Abstract

Ross Stores will report fiscal second-quarter 2026 results on August 20, 2026 Post-Mkt; current projections point to approximately 6.17 billion US dollars of revenue and adjusted EPS of 1.93, while investors track gross margin trajectory, inventory quality, and operating expense discipline into back-to-school.

Market Forecast

For fiscal Q2 2026, the latest quarter now in focus, consensus indicates revenue of 6.17 billion US dollars, up 10.60% year over year, and adjusted EPS of 1.93, up 25.63% year over year; EBIT is projected at 799.58 million US dollars, up 26.94% year over year. Management’s Q2 EPS guidance range was 1.85–1.93, implying year-over-year growth at the upper end of the range consistent with the current estimate; no explicit gross margin or net margin targets were provided publicly, and external channels have not surfaced more granular margin forecasts for the quarter. The company’s core categories are expected to carry momentum into August’s back-to-school phase, with particular attention on merchandise margin sustainability and operating expense control as store traffic normalizes from an elevated first quarter; new stores opened in June and July add incremental contribution. The home decor, bed and bath category appears to be the most promising near-term driver, anchored by last quarter’s 1.50 billion US dollars in revenue and supported by seasonal resets and expanded assortments; year-over-year growth by category was not disclosed, but overall company revenue grew strongly in the prior quarter, providing a solid base.

Last Quarter Review

For fiscal Q1 2026 (ended May 2, 2026), Ross Stores delivered revenue of 6.01 billion US dollars, a gross profit margin of 29.61%, GAAP net income attributable to shareholders of 650.00 million US dollars with a net margin of 10.81%, and adjusted EPS of 2.02, up 37.42% year over year. Operational execution stood out: EBIT reached 804.03 million US dollars, up 32.58% year over year, while revenue exceeded the period’s consensus by 370.47 million US dollars, reflecting healthy traffic and merchandise margins. Main business categories were well-balanced, led by home decor, bed and bath at 1.50 billion US dollars, women’s apparel at 1.38 billion US dollars, accessories and beauty adjacent categories at 901.57 million US dollars, men’s apparel at 841.47 million US dollars, footwear at 841.47 million US dollars, and kids’ apparel at 540.94 million US dollars, collectively underpinning company revenue growth of 20.57% year over year.

Current Quarter Outlook

Core merchandising and store traffic into back‑to‑school

Consensus points to a solid but more normalized sales cadence in fiscal Q2 after an elevated first quarter. External channel checks referenced double-digit monthly sales growth rates in May, June, and July on a year-over-year basis, though indications suggest momentum may be somewhat below more bullish sell-side assumptions. Against this backdrop, the company’s own guidance of 1.85–1.93 in Q2 EPS and the current 1.93 estimate reflect confidence that product margins and disciplined expense control can carry earnings ahead of sales growth. The August back‑to‑school period is a pivotal traffic window for women’s, kids’, men’s, and footwear, and merchandising flexibility should help shift mix to in‑season, trend-right goods that support sell‑through and limit markdowns. Inventory quality and packaway positioning remain watch items: favorable buying conditions can amplify merchandise margin, but any over-tilt toward slower-moving categories could require incremental clearance late in the quarter. The net result embedded in current estimates is that sales growth near 10.60% can translate into outsize earnings expansion if gross margin remains solid and SG&A leverage holds in line with plan. Management’s commentary on August traffic and early September receipts will be critical to framing third‑quarter comp expectations and the full‑year earnings cadence.

Home decor, bed and bath as the near‑term growth vector

Home decor, bed and bath generated 1.50 billion US dollars last quarter and remains well-positioned to contribute meaningfully this quarter as assortments are refreshed and promotional intensity stays measured. The category’s breadth—ranging from functional basics to decorative accents—enables targeted value messaging during seasonal transitions, where shoppers tend to balance utility with small-ticket décor updates; this mix can support unit velocity without excessive markdowns. With supply chains stabilized and ocean freight no longer a drag versus the prior year, cost of goods for bulky items has improved versus peak levels, a tailwind to merchandise margins if maintained through the quarter. The company’s ongoing store growth—47 locations opened in June and July and on track for about 110 openings this year—expands shelf space for home categories and supports localized assortments that can capture regional preferences without pressuring price points. Execution hinges on inventory turns and presentation: fast rotations of core programs combined with opportunistic closeout buys typically protect gross margin, provided sell-through rates remain in line with plan. In sum, even without category-specific growth disclosures, the size of last quarter’s home revenue base and favorable cost dynamics argue for continued, if measured, contribution to both top line and merchandise margin in the current quarter.

