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ROST Sees Strong Closeout Supply: Is Off-Price Set to Benefit?
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Key Takeaways
Ross Stores sees strong closeout supply as mainstream retail softness sends more canceled goods to market.
ROST ended Q2 with inventories up 18%, while store turns stayed strong, clearance stayed low and margins rose.
Ross Stores expects modest back-half 2026 price increases while keeping prices below mainstream retailers.
Ross Stores, Inc. (ROST - Free Report) appears well-positioned to capitalize on favorable merchandise availability across the off-price retail space. Management noted that closeout opportunities remain strong, supported partly by softness across mainstream retail, which is resulting in more canceled goods entering the market. This environment gives Ross Stores greater flexibility to secure compelling branded merchandise at attractive costs and strengthen its value proposition. The company also continues to gain access to better and more popular brands, potentially enhancing assortment quality and customer appeal while supporting its ongoing efforts to capture market share.
ROST’s inventory strategy should further help it benefit from the favorable sourcing backdrop. Consolidated inventories increased 18% at the end of the second quarter, as the company carried additional merchandise to support higher customer traffic and broaden assortments across stores. Despite higher inventory levels, in-store turns remained strong, clearance levels stayed low and merchandise margins improved. Importantly, management continues to maintain flexibility in its open-to-buy position, enabling ROST to pursue attractive closeout opportunities while retaining the ability to adjust inventory should consumer demand moderate.
The broader economic environment could also reinforce demand for Ross Stores’ value-focused model. With consumers facing inflationary pressures and higher fuel costs, management remains focused on keeping prices below mainstream retailers and maintaining compelling value across its merchandise assortment. The company has been cautious about passing through price increases and expects only modest average unit retail increases in the back half of 2026. Combined with abundant closeout supply, stronger vendor relationships and improving assortments, this disciplined pricing strategy could help ROST attract value-conscious shoppers and sustain momentum across the off-price segment.
ROST’s Zacks Rank & Share Price Performance
Shares of this Zacks Rank #2 (Buy) company have lost 1.4% in the past three months compared with the industry’s decline of 8.2%.
ROST Stock's Past Three-Month Performance
Image Source: Zacks Investment Research
Is ROST a Value Play Stock?
ROST currently trades at a forward 12-month P/E ratio of 26.63X, which is higher than the industry average of 26.51X.
ROST P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
Other Key Picks
Superior Group of Companies, Inc. (SGC - Free Report) produces, manufactures and sells promotional products and branded uniforms, and healthcare apparel and accessories in the United States and internationally. At present, SGC carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Superior Group of Companies’ current fiscal-year sales and earnings implies growth of 3.1% and 39.1%, respectively, from the year-ago figures. SGC delivered a trailing four-quarter earnings surprise of 90.2%, on average.
Boot Barn Holdings, Inc. (BOOT - Free Report) operates specialty retail stores in the United States and internationally. It has a Zacks Rank of 2 at present. BOOT delivered an earnings surprise of 11.4% in the trailing four quarters, on average.
The Zacks Consensus Estimate for Boot Barn’s current fiscal-year sales and earnings implies growth of 15.7% and 22.5%, respectively, from the year-ago reported figures.
Fossil Group, Inc. (FOSL - Free Report) is involved in designing, marketing and distributing consumer fashion accessories. It currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for Fossil Group’s current fiscal-year earnings suggests growth of 96.7% from the year-ago actuals. FOSL delivered an earnings surprise of 55.2% in the last reported quarter.
View the Zacks #1 Rank List
Image: Bigstock
ROST Sees Strong Closeout Supply: Is Off-Price Set to Benefit?
Key Takeaways
Ross Stores, Inc. (ROST - Free Report) appears well-positioned to capitalize on favorable merchandise availability across the off-price retail space. Management noted that closeout opportunities remain strong, supported partly by softness across mainstream retail, which is resulting in more canceled goods entering the market. This environment gives Ross Stores greater flexibility to secure compelling branded merchandise at attractive costs and strengthen its value proposition. The company also continues to gain access to better and more popular brands, potentially enhancing assortment quality and customer appeal while supporting its ongoing efforts to capture market share.
ROST’s inventory strategy should further help it benefit from the favorable sourcing backdrop. Consolidated inventories increased 18% at the end of the second quarter, as the company carried additional merchandise to support higher customer traffic and broaden assortments across stores. Despite higher inventory levels, in-store turns remained strong, clearance levels stayed low and merchandise margins improved. Importantly, management continues to maintain flexibility in its open-to-buy position, enabling ROST to pursue attractive closeout opportunities while retaining the ability to adjust inventory should consumer demand moderate.
The broader economic environment could also reinforce demand for Ross Stores’ value-focused model. With consumers facing inflationary pressures and higher fuel costs, management remains focused on keeping prices below mainstream retailers and maintaining compelling value across its merchandise assortment. The company has been cautious about passing through price increases and expects only modest average unit retail increases in the back half of 2026. Combined with abundant closeout supply, stronger vendor relationships and improving assortments, this disciplined pricing strategy could help ROST attract value-conscious shoppers and sustain momentum across the off-price segment.
ROST’s Zacks Rank & Share Price Performance
Shares of this Zacks Rank #2 (Buy) company have lost 1.4% in the past three months compared with the industry’s decline of 8.2%.
ROST Stock's Past Three-Month Performance
Image Source: Zacks Investment Research
Is ROST a Value Play Stock?
ROST currently trades at a forward 12-month P/E ratio of 26.63X, which is higher than the industry average of 26.51X.
ROST P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
Other Key Picks
Superior Group of Companies, Inc. (SGC - Free Report) produces, manufactures and sells promotional products and branded uniforms, and healthcare apparel and accessories in the United States and internationally. At present, SGC carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Superior Group of Companies’ current fiscal-year sales and earnings implies growth of 3.1% and 39.1%, respectively, from the year-ago figures. SGC delivered a trailing four-quarter earnings surprise of 90.2%, on average.
Boot Barn Holdings, Inc. (BOOT - Free Report) operates specialty retail stores in the United States and internationally. It has a Zacks Rank of 2 at present. BOOT delivered an earnings surprise of 11.4% in the trailing four quarters, on average.
The Zacks Consensus Estimate for Boot Barn’s current fiscal-year sales and earnings implies growth of 15.7% and 22.5%, respectively, from the year-ago reported figures.
Fossil Group, Inc. (FOSL - Free Report) is involved in designing, marketing and distributing consumer fashion accessories. It currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for Fossil Group’s current fiscal-year earnings suggests growth of 96.7% from the year-ago actuals. FOSL delivered an earnings surprise of 55.2% in the last reported quarter.