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ROST posted Q1 EPS of $2.02 on $6B sales, beating estimates as comps climbed 17% YoY.
Ross Stores cited strong traffic, spring product transitions, marketing and an improved in-store experience.
ROST raised FY26 EPS to $7.50-$7.74 and sees 6-7% comp growth; buybacks and store openings continue.
Ross Stores, Inc. (ROST - Free Report) reported first-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 first-quarter earnings of $2.02 per share, beating the Zacks Consensus Estimate of $1.70 and exceeding the company’s guidance of $1.60 to $1.67. The bottom line rose 37% from $1.47 per share in the prior-year period.
Ross Stores, Inc. Price, Consensus and EPS Surprise
Total sales reached $6 billion, rising 21% year over year and beating the Zacks Consensus Estimate of $5.6 billion. Comparable store sales (comps) increased 17% year over year, driven by an increase in the number of transactions.We expected comps growth of 5% in the first quarter of fiscal 2026.
Ross Stores' stock gained more than 5% in after-hours trading yesterday following the off-price retailer's report of better-than-expected first-quarter fiscal 2026 results, and it raised its full-year outlook. Investor sentiment was boosted by the company’s strong earnings beat and improved fiscal 2026 EPS guidance. The upbeat results reflected strong customer traffic, compelling merchandise assortments, successful Spring product transitions, effective marketing initiatives and an enhanced in-store shopping experience, signaling continued momentum in ROST’s underlying business fundamentals.
Shares of the Zacks Rank #3 (Hold) company have gained 7.6% in the past three months compared with the industry's 4% growth.
Image Source: Zacks Investment Research
Insight Into ROST’s Q1 Performance
Cost of goods sold (COGS) rose 18.1% year over year to $4.2 billion. COGS, as a percentage of sales, declined 145 basis points (bps) year over year. The company’s merchandise margin improved by 85 basis points, while occupancy costs as a percentage of sales decreased by 60 basis points due to strong sales growth.Our model predicted COGS to increase 7.8% year over year and contract 10 bps to 71.7%, as a percentage of sales, in the fiscal first quarter.
Distribution and domestic freight costs fell by 15 and 10 bps, respectively. However, these gains were partly offset by a 25-basis-point increase in buying costs and SG&A expenses, mainly due to higher incentive compensation following the company’s strong earnings performance. Marketing and store-related costs improved as a percentage of sales.
The company’s operating income rose 32.6% year over year to $804 million, with the operating margin expanding 120 bps to 13.4%.Our model predicted a 8.9% year-over-year growth in operating income, with a 20-bps operating margin contraction to 12% in the fiscal second quarter.
Sneak Peek Into ROST’s Other Financials
Ross Stores ended the fiscal first quarter with cash and cash equivalents of $4.1 billion, after funding business growth and capital requirements. The company has a long-term debt of $776.8 million and a total shareholders’ equity of $6.3 billion.
Consolidated inventories increased 12% year over year, with packaway accounting for 36% of the total inventory, down from 41% in the prior year. Management expressed confidence in the overall level and composition of inventory entering the second quarter, noting that the availability of closeout product in the marketplace remains strong.
Ross repurchased 1.5 million shares for $319.0 million under a new two-year $2.55 billion authorization approved in March 2026 and reiterated plans to buy back $1.275 billion of stock in fiscal 2026.
ROST’s Store Update
The company also kept store expansion on track. ROST opened 13 Ross Dress for Less and four dd’s DISCOUNTS locations in the first quarter and continues to target roughly 110 new stores this year, comprised of about 85 Ross and 25 dd’s, excluding planned closures or relocations of older units. Management also pointed to encouraging early results from newer markets and continued progress in building a Northeast pipeline.
For the second quarter of fiscal 2026, the company plans to add 47 new stores, consisting of 35 Ross and 12 dd's DISCOUNTS.
ROST Lifts Full-Year View After Strong Start to FY26
ROST guided for second-quarter comparable-store sales growth of 6-7% and earnings of $1.85 to $1.93 per share, assuming sales perform in line with the forecast. Management expects an operating margin of 12.8-13.0% for the quarter, reflecting merchandise margin improvement and lower distribution costs as it anniversaries prior-year impacts.
For fiscal 2026, management raised its outlook for comparable-store sales growth to 6-7% and now expects earnings of $7.50-$7.74 per share, up 13-17% from last year. The company also reiterated that tariff refund claims are excluded from guidance, given the uncertainty around timing and ultimate reimbursement amounts.
Stocks to consider
We have highlighted three better-ranked stocks, namely, Tapestry, Inc. (TPR - Free Report) , Victoria's Secret & Co. (VSCO - Free Report) and Levi Strauss & Co. (LEVI - Free Report) .
The Zacks Consensus Estimate for TPR’s current fiscal-year earnings and sales indicates growth of 36.3% and a decline of 13.2%, respectively, from the year-ago actuals. The company delivered a trailing four-quarter average earnings surprise of 15.6%.
Victoria's Secret is a specialty retailer of women's intimates, sleepwear, apparel, sport and swimwear, and prestige fragrances and body care. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for VSCO’s current fiscal-year sales and earnings indicates growth of 6.2% and 16.3%, respectively, from the year-ago reported numbers. The company delivered a trailing four-quarter earnings surprise of 55.1%, on average.
Levi Strauss designs and markets jeans, casual wear and related accessories for men, women and children. It currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for LEVI’s current fiscal-year earnings and sales suggests growth of 11.9% and 5.2%, respectively, from the year-ago actuals. The company delivered a trailing four-quarter average earnings surprise of 21.4%.
