Shares of Ross Stores (NASDAQ:ROST | ROST Price Prediction) are rising 8% to $246.60 Friday morning after the off-price chain posted a blowout Q2 fiscal 2026 report. The move is doing analytical work on its own, because the broader retail tape isn’t following along.
Meanwhile, TJX Companies (NYSE:TJX) stock is up 1% to $141.45, catching a modest read-across from the off-price winner. Additionally, Macy’s (NYSE:M) shares are up 1% to $22.82, representing a mild bounce much like TJX stock. The SPDR S&P Retail ETF (NYSEARCA:XRT) is unchanged at $87, underscoring that today’s story is one of dispersion within retail.
Blowout Quarter Fuels the Ross Stores Rally
Ross Stores reported revenue of $6.26 billion, up 13%, against analyst estimates of $6.15 billion. GAAP EPS came in at $2.66, ahead of the $1.95 consensus and above prior company guidance of $1.85 to $1.93. Net income reached $851.3 million versus $508 million a year ago.
Comparable store sales at Ross Stores rose 10%, the second consecutive double-digit quarter, driven by customer traffic. Operating profit hit $1.1 billion, with operating margin at 17.6% versus 11.5% a year earlier. Results included roughly $253 million of operating income and about $0.60 per share from IEEPA tariff refunds, but ex-benefit operating margin still expanded 205 basis points against a 130 to 150 bps plan.
CEO Jim Conroy declared the quarter delivered “stellar sales and earnings growth,” pointing to a supply backdrop that keeps improving. He asserted, “There’s a lot of goods being canceled… we expect that to continue. Off-price at the end of the day will probably continue to be a winning sector.” Conroy also noted “the new customers we are attracting span a broad range of income demographics and age cohorts.”
Guidance Raised Across the Board
Ross Stores lifted full-year fiscal 2026 EPS guidance to $8.61 to $8.77 from $7.50 to $7.74, including the tariff benefit. Q3 guidance calls for EPS of $1.75 to $1.83 and comps up 6% to 7%, well above the consensus 3.1% comp print. Q4 comps are guided up 4% to 5%.
During the quarter, Ross Stores opened 47 stores and raised its 2026 opening plan to 115 from 110, split roughly 90 Ross Dress for Less and 25 dd’s DISCOUNTS. That brings the fleet to 2,328 locations versus 2,233 a year ago. The company repurchased 1.4 million shares for $319 million in the quarter and remains on track for $1.275 billion in fiscal 2026 buybacks under a two-year $2.55 billion authorization approved in March.
Peers Split Between Beneficiary and Source
TJX Companies is the larger off-price operator, with more than 5,200 stores across ten countries and a $155.42 billion market cap spanning TJ Maxx, Marshalls, HomeGoods, Homesense, Sierra, Winners, and TK Maxx. The stock is only ticking higher because TJX Companies already reported and receives a read-across from Conroy’s winning-sector thesis rather than a direct catalyst.
Macy’s sits on the other side of the trade, with a $5.94 billion market cap across Macy’s, Bloomingdale’s, and Bluemercury. Conroy’s cancelled-order comment describes mainstream department store weakness as the supply feeding off-price closeout racks, so Macy’s stands as a source of Ross Stores’ merchandise advantage. The SPDR S&P Retail ETF is a broad retail fund spanning off-price, department stores, e-commerce, and specialty retail, which is why one 8% winner leaves the fund flat.
Macro Backdrop Favors the Off-Price Winner
WTI crude oil sits at $86.80 a barrel and the 10-year Treasury yields 4.69%, with CME FedWatch pricing a 34.6% chance the Federal Reserve hikes at its September meeting. Higher fuel and borrowing costs squeeze the mainstream consumer, and that pressure is what pushes traffic toward off-price. University of Michigan consumer sentiment reads 49.5, deep in pessimistic territory, which historically supports the trade-down narrative.
Ross Stores expects only modest low-single-digit price increases in the second half, keeping its value gap wide. Traders can watch for a fade into the close, since profit-taking on a one-time tariff benefit remains a risk after such a sharp gap higher. Investors may want to keep an eye on whether TJX Companies stock builds on the read-across when it next reports, and whether Macy’s cancelled orders keep feeding the off-price supply pipeline.
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