Aug 20, 2026 earnings call — Double-digit comp growth, raised outlook
Raised third-quarter outlook to 6% to 7% comps with EPS $1.75 to $1.83.
Revenue $6.3B (est $6.2B) · EPS $2.66 (est $1.95)
Key quotes
"We believe the increased traffic reflects the effectiveness of our customer acquisition efforts."
"Consolidated inventories at quarter end increased 18%. Packaway represented 36% of total inventory compared with 38% last year."
"We are now planning to open 115 locations in 2026, up from 110 in our prior guidance."
Analyst Q&A 17
what drove sales momentum
Q (Matthew Boss · JPMorgan): Analyst asked what drove the top-line momentum in Q2 and drivers of exit-rate strength. He also asked about opportunities remaining in H2 across assortment, marketing and in-store execution.
A: Management said the quarter was solid, driven mainly by more transactions from new, returning and existing customers shopping more often. They noted broad-based strength across merchandise and geography, a very strong July, and continued momentum into August. They said many initiatives are still early and there are more opportunities to drive growth for the rest of the year.
"The quarter was really solid, and we're thrilled by not only the underlying growth number, the 10% comp, but the quality of the comp." — James Conroy (CEO)
which initiatives still have room to grow
Q (Lorraine Maikis · BofA): Analyst asked which early-stage initiatives have the most runway to keep driving the guided comp strength.
A: Management grouped initiatives into merchandising, stores and marketing. They said merchants are adding assortments and brands, stores are more organized with faster inventory recovery and shorter queues, and marketing engagement is strong with new creative and media tweaks. They emphasized many initiatives remain unexecuted and more ideas remain to drive growth.
"The merchant team has really done a great job of continuing to build great assortments, opening up new vendors and new brands, starting to tell better merchandise stories across categories." — James Conroy (CEO)
who are the new customers
Q (Corey Tarlowe · Jefferies): Analyst asked how marketing fuels new customer acquisition and whether the new customers are higher income and what products they buy versus prior assortments.
A: Management said marketing and analytics teams are doing well but they are still learning. They have seen brand-new customers and returning lapsed customers. The new customers look very similar to current customers across income, age and ethnicity, implying growth across all household income and age groups.
"We've absolutely seen brand-new customers come into the Ross and dd's that hadn't shopped with us in the past as well as recapturing customers that perhaps used to shop with us and they're returning." — James Conroy (CEO)
vendor relationships and lapsed customers
Q (Charles Grom · Gordon Haskett): Analyst asked how success translated into better vendor relationships and new suppliers, and asked to size the lapsed customer opportunity and how they target them.
A: Management said vendor partnerships are strong because of their growth, improved in-store presentation, and the brand's more exciting positioning, which encourages vendors to participate. For lapsed customers they use third-party credit card data to identify and measure return behavior, are prospecting for them in marketing, and aim to show strong assortments to keep them coming back.
"The partnership with our current vendors and bringing on new vendors, I think, ties to the same 2 or 3 things that are happening within the business." — James Conroy (CEO)
how much sales from new customers
Q (Paul Lejuez · Citi): Analyst asked to quantify year-over-year new customers and Q2 sales from new customers versus Q1, and to quantify vendor count changes.
A: Management said vendor count alone doesn't capture the change because stronger national brands can replace tertiary vendors; walking stores shows stronger brand plates. On customers they said it's hard and somewhat proprietary to quantify, but in the 10% comp most of it was transactions, a smaller portion basket growth, and transactions were mix of new customers, returning lapsed customers, and existing customers shopping more frequently.
"But if you parse out some of the things we've said, a 10% comp, most of that was transactions." — James Conroy (CEO)
sustainable comp above long-term level
Q (Michael Binetti · Evercore): Analyst asked if initiatives give potential to sustain comps above traditional off-price levels and what would need to continue to do so.
A: Management said they are pleased and many initiatives are early stage. They believe they can grow beyond current trends and comp on top of strong comps this year, but they would wait further progress before updating the long-term algorithm. They did not change the long-term year-over-year algorithm at this time.
"I think the right time to do that would be further along in some of the initiatives we have in place." — Michael Hartshorn (COO)
whether investments need to increase
Q (Alexandra Straton · Morgan Stanley): Analyst asked if sustaining high comp growth needs higher structural investment or if current cost structure suffices.
A: Management said investments are tested in pilots and expanded only if they make sense on the P&L or as capital that pays back in 2 to 3 years. They have been able to leverage store payroll and SG&A so far and will make larger investments only when tests show they work across the total P&L.
"So the investments we're making, we're first testing in pilot stores." — Michael Hartshorn (COO)
lean in on investments and flow-through
Q (Brooke Roach · Goldman Sachs): Analyst asked if they should increase investment pace and if flow-through per comp point has changed.
A: Management said they are pleased with demand generation and have met flow-through expectations for several quarters. They will operate within their existing financial model and would inform the market before any major overinvestment. They confirmed the same 10 to 15 basis points per 1% comp flow-through model still holds.
"So yes, Brooke, I mean that same 10 to 15 bps per 1% of comp model still holds." — William Sheehan (CFO)
back-half margin drivers and pricing
Q (Mark Altschwager · Baird): Analyst asked if implied back-half margin raise is larger than 10–15 bps and what factors affect flow-through; also asked about protecting the value gap as competitors cut prices and assumptions for ticket growth.
