Key Highlights

  • Ross Stores beat expectations in the second quarter of 2026, with comparable sales rising around 10%.
  • The company raised its full-year outlook while planning to open scores of new stores.
  • Its off-price model relies on buying excess inventory and cancelled orders from brands at a discount.
  • Strong comparable-sales growth suggests customers are actively trading down toward value retailers.

When shoppers become cautious with money, many do not stop buying; they hunt for bargains. Ross Stores (NASDAQ:ROST), one of America's largest off-price retailers, thrives on exactly that behaviour, which makes it a valuable window into how consumers are trading down. For Nasdaq 100 investors, bargain shopping is a consumer trend worth watching, and Ross is a prime example.

What Ross Stores Does

Ross Stores runs a chain of off-price retail shops, selling brand-name clothing, footwear and home goods at prices well below department stores. It sits in the consumer-discretionary sector. Its model relies on buying excess inventory, cancelled orders and end-of-season goods from brands and manufacturers at a discount, then passing savings to shoppers who enjoy the "treasure hunt" of finding bargains. Because its stock changes constantly and prices are low, it appeals particularly to value-conscious customers.

Bargains Drive Strong Results

Ross has been performing strongly. In the second quarter of 2026 it beat expectations, with comparable sales, a measure of growth at established stores, rising around 10 per cent, and it raised its full-year outlook while planning to open scores of new stores. Off-price retail tends to do well when consumers feel squeezed, because shoppers still want brands but seek lower prices, and Ross benefits both from that Demand and from an abundant Supply of discounted merchandise when other retailers have too much stock. Its strong comparable-sales growth suggests customers are actively seeking value, a signal that resonates well beyond the company itself.

Why it Matters for the Nasdaq 100

Ross offers the index exposure to the resilient off-price retail model and a read on how consumers are behaving. Strong results at off-price chains often signal that shoppers are trading down, an important indicator of the broader consumer mood. As a large, cash-generative member of the benchmark that returns cash to shareholders, Ross also illustrates the durability of a model built on value, which can perform well in both good times and bad, though for different reasons.

Why Off-price Is Resilient

The off-price model's resilience deserves particular attention, because it explains Ross's appeal. In tough times, consumers trade down from full-price retailers to bargain chains, boosting demand. In good times, they still enjoy the thrill of finding deals, so demand holds up. Crucially, off-price retailers also benefit when other stores misjudge demand and end up with excess inventory, because that surplus becomes the discounted merchandise Ross buys cheaply. This gives the model a counter-cyclical quality on the supply side as well as the demand side. The main risk is that a very strong economy leaves less excess inventory available, or that supply-chain disruptions limit the flow of discounted goods, which can make it harder for Ross to keep its shelves full of the bargains its customers expect.

The Risks to Weigh

Ross depends on a steady supply of discounted merchandise, which can tighten if other retailers manage inventory well. Consumer spending on clothing is discretionary and can soften. Rising costs, including wages and freight, pressure margins. Competition among off-price and discount retailers is intense. The shares are valued for continued growth, so any slowdown in comparable sales would disappoint. Tariffs on imported goods could affect costs and pricing.

Winning When Shoppers Get Careful

Readers should track comparable sales, the clearest measure of demand and of whether shoppers are trading down, and watch commentary on the availability of discounted merchandise, which drives the model. New store openings indicate expansion plans. Margins reveal how Ross is managing costs and pricing. Commentary on the value-conscious consumer is valuable both for Ross and as an economic signal. Finally, watch how tariffs and supply conditions affect the flow of bargains, because Ross's success ultimately depends on keeping its shelves stocked with the brand-name deals that draw its value-seeking customers into its stores.