01—Abstract
Summary
Summary of the 10-Q filed June 2, 2026. Cited figures are marked; the original filing is the authoritative source.
Ross Stores, Inc. (ROST) reported a strong first quarter for fiscal year 2026, with significant year-over-year increases in sales and earnings.
Total sales surged by 21% to $6.01 billiona, driven by a robust 17% increase in comparable store sales. This growth was fueled by an 11% rise in customer traffic and a 6% increase in average transaction value. Profitability also saw substantial improvement, with operating income rising to $804 million and net earnings reaching $650 million, up from $479 million in the prior year's first quarter.
Diluted earnings per share increased by 37% to $2.02b. The company's effective tax rate decreased due to favorable tax effects from stock-based compensation. The company continues to execute its growth strategy, opening 17 new stores in the quarter and remaining on track to open approximately 110 new stores for the full fiscal year.
Management highlighted key initiatives in merchandising, marketing, and store improvements aimed at enhancing customer experience and driving performance. Financially, Ross Stores maintained a strong liquidity position with $4.1 billionc in unrestricted cash, complemented by a fully available $1.3 billion credit facility. The company also continued its commitment to returning capital to shareholders through dividends and an active stock repurchase program, repurchasing $318.7 million in the quarter under a new $2.55 billion repurchase authorization.
02—Key points
Key Highlights
- Total sales increased by 21% to $6.01 billion in Q1 FY2026.
- Comparable store sales grew by a strong 17%, indicating robust demand.
- Net earnings increased by 36% to $650 million, with diluted EPS rising to $2.02.
- Operating income margin improved to 13.4% from 12.2% in the prior year.
- The company opened 17 new stores in the quarter and plans to open approximately 110 new stores in FY2026.
- Strong cash flow from operations of $836 million demonstrates operational efficiency.
- The company repurchased $318.7 million of its common stock under a new $2.55 billion repurchase program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2027, Ross Stores, Inc. kept $0.11.
- Revenue$6.01B100.0%
- Cost of revenue−$4.23B70.4%
- Gross profit$1.78B29.6%
- Operating costs−$975.9M16.2%
- Operating income$804.0M13.4%
- Interest, other & tax−$154.1M2.6%
- Net income$650.0M10.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2027filed June 2, 2026Financial Statements
Q1 FY2027 against Q1 FY2026
| Line item | Q1 FY2027Q1 FY2026 | Change |
|---|---|---|
| Revenue | $6.01B$4.98B | +20.6% |
| Cost of Revenue | $4.23B$3.58B | +18.1% |
| Gross Profit | $1.78B$1.40B | +26.8% |
| SG&A Expenses | $975.86M$797.13M | +22.4% |
| Operating Income | $804.03M$606.47M | +32.6% |
| Net Income | $649.96M$479.25M | +35.6% |
| EPS (Basic) | $2.04$1.48 | +37.8% |
| EPS (Diluted) | $2.02$1.47 | +37.4% |
| Shares Outstanding (Basic) | 318.96M324.88M | −1.8% |
| Shares Outstanding (Diluted) | 321.23M327.00M | −1.8% |
05—Questions
Frequently Asked Questions
What drove the significant increase in sales and earnings in the first quarter?
The substantial increase in sales and earnings was primarily driven by a strong 17% rise in comparable store sales, which benefited from an 11% increase in customer traffic and a 6% increase in average transaction value. This top-line growth, combined with improved merchandise margins and leveraged occupancy costs, led to a significant expansion in operating income and net earnings.
How is Ross Stores managing its inventory and supply chain?
Ross Stores continues to leverage packaway inventory opportunities, with packaway representing 36% of total inventory as of May 2, 2026. The company is also investing in its supply chain, including plans for new distribution centers, to support long-term growth and manage inventory effectively. Operating cash flow increased significantly, partly due to higher accounts payable leverage, indicating efficient management of supplier payments relative to inventory.
What is the company's capital allocation strategy, including share repurchases and dividends?
Ross Stores demonstrates a commitment to returning capital to shareholders. The company declared a quarterly cash dividend of $0.4450 per share and repurchased $318.7 million of its common stock in the first quarter under a new $2.55 billion repurchase program. This reflects confidence in the company's financial health and its ability to generate strong cash flows.
What are the key growth drivers and future outlook for Ross Stores?
The company's growth is supported by its off-price retail model, which appeals to value-conscious consumers. Key initiatives in merchandising, marketing, and in-store experience are expected to further enhance performance. Ross Stores plans to open approximately 110 new stores in fiscal year 2026, expanding its market reach. The company maintains a strong financial position with substantial cash reserves and an available credit facility, providing flexibility to fund growth initiatives and capital expenditures.
06—Continue