Points
With savings of up to 70%, Ross' value-focused strategy is resonating with cash-strapped consumers.
The company's profit margins are rising as it grows its store count.
- 10 stocks we like better than Ross Stores ›
Shares of Ross Stores (NASDAQ: ROST) rose on Friday after the off-price retailer reported robust quarterly profits.
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Bargains are always in style
Ross' total sales jumped 13% year over year to $6.3 billion in its fiscal 2026 second quarter, which ended on Aug. 1.
"Our performance was fueled by our compelling merchandise offerings, engaging marketing initiatives, and continued enhancements to the in-store experience," CEO Jim Conroy said.
The company's comparable store sales, which include revenue from stores open for more than 14 months, increased 10%.
"We were pleased to see strength throughout the quarter, with comparable store sales growth once again primarily driven by customer traffic," Conroy said. "Importantly, that growth was supported by both an increase in new customers and higher engagement from existing customers."
Rising sales at older stores are driving Ross to advance its expansion strategy. The retailer opened 47 new stores during the quarter, bringing its total store count to more than 1,950 locations across 44 states, the District of Columbia, Guam, and Puerto Rico.
Better still, Ross is growing more profitable as it expands its store base. Its adjusted operating margin improved by more than 2 percentage points compared to the year-ago quarter.
All told, Ross' net income, boosted by $253 million in tariff refunds, came in at $851 million, up from $508 million in the prior-year period. Earnings per share rose to $2.66 from $1.56.
Store openings should continue to fuel earnings growth
Ross expects to open a total of 115 new stores in 2026. Management sees sales at existing locations rising by 6% to 7% in the third quarter and 4% to 5% in the fourth quarter.
In turn, Ross projects full-year earnings per share of $8.61 to $8.77, up from $6.61 in fiscal 2025.
"We believe we are well-positioned to capture additional market share and drive profitable growth over the long term," Conroy said.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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