Off-Price Wins the Cautious Consumer: Ross Stores Crushes Q2 and Raises Its Outlook

Ross Stores (ROST) delivered a blowout second quarter and lifted its full-year outlook, and investors rewarded the beat immediately — shares jumped about 7% after hours to $245.50 on 2.4 times normal volume. The timing sharpens the story: on the very morning Walmart fell on a traffic miss, the off-price giant reported that shoppers are streaming through its doors. As a result, Ross has handed Wall Street fresh evidence that budget-conscious consumers increasingly hunt for value at off-price retailers.

Key Points

• Ross posted Q2 EPS of $2.66, crushing its own $1.85–$1.93 guidance — roughly $0.60 of that came from one-time tariff refunds.
• Total sales rose 13% to $6.26 billion, with comparable-store sales up a strong 10%.
• Operating margin expanded 610 basis points, though about 405 of those points stemmed from the tariff refunds.
• Management raised full-year EPS guidance to $8.61–$8.77 and lifted its store-opening plan to 115 locations.
• CEO Jim Conroy credited “compelling merchandise” and rising customer traffic from both new and existing shoppers.
• The stock jumped about 7% after hours to $245.50 as off-price cemented its status as retail’s winning format.

Ross Stores (ROST) Turns Traffic Into a Blowout

Ross grew the quarter the way investors most want to see. Total sales climbed 13% to $6.26 billion, and comparable-store sales — the truest read on underlying demand — rose a robust 10%. Moreover, CEO Jim Conroy pinned the strength directly on customer traffic, noting that both new and returning shoppers visited more often and engaged more deeply.

That distinction matters, especially this week. Walmart stumbled the same morning precisely because its traffic softened, while Ross accelerated because its traffic surged. Consequently, the two prints together sketch a clear picture: as households tighten budgets, they are steering their trips toward off-price, and Ross is capturing the shift.

A Blowout Beat — With a Tariff Asterisk

The headline number looks enormous, and investors should read it carefully. Ross earned $2.66 per share against guidance of just $1.85–$1.93, clearing the high end by $0.73. However, roughly $0.60 of that beat came from one-time IEEPA tariff refunds, and about 405 of the quarter’s 610 basis points of margin expansion traced to those same refunds.

Strip out the one-timer, though, and the quarter still impresses. Excluding the refunds, Ross expanded margins about 205 basis points and earned roughly $2.06 per share — comfortably above its own guidance range. Because the underlying beat holds up even without the tariff windfall, the report reflects genuine operating strength rather than an accounting mirage.

Ross Raises Its Full-Year Outlook

Confidence, not caution, defined management’s guidance. Ross raised full-year EPS guidance to $8.61–$8.77 and now expects comparable-sales growth of 6%–7% in the third quarter and 4%–5% in the fourth. Furthermore, the company lifted its expansion plans, opening 47 stores in the quarter and boosting its full-year target to 115 new locations across the Ross and dd’s DISCOUNTS banners.

Because retailers rarely raise both earnings and store-growth targets when they fear a weakening consumer, the upgrade signals that Ross expects the value-seeking behavior driving its results to persist through the holidays.

What It Means for Investors

Ross entered the back half of 2026 firing on every cylinder that matters: rising traffic, double-digit comps, expanding margins, and an aggressive store-growth plan. Even so, investors should keep the tariff refunds in view, since a chunk of the reported profit will not repeat, and the coming quarters will test how much of this momentum is structural.

Ultimately, the quarter reinforced a theme rippling across retail this earnings season. When shoppers grow cautious, they do not stop spending — they trade down, and off-price captures the flow. For now, the market rewarded Ross for standing on the winning side of that divide, sending the stock higher even as bigger, pricier rivals struggled to hold their ground.