ROST changes
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- Price
- $237.00
- Discount category
- Far above intrinsic value
- Next earnings
- 2026-11-19
- Next earnings is estimate
- Yes
- Company name
- Ross Stores
- Sector
- Off-price retail
- About
- Ross Stores (Ross) runs off-price stores that sell brand-name apparel, accessories, footwear and home fashions for less than the regular prices of department and specialty stores. Ross Dress for Less is the largest off-price apparel and home fashion chain in the United States, with 1,952 locations in 44 states, the District of Columbia, Guam and Puerto Rico. The company also runs 376 dd's DISCOUNTS stores in 23 states, which sell a more moderately priced assortment. In Q2 2026, home accents and bed and bath gave 24% of sales, ladies 23%, men's 16%, accessories, lingerie, fine jewelry and cosmetics 15%, shoes 13% and children's 9%. Sales were $22.8 billion in fiscal 2025, which ended January 31, 2026. The head office is in Dublin, California. Jim Conroy is Chief Executive Officer.
- Thesis
- Ross trades at a premium because investors pay for its fast growth in customer traffic, its store growth and its net cash. In Q2 2026, sales rose 13% to $6,265 million and comparable store sales rose 10%, mainly from more customer traffic. EPS was $2.66, which includes about $0.60 from refunds of IEEPA tariffs that will not come again. The company raised its fiscal 2026 EPS guidance to $8.61 to $8.77, against $6.61 for fiscal 2025, and it plans 115 new stores in 2026. But the second half of 2026 has much harder comparisons, and guidance for comparable store sales growth falls to 6% to 7% in Q3 and 4% to 5% in Q4. For the premium to be earned, three things must be true. Comparable store sales must keep growing near the guidance after the strong first half. The operating margin without the tariff refunds must keep rising. New stores in new markets must give good returns. The Q3 2026 report, expected in mid-November 2026, and the fiscal 2027 guidance, expected in early March 2027, are the next tests. Only several years of growth in sales and margins can earn the premium.
- Risks
- Comparable store sales rose 13% in the first half of 2026, so the second half has much harder comparisons. The company expects growth of only 6% to 7% in Q3 and 4% to 5% in Q4. Many customers have moderate incomes. Higher costs for fuel and other necessities, or a weaker economy, can lower their spending. Ross imports much of what it sells. New tariffs or changes in trade policy can raise its costs. The IEEPA tariff refunds of about $253 million in Q2 2026 will not come again. The model needs a steady supply of brand-name goods at large discounts. Less excess inventory at brands and department stores can lower merchandise margins. Growth depends on new stores in new and existing markets. New stores that open in weaker locations can give lower returns.
- Balance sheet
- Cash: $4.3B Debt: $1.0B Net cash: $3.3B Interest cover: 94× Debt due within 12 months: $241M Ross has more cash than debt. At August 1, 2026, cash and cash equivalents were $4,288 million. Debt was $1,019 million of unsecured senior notes: $241 million of 4.700% notes due 2027, which are current, and $777 million due after one year, which mature between 2030 and 2050. In the first half of 2026, Ross repaid $500 million of 0.875% notes. A $1.3 billion revolving credit facility runs to June 2030. Operating lease liabilities were $3,721 million. Interest cover is operating income divided by interest expense for the first half of 2026 ($1,908 million against $20 million). Operating cash flow was $1,712 million in the first half of 2026, and capital spending was $460 million. In the same period, Ross bought $638 million of its own shares and paid $286 million of dividends. Stockholders' equity was $6,743 million. As of 2026-08-01.
- Checkpoints
- Aug 20, 2026: Q2 2026 results: customer traffic. Passed. Watch: Comparable store sales growth above the plan, driven by traffic, passes; a slowdown fails. Outcome: Comparable store sales rose 10%, mainly from customer traffic, and the company raised its fiscal 2026 EPS guidance. Nov 19, 2026 (estimate): Q3 2026 results. Pending. Watch: Comparable store sales growth of 6% to 7% and EPS of $1.75 to $1.83 or more pass; lower results fail. Mar 2027 (estimate): Fiscal 2026 results and fiscal 2027 guidance. Pending. Watch: Guidance for EPS growth over fiscal 2026 without the tariff refunds passes; flat or lower EPS guidance fails.
- Recent events
- 2026-09-17: Ross said that Shelley H. Bransten and Christian B. Johnson join the Board on October 1, 2026, and that Sharon D. Garrett, a director since 2000, retires from the Board. 2026-08-20: Ross reported Q2 2026 results. Sales rose 13% to $6,265 million, comparable store sales rose 10% and EPS rose to $2.66 from $1.56. EPS includes about $0.60 from about $253 million of IEEPA tariff refunds. The company raised its fiscal 2026 EPS guidance to $8.61 to $8.77 and its new store plan to 115 locations. 2026-03-03: Ross reported fiscal 2025 results. Sales rose 8% to $22.8 billion, comparable store sales rose 5% and EPS rose to $6.61 from $6.32. The Board approved a two-year share repurchase program of $2.55 billion and raised the quarterly dividend by 10% to $0.445 per share.