Key Highlights

● Sales rose 13% to US$6.3 billion.

● Comparable-store sales rose 10%.

● Tariff refunds added about US$0.60 to EPS.

● Full-year EPS is guided at US$8.61 to US$8.77.

Ross Stores, Inc. (NASDAQ:ROST) raised its full-year profit outlook on 20 August 2026 after a second quarter in which sales and comparable-store sales both beat the prior year, and in which a one-off recovery of tariff payments added to earnings. The retailer's reported figures flatter the underlying trend, so the split between operating performance and the refund matters for anyone reading the headline numbers.

The second-quarter results

For the quarter ended 1 August 2026, Ross reported sales of US$6.3 billion, up 13% from US$5.5 billion a year earlier. Comparable-store sales rose 10%, compared with 2% in the prior-year quarter. Diluted Earnings per share were US$2.66, against US$1.56 a year earlier, while net earnings were US$851 million, compared with US$508 million. For the six months, net earnings reached US$1.501 billion, against US$987 million.

Chief executive Jim Conroy said in the release that the company achieved stellar sales and earnings growth in the quarter, which he linked to compelling merchandise offerings. The company's Operating Margin rose by 610 basis points on the year.

How much came from tariff refunds

The release states that the quarter included about US$253 million of refunds relating to tariffs imposed under the International Emergency Economic Powers Act (IEEPA). That accounted for 405 basis points of the margin increase and about US$0.60 of earnings per share. Excluding the refunds, operating margin improved by 205 basis points, which the company said was well above its plan for an increase of 130 to 150 basis points.

This distinction is important because refunds of this kind are not part of normal trading. The underlying improvement still beat management's plan, but the US$2.66 headline figure should not be read as a run rate.

Balance sheet, stores and Capital returns

At 1 August 2026 the company held US$4.288 billion in cash, compared with US$3.847 billion a year before, and inventory of US$3.087 billion, up from US$2.608 billion. Ross opened 47 stores in the quarter, comprising 35 Ross Dress for Less and 12 dd's DISCOUNTS locations, and raised its 2026 opening plan to 115 locations.

It repurchased 1.4 million shares for US$319 million in the quarter and said it remains on track for US$1.275 billion of Buybacks in fiscal 2026. Dividends paid in the first six months totalled US$286.2 million. The indicated Dividend is US$1.78 per share, a Yield of 0.79%.

Guidance and risks

Management now expects comparable-store sales to increase 6% to 7% in the third quarter and 4% to 5% in the fourth. Third-quarter earnings per share are guided at US$1.75 to US$1.83, and full-year earnings per share at US$8.61 to US$8.77, a range that includes the roughly US$0.60 refund benefit recognised in the second quarter.

Risks are straightforward. Off-price retail depends on a steady Supply of attractively priced branded merchandise and on lower and moderate-income shoppers, who can be sensitive to household budgets. Tariff policy remains a variable for imported goods and costs, and a 10% comparable-store sales increase is a demanding base against which later quarters will be measured. Inventory growth of about 18% on the year also deserves monitoring, given the guided slowdown in comparable sales.

Beating the Plan, With a One-Off Boost

Investors will look to the third-quarter report, which will test the guided comparable-store sales range of 6% to 7% set by management. Further store openings, both Ross and dd's DISCOUNTS, towards the 115-location plan, progress on the US$1.275 billion buyback and any updates on tariff costs are also worth following.