Ross Stores Earnings Lift Outlook, Shares Rise

Ross Stores, Inc. (ROST) reported earnings on May 21, 2026, for the quarter ended May 2, showing stronger sales that prompted the company to raise its fiscal 2026 outlook. The announcement pushed shares to a 52-week high and refocused attention on valuation.

Quarter Results and Drivers

Ross Stores reported net sales of $6.0 billion for the 13-week first quarter, a 21% increase year over year. Comparable-store sales rose 17%, reversing a flat result a year earlier. Operating margin expanded to 13.4%, exceeding the company’s internal guidance range of 11.8% to 12.1%. Net income reached $650 million, and diluted earnings per share rose 37% to $2.02, materially surpassing prior guidance of $1.60 to $1.67.

Management attributed the gains mainly to higher customer traffic and broad-based acquisition across income levels, age groups, and geographies. Category strength was notable in ladies’ apparel and cosmetics. Executives credited strong value offerings, favorable availability of branded closeout merchandise, and disciplined merchandising and inventory management for supporting both sales and margins. They noted that higher tax refunds provided a tailwind but emphasized the quarter was transaction-led.

Guidance, Capital Returns, and Valuation

Following the strong quarter, Ross raised its near-term and full-year outlook. The company now expects comparable-store sales to increase 6% to 7% in the second quarter and for fiscal 2026 overall. Second-quarter diluted EPS is forecast at $1.85 to $1.93, with full-year diluted EPS projected between $7.50 and $7.74, implying 13% to 17% growth over fiscal 2025.

Ross repurchased 1.5 million shares during the quarter for $319 million and remains on track to repurchase approximately $1.275 billion in fiscal 2026 under its two-year $2.55 billion authorization. The company reiterated its commitment to paying a regular quarterly cash dividend.

Management raised second-quarter assumptions to reflect the strong start while keeping second-half assumptions largely unchanged. The outlook assumes continued demand for off-price retail but incorporates risks from tariffs, cost pressures, and increasingly difficult year-over-year comparisons after an exceptional first quarter.

Market commentary highlighted valuation as a key consideration after the report. Analysts noted the stock now trades at a premium to historical norms, narrowing the margin of safety for some investors. Some raised price targets based on a projected five-year EPS compound annual growth rate near 7.5%, while others warned of tougher comparisons later in the year.

Management’s upgrade and sizable buybacks signal confidence in the business and capital-return strategy, but investors will weigh that momentum against premium valuation and the risks Ross identified.