Ross Stores delivered a first quarter that met the high end of management’s expectations, with sequential sales improvements as a notable trend. CEO James Conroy highlighted momentum in categories such as cosmetics and consistent performance from the dd’s DISCOUNTS brand, while also pointing to execution in inventory management. The company credited opportunistic inventory buys and a flexible merchandising approach for its ability to capitalize on closeouts, helping offset the impact of a volatile external environment. Management also noted that geographic performance was balanced, with the Southeast emerging as the best-performing region during the period.
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Ross Stores (ROST) Q1 CY2026 Highlights:
- Revenue: $6.01 billion vs analyst estimates of $5.64 billion (20.6% year-on-year growth, 6.6% beat)
- EPS (GAAP): $2.02 vs analyst estimates of $1.72 (17.6% beat)
- Adjusted EBITDA: $936.6 million vs analyst estimates of $830.7 million (15.6% margin, 12.7% beat)
- EPS (GAAP) guidance for the full year is $7.62 at the midpoint, beating analyst estimates by 2.7%
- Operating Margin: 13.4%, up from 12.2% in the same quarter last year
- Locations: 2,282 at quarter end, up from 2,205 in the same quarter last year
- Same-Store Sales rose 17% year on year (0% in the same quarter last year)
- Market Capitalization: $75.21 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Ross Stores’s Q1 Earnings Call
- Matthew Boss (JPMorgan) asked about the drivers behind the improvement in comps as the quarter progressed. CEO James Conroy pointed to broad-based departmental strength and noted that April saw improvement, in line with the company’s guidance, but was reserved and did not specifically highlight 'especially strong transaction and basket trends.'
- Lorraine Hutchinson (Bank of America) inquired about the gross margin impact from tariffs and whether the effect would moderate later in the year. COO Michael Hartshorn explained that Q2 margin pressure reflects goods already in transit during tariff hikes, with more visibility needed for the back half.
- Mark Altschwager (Baird) asked about potential supply chain gaps and inventory availability due to the tariff disruptions. Conroy confirmed that while a near-term influx of closeouts is expected, the company feels well-positioned to manage through any supply gaps using packaway and opportunistic buying.
- Alex Straton (Morgan Stanley) wanted an update on the branded product strategy and its impact on margins. Conroy stated the transition is complete and no further margin drag is expected; women’s apparel is now performing in line with the rest of the business.
- Brooke Roach (Goldman Sachs) questioned the potential for assortment shifts to mitigate tariff impacts. Conroy described significant flexibility in adjusting mix and sourcing, but noted that meaningful changes in country of origin will take several months.
Catalysts in Upcoming Quarters
As we look to future quarters, our analyst team will be monitoring (1) the pace and effectiveness of tariff mitigation efforts through sourcing and vendor negotiations, (2) trends in customer traffic and basket size—especially as inflation and trade policy evolve, and (3) the execution of store growth plans, including new Ross and dd’s DISCOUNTS locations. The ability to sustain momentum in higher-performing categories and adapt quickly to shifting supply chain dynamics will also be central to Ross Stores’ performance.
Ross Stores currently trades at $236.22, up from $217.19 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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