Ross Stores Continues to Thrive Despite Uncertain External Environment
Ross Stores has once again demonstrated its resilience in the face of an unpredictable external environment. The company's Q1 2026 earnings release conference call, held on May 22, 2025, revealed a 3% growth in total sales to $5 billion, with comparable store sales remaining flat versus last year. Earnings per share were $1.47 compared to $1.46 in the same period last year, while net income for the quarter was $479 million, slightly lower than the $488 million recorded in Q1 2024.
Despite a slower start to the spring selling season in February, Ross Stores' monthly sales performance improved significantly month by month throughout the quarter. This sequential improvement in comp sales is a testament to the company's ability to adapt and respond to changing market conditions.
The cosmetics segment was the strongest performer during the quarter, while geographic trends were broad-based with the Southeast region performing particularly well. The dd's DISCOUNT brand continued its strong momentum from 2024, with another quarter of solid sales and operating profits. This success can be attributed to the chain's value and fashion offerings, which have consistently resonated with shoppers.
In terms of inventory management, total consolidated inventories were up 8% versus last year, primarily due to opportunistic buys during the period. Average store inventories increased by 4%, in line with the company's plan, while packaway merchandise represented 41% of total inventory, similar to last year. Ross Stores believes its inventory is well-positioned as it enters the second quarter.
Store growth remained on track, with 16 new Ross and 3 dd's DISCOUNT locations opened in Q1. The company continues to plan for approximately 90 new stores this year, comprising about 80 Ross and 10 dd's. As usual, these numbers do not reflect plans to close or relocate around 10-15 older stores.
Chief Executive Officer Jim Conroy emphasized the importance of adaptability in navigating an uncertain external environment. He noted that while tariffs may have a short-term impact on profitability, the company has multiple strategies in place to mitigate this effect and maintain its focus on providing high-quality branded merchandise at a great value. From a pricing standpoint, Ross Stores expects modest but broad-based inflationary pressure across the retail industry.
The company's withdrawal of annual guidance for fiscal year 2026 is a prudent move given the many unknown variables that are limiting visibility into the second half of the year. However, this decision does not diminish expectations of a continued strong performance from Ross Stores in the quarters ahead. As Conroy stated, the off-price sector has historically benefited from significant disruptions to the supply chain, and Ross Stores is no exception.
As the company continues to navigate these uncertain times, its commitment to delivering great value to customers remains unwavering. With a solid foundation of inventory management, store growth, and adaptability, Ross Stores is well-positioned for continued success in the quarters ahead.