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Rost Stores Q1 Earnings & Sales Beat Estimates, Comp Up 17% Y/Y
Key Takeaways
Ross Stores, Inc. (ROST - Free Report) reported first-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 first-quarter earnings of $2.02 per share, beating the Zacks Consensus Estimate of $1.70 and exceeding the company’s guidance of $1.60 to $1.67. The bottom line rose 37% from $1.47 per share in the prior-year period.
Ross Stores, Inc. Price, Consensus and EPS Surprise
Ross Stores, Inc. price-consensus-eps-surprise-chart | Ross Stores, Inc. Quote
Total sales reached $6 billion, rising 21% year over year and beating the Zacks Consensus Estimate of $5.6 billion. Comparable store sales (comps) increased 17% year over year, driven by an increase in the number of transactions.We expected comps growth of 5% in the first quarter of fiscal 2026.
Ross Stores' stock gained more than 5% in after-hours trading yesterday following the off-price retailer's report of better-than-expected first-quarter fiscal 2026 results, and it raised its full-year outlook. Investor sentiment was boosted by the company’s strong earnings beat and improved fiscal 2026 EPS guidance. The upbeat results reflected strong customer traffic, compelling merchandise assortments, successful Spring product transitions, effective marketing initiatives and an enhanced in-store shopping experience, signaling continued momentum in ROST’s underlying business fundamentals.
Shares of the Zacks Rank #3 (Hold) company have gained 7.6% in the past three months compared with the industry's 4% growth.
Image Source: Zacks Investment Research
Insight Into ROST’s Q1 Performance
Cost of goods sold (COGS) rose 18.1% year over year to $4.2 billion. COGS, as a percentage of sales, declined 145 basis points (bps) year over year. The company’s merchandise margin improved by 85 basis points, while occupancy costs as a percentage of sales decreased by 60 basis points due to strong sales growth.Our model predicted COGS to increase 7.8% year over year and contract 10 bps to 71.7%, as a percentage of sales, in the fiscal first quarter.
Distribution and domestic freight costs fell by 15 and 10 bps, respectively. However, these gains were partly offset by a 25-basis-point increase in buying costs and SG&A expenses, mainly due to higher incentive compensation following the company’s strong earnings performance. Marketing and store-related costs improved as a percentage of sales.
The company’s operating income rose 32.6% year over year to $804 million, with the operating margin expanding 120 bps to 13.4%.Our model predicted a 8.9% year-over-year growth in operating income, with a 20-bps operating margin contraction to 12% in the fiscal second quarter.
Sneak Peek Into ROST’s Other Financials
Ross Stores ended the fiscal first quarter with cash and cash equivalents of $4.1 billion, after funding business growth and capital requirements. The company has a long-term debt of $776.8 million and a total shareholders’ equity of $6.3 billion.
Consolidated inventories increased 12% year over year, with packaway accounting for 36% of the total inventory, down from 41% in the prior year. Management expressed confidence in the overall level and composition of inventory entering the second quarter, noting that the availability of closeout product in the marketplace remains strong.
Ross repurchased 1.5 million shares for $319.0 million under a new two-year $2.55 billion authorization approved in March 2026 and reiterated plans to buy back $1.275 billion of stock in fiscal 2026.
ROST’s Store Update
The company also kept store expansion on track. ROST opened 13 Ross Dress for Less and four dd’s DISCOUNTS locations in the first quarter and continues to target roughly 110 new stores this year, comprised of about 85 Ross and 25 dd’s, excluding planned closures or relocations of older units. Management also pointed to encouraging early results from newer markets and continued progress in building a Northeast pipeline.
For the second quarter of fiscal 2026, the company plans to add 47 new stores, consisting of 35 Ross and 12 dd's DISCOUNTS.
ROST Lifts Full-Year View After Strong Start to FY26
ROST guided for second-quarter comparable-store sales growth of 6-7% and earnings of $1.85 to $1.93 per share, assuming sales perform in line with the forecast. Management expects an operating margin of 12.8-13.0% for the quarter, reflecting merchandise margin improvement and lower distribution costs as it anniversaries prior-year impacts.
For fiscal 2026, management raised its outlook for comparable-store sales growth to 6-7% and now expects earnings of $7.50-$7.74 per share, up 13-17% from last year. The company also reiterated that tariff refund claims are excluded from guidance, given the uncertainty around timing and ultimate reimbursement amounts.
Stocks to consider
We have highlighted three better-ranked stocks, namely, Tapestry, Inc. (TPR - Free Report) , Victoria's Secret & Co. (VSCO - Free Report) and Levi Strauss & Co. (LEVI - Free Report) .
Tapestry is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. It carries a Zacks Rank #2 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for TPR’s current fiscal-year earnings and sales indicates growth of 36.3% and a decline of 13.2%, respectively, from the year-ago actuals. The company delivered a trailing four-quarter average earnings surprise of 15.6%.
Victoria's Secret is a specialty retailer of women's intimates, sleepwear, apparel, sport and swimwear, and prestige fragrances and body care. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for VSCO’s current fiscal-year sales and earnings indicates growth of 6.2% and 16.3%, respectively, from the year-ago reported numbers. The company delivered a trailing four-quarter earnings surprise of 55.1%, on average.
Levi Strauss designs and markets jeans, casual wear and related accessories for men, women and children. It currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for LEVI’s current fiscal-year earnings and sales suggests growth of 11.9% and 5.2%, respectively, from the year-ago actuals. The company delivered a trailing four-quarter average earnings surprise of 21.4%.