Key stock‑price drivers this quarter: margins, guidance, and operating cadence

Earnings sensitivity this quarter is predominantly tied to margin math and any refinement of full‑year guidance. Consensus embeds an EBIT of 799.58 million US dollars, up 26.94% year over year—an expansion rate notably ahead of revenue growth of 10.60%—which presumes healthy merchandise margins and controlled operating expenses. The gross profit line will be influenced by buying conditions, packaway utilization, and markdown discipline; modest improvements in inbound costs versus last year can provide leverage if clearance remains contained. On the expense side, wage and occupancy inflation are ongoing variables, but scale efficiencies from higher sales and continued process improvements should help keep SG&A growth below the rate of revenue. Guidance is the second key driver: external commentary anticipates that full‑year EPS guidance could be narrowed to a range that modestly tightens the initial outlook given after Q1; investors will parse whether any narrowing reflects conservatism on second‑half comps or simply removes outliers from the range after a strong start to the year. Finally, the operating cadence of new stores matters for medium‑term modeling: the roughly 110 planned openings imply ongoing square footage growth that can support revenue before considering comp effects, provided new units scale to mature productivity at historical rates. Taken together, a constructive margin outcome and steady guidance should be sufficient to meet or slightly exceed the current EPS estimate; conversely, any indication of higher-than-planned clearance or SG&A deleverage could pressure the multiple near term.

Analyst Opinions

Among recent views gathered since January 2026, the majority stance is constructive. Counting explicit directional opinions, bullish ratings and target raises from Barclays, J.P. Morgan, Telsey Advisory Group, Jefferies, Erste Group, and William O’Neil outweigh more cautious takes from Wells Fargo and UBS and a neutral hold from Bernstein; by count, bullish versus non‑bullish opinions approximate 6 to 3. The bullish cohort emphasizes consistent execution and earnings power above sales growth, with several highlighting catalysts across merchandising and expense control. Barclays maintained a Buy rating with a 260.00 US dollars price target, noting continued progress on profitability alongside solid demand for value-focused assortments; their stance is that quarter-to-date trends and the company’s EPS framework support upside relative to normalized revenue growth. J.P. Morgan reiterated an Overweight view and recently adjusted its target to 262.00 US dollars from 265.00 US dollars, framing the shares within an attractive earnings growth trajectory and citing confidence in management’s ability to expand merchandise margins while scaling SG&A efficiently. Telsey Advisory Group reaffirmed its Buy and a 265.00 US dollars target, pointing to durable customer engagement across core categories and ongoing benefits from better in‑season product flow. Jefferies raised its target to 265.00 US dollars and kept a Buy rating, highlighting a constructive mix of traffic, conversion, and controlled markdowns and emphasizing that full‑year guidance has room to tighten higher if Q2 lands in the upper half of the EPS range. Erste Group maintained a Buy rating, aligning with the view that the company can sustain earnings growth through a combination of revenue expansion, favorably sourced product, and disciplined store operations. William O’Neil initiated with a Buy, adding to the cluster of positive stances that lean on accelerating EPS and balanced risk‑reward into the print. The bullish narrative converges on a few core points for the current quarter. First, earnings leverage: with revenue growth forecast around 10.60%, the Street expects EBIT growth closer to 26.94%, implying improved merchandise margins and/or SG&A efficiencies; bulls view this as achievable given the company’s recent track record and stable input costs. Second, category breadth: home decor, bed and bath at 1.50 billion US dollars last quarter, along with women’s, men’s, and footwear, give multiple avenues for sell‑through during back‑to‑school, which can mitigate risk if any single category underperforms. Third, operational expansion: the opening of 47 stores in June and July, and being on track for about 110 stores this year, supports revenue visibility and creates a platform for incremental profit contribution as new units ramp. In contrast, neutral and more cautious voices have cited the possibility that fiscal Q2 sales momentum is below aggressive sell‑side expectations and that EPS could be modestly shy of the 1.94 US dollars threshold in some scenarios; however, those views generally stop short of arguing for negative full‑year revisions and instead anticipate a narrowing of the EPS range to reflect a more balanced second‑half cadence. Synthesizing the majority view, the expectation into August 20, 2026, is that Ross Stores can deliver an in‑line to slightly better quarter on EPS even as revenue growth normalizes. If merchandise margins hold, clearance is contained, and SG&A grows below revenue, the company should meet or beat the 1.93 estimate and reaffirm or modestly refine its full‑year framework. The expanded store base, diversified category exposure, and demonstrated cost control give analysts confidence that earnings growth can continue to outpace sales growth through the near term, keeping sentiment favorable absent a material change in margin trends or guidance tone.