Quick Look

  • Ross Stores reported on Thursday that second-quarter traffic drove a 10% year-over-year increase in comparable store sales, marking the company's second consecutive quarter of double-digit comparable growth. According to Placer.ai data, store visits grew more than 16% during the period.
  • Executives said on Thursday's analyst call that transaction growth came from new customers, returning lapsed customers, and existing customers shopping more frequently.
  • This comparable performance exceeded analyst expectations and stood in stark contrast to discount retail leader TJX. TJX's Marmaxx division, which includes U.S. T.J. Maxx and Marshalls stores, reported weak comparable store sales growth of just 1% on Wednesday.

Deeper Dive

Under CEO James Conroy, who took the helm early last year, Ross has been upgrading its merchandise mix—adding more brands and remodeling stores—while stepping up marketing, and these efforts are already showing results.

"Ross is now the king of retail," said a Wells Fargo analyst team led by Ike Boruchow in a research note Thursday.

Second-quarter total sales rose 13% to $6.3 billion. Excluding a $253 million tariff refund, operating margin expanded 205 basis points. The tariff refund contributed 405 basis points of the 610-basis-point increase in operating margin, with operating profit exceeding $1 billion in the quarter. Net income surged 68% to $851.3 million.

The company expects comparable growth momentum to continue into the second half of the year, with CFO William Sheehan telling analysts that third-quarter comparable sales are expected to grow 6% to 7%, and fourth-quarter growth of 4% to 5%.

A William Blair analyst team led by Dylan Carden noted in a Friday report that these high growth numbers will eventually moderate, but the company's current initiatives are expected to drive growth "at least through 2027, after which the company may enter a more normalized low-single-digit comparable growth phase."

Ross is also now the king of off-price retail, at least for now. For years, these retailers have benefited from market share ceded by department stores, and recently there are signs they may begin competing for share against each other. William Blair analysts believe Ross likely took market share from TJX this time, as evidenced by the divergence in their second-quarter comparable results, given that Ross has been fairly conservative on pricing.

This strategy is particularly effective in an environment where consumers are highly focused on prices across various categories, including groceries, gas, and discretionary items.

"As we've noted, this contrasts sharply with TJX—which has seen outsized growth over the past year and a half thanks to price increases," Carden said. "In the current environment, we believe better value is clearly winning incremental share for Ross, and it's hard to imagine that some of it isn't at TJX's expense."

When analysts asked about this, Conroy acknowledged the company has gained share in off-price retail, but he declined to attribute it to any specific competitor.

"Trying to stay humble, but just mathematically, over the last four quarters we've grown faster than the other two peers," he said, likely referring to TJX and Burlington. "So mathematically, we've gained more share. In the off-price market, our share is larger than a year ago because we're growing faster."

Finally, Conroy said he broadly supports the off-price industry and called the other major retailers in the space "very strong companies."

"They all run extremely well. We compete with each other, but we're also taking share from other parts of the retail industry," he said. "So in a way, we want off-price to win, and we just want to be the slightly bigger winner. So I can't comment on whether we're specifically impacting either of the other two—one is much larger than us and does what I would call a world-class job. So I'm not too worried about that."

The strong second-quarter performance prompted Ross to raise its 2026 store expansion plan from about 110 new stores to 115. In the second quarter, the company opened 35 new Ross stores and 12 DD's Discounts stores.