A: Management said guidance aligns with the comp raise and reflects top-line momentum plus higher merchandise margins and some lower DC costs. On pricing they want to stay under mainstream retail pricing, have avoided passing through AUR increases, expect low-single-digit modest AUR increases in the back half, and will act if they lose the price umbrella.
"But our guidance reflects some of what we talked about there, higher merchandise margins, some lower DC costs." — William Sheehan (CFO)
freight and fuel impact on margins
Q (Irwin Boruchow · Wells Fargo): Analyst asked about gross margin plans for Q3 and Q4 and whether freight headwind from fuel worsens in the back half.
A: Management said merchandise margin is a tailwind and DC costs should benefit some, but domestic freight is projected to deleverage due to higher fuel costs. They do not hedge fuel and have embedded higher fuel in guidance; material changes in fuel would affect results and the impact depends on future fuel prices.
"I think similar to Q3, we are projecting domestic freight to deleverage due to higher fuel costs." — William Sheehan (CFO)
role of brand relevance and selling to vendors
Q (Jay Sole · UBS): Analyst asked whether marketing is the main traffic driver and how improving brand relevance ties to getting better vendors and products.
A: Management said all three—marketing, assortment and store experience—work together: marketing fills the top of funnel while assortment and store experience convert traffic. They are making intentional creative and storytelling moves to make Ross and dd's resonate as brands without losing value orientation, and those moves seem to be working.
"We want Ross and dd's to both resonate with consumers in their own right as brands." — James Conroy (CEO)
category performance and store growth
Q (Dana Telsey · Telsey Advisory Group): Analyst asked for updates on apparel/ladies performance, which categories drove strength, and details on new store openings and sizes, including Northeast expansion and whether pace will accelerate.
A: Management said cosmetics and home were strong, home is now outpacing company average with decorative home growing mid-teens, and ladies is strong with juniors up. On real estate they targeted 5% unit growth, added 5 stores that could be opened this year versus next, are expanding in the Northeast, and store size remains generally unchanged and site-dependent.
"This year, we had -- these 5 stores that we added were stores that we're teetering on could we open them this year, get through the negotiations and construction or should we open them in spring of next year." — Michael Hartshorn (COO)
inventory sources and AI plans
Q (Adrienne Yih-Tennant · Barclays): Analyst asked about shifts in inventory availability from closeouts vs wholesale and which categories are underpenetrated; also asked how AI/agentic search may affect off-price.
A: Management said no meaningful shift in closeout availability; many goods are becoming available as mainstream retail softens, and they can get their fair share. They already invested in data foundations and will integrate AI across functions rather than creating a separate group; AI is seen as an enhancer to planning, allocation and other operations.
"Of course, way before I got here, Michael and the IT team had already started investing in sort of the foundational data elements that we need to rely on to integrate AI." — James Conroy (CEO)
which customer metrics surprised most
Q (Krisztina Katai · Deutsche Bank): Analyst asked which customer metrics exceeded expectations and what percent of stores operate under the new playbook.
A: Management said customer metrics are strong across four dimensions: new customer capture, returning lapsed shoppers, higher frequency of existing shoppers, and higher baskets. They said initiatives are rolled out via test-and-learn—some go chain-wide, some in partial pilots—and it's hard to give a single percentage because stores and formats vary and initiatives ramp differently by site and category.
"We've seen that, and we've seen an increase year-over-year versus last year in that group." — James Conroy (CEO)
risk of higher in-store inventory
Q (Aneesha Sherman · Bernstein): Analyst asked about risk of higher store inventories if consumer softens and whether new customers are shifting share within off-price or coming from mainstream retail.
A: Management said they carried higher store inventory to support demand but in-store turns remained very strong and merchandise margins increased. They maintain open-to-buy flexibility to adjust if needed. They also said Ross has outgrown other off-price players over the last 4 quarters and thus has captured more share, but they won't comment on specific impacts to competitors.
"Despite that higher level of inventory, our in-store turns remained very strong." — Michael Hartshorn (COO)
Instagram and marketing spend
Q (Marni Shapiro · Retail Tracker): Analyst asked if Instagram is driving younger shoppers and whether marketing spend will increase in back half and into 2027; also asked about event-driven selling.
A: Management said data show marketing and creative drive traffic including younger customers, though they avoid over-attributing day-to-day causality. They plan marketing as a rate of sales so spend will rise in H2 as the business grows, with possible slight escalation in rate of sales. They also said they are doubling down on event-driven selling but weekly comps have been consistent rather than spiking around events.
"So on the data front, as you can imagine, we are constantly poring through data." — James Conroy (CEO)
good-better-best mix and dd's performance
Q (Robert Drbul · BTIG): Analyst asked if mix is shifting toward better or best and for an update on dd's business and its opportunity relative to Ross.
A: Management said they are not shifting dramatically away from their core 'good' price point and are cautious not to raise price points meaningfully now. They said dd's sits beneath Ross price points, had a very strong quarter (not as strong as Ross on a 1-year basis but in line on a 2-year basis), and the dd's team is running the business well.
"dd's sort of tucks in beneath those price points." — James Conroy (CEO)