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Ross Stores reported Q2 FY2027 revenue of $6.3 billion, up 13.3% from Q2 FY2026 revenue of $5.5 billion. The company’s revenue, as the consensus counts it, was $6.3 billion versus consensus revenue of $6.1 billion, or 1.89% above the consensus.
The company reported adjusted EPS, as the consensus counts it, of $2.06 versus consensus adjusted EPS of $1.93, or 6.74% above the consensus. The filing reported diluted EPS of $2.66, compared with $1.56 a year earlier, a 70.5% increase.
The filing said comparable-store sales increased 10%, driven primarily by an approximately 7% increase in traffic and a 3% increase in basket. Ross Stores said gross margin reached 33.8%, compared with 27.6% a year earlier, while operating margin was 17.6%, compared with 11.5%. The filing attributed lower cost of goods sold partly to the recovery of IEEPA tariffs, higher merchandise margin, lower distribution costs and occupancy-cost leverage; it also cited higher freight and buying costs. Free cash flow was $624.5 million, compared with $466.6 million a year earlier.
| Q2 FY2027 | Q2 FY2026 | Change | |
|---|---|---|---|
| Revenue | $6.3 billion | $5.5 billion | 13.3% |
| Diluted EPS | $2.66 | $1.56 | 70.5% |
| Gross margin | 33.8% | 27.6% | 6.2 percentage points |
| Operating margin | 17.6% | 11.5% | 6.1 percentage points |
| Free cash flow | $624.5 million | $466.6 million | 33.8% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $2.06 | $1.93 | Beat by 6.74% |
| Revenue | $6.3 billion | $6.1 billion | Beat by 1.89% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
Jim Conroy, chief executive officer, said second-quarter comparable-store sales growth was driven primarily by transactions, including new customers, returning lapsed customers and more frequent visits by existing customers. He said sales improved sequentially through the quarter and that July was the company’s strongest month, while August trends remained encouraging.
Conroy said the company saw broad-based sales performance across merchandise categories and geographies at Ross, with home and cosmetics its strongest businesses, while dd’s DISCOUNTS also delivered broad-based performance. He said Ross Stores was using its inventory position to support higher store traffic and broaden merchandise offerings, and that its packaway inventory gave the company flexibility for closeout opportunities entering fall.
Asked to quantify customer capture, Conroy said Ross Stores would not provide that level of data and described customer growth as coming from three meaningful groups: new customers, lapsed customers and existing shoppers visiting more often. He said the company uses third-party credit-card data directionally to identify returning shoppers and is strategically marketing to them.
Conroy said marketing, merchandise assortments and the store experience work together: marketing drives traffic, while assortments and stores help convert that traffic into buyers. He said the company was opening new vendors and brands, improving store organization and checkout lines, and adjusting its media mix, but would not provide detailed information on initiatives that competitors could emulate.
On pricing, Conroy said Ross Stores intends to remain below mainstream retail and expects only modest average-unit-retail increases in the back half. Bill Sheehan, chief financial officer, said third-quarter margin guidance reflects expected comparable-sales leverage and slightly higher merchandise margins, partly offset by higher freight costs from fuel prices. Sheehan said the company does not hedge fuel costs and that material changes in fuel prices could affect results.
Conroy said Ross Stores planned to operate largely within its existing financial model rather than make a structurally higher investment in demand generation, apart from smaller investments included in growth plans. He said the company had raised its annual store-opening plan and was encouraged by the performance of recent openings.
Guidance
Ross Stores said it raised its outlook for the third and fourth quarters. The company now expects Q3 FY2026 comparable-store sales growth of 6.00% to 7.00%, total-sales growth of 9.00% to 11.00%, operating margin of 11.7% to 12.0%, and EPS of $1.75 to $1.83. It expects Q4 FY2026 comparable-store sales growth of 4.00% to 5.00% and EPS of $2.17 to $2.26. Ross Stores increased its FY2026 EPS forecast to $8.61 to $8.77, including $0.60 from tariff refunds, and increased its planned new-store openings to 115.