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Ross Stores: Ross Stores' Strong Q4 Earnings Driven by Sales Growth and Margin Expansion

Ross Stores reported a robust fourth quarter with total sales growing 12% to $6.6 billion, driven by a 9% increase in comparable store sales, primarily due to an increase in transactions. The operating margin was 12.3%, and net income was $646 million, with earnings per share of $2, a 21% increase from the prior year, beating analyst estimates of $1.9. For the full year, total sales increased 8% to $22.8 billion, and net income was $2.1 billion, with earnings per share of $6.61, up 10% from the prior year.

ROST

USD 213.52

8.03%

A-Score: 5.5/10

Publication date: March 3, 2026

Full Report

Author: Analystock.ai

📋 Highlights
  • Q4 Sales Growth: Total sales rose 12% to $6.6 billion, with comparable store sales up 9%, driven by increased transactions.
  • Profitability Expansion: Operating margin reached 12.3%, and net income hit $646 million, with EPS climbing 21% to $2.
  • Shareholder Returns: Completed a $2.1 billion stock repurchase program and authorized a new $2.55 billion program, alongside a 10% dividend increase to $0.445/share.
  • 2026 Guidance: EPS projected at $7.02–$7.36 (+10–14% YoY), with total sales growth of 5–7% and operating margin of 12–12.3%.
  • New Store Expansion: Plans to open 110 new stores in 2026 (85 Ross, 25 dd's DISCOUNTS), supporting long-term growth through strategic location additions.

Operational Highlights

The company's strong performance was driven by better buying and merchants' good decisions, with a 7-8% comp growth expected in Q1. The ladies' business acceleration is attributed to a brand strategy reset 2 years ago, with a focus on bringing in branded bargains. Store experience improvements, including targeted payroll investments and self-checkout expansion, are driving positive results, with customer count growth broad-based across income demographics and age groups.

Guidance and Outlook

For 2026, Ross Stores expects comparable store sales to increase 3-4%, and earnings per share to be $7.02-$7.36, with total sales growth of 5-7%, and operating margin of 12-12.3%. The company plans to open 110 new stores, including 85 Ross and 25 dd's DISCOUNTS locations. The guidance for the year encompasses a conservative view, but internally, the company is pushing for a growth orientation.

Valuation and Growth Prospects

With a P/E Ratio of 31.83 and an expected revenue growth rate of 7.6% next year, Ross Stores' valuation appears reasonable. The company's ROE of 36.25% and ROIC of 17.1% indicate strong profitability. As the company continues to expand its store base and improve its operational efficiency, it is well-positioned for long-term growth.

dd's DISCOUNTS Performance and Strategy

Ross Stores plans to open 25 new dd's stores in 2026, up from 10 in 2025, using a similar strategy that drove success in the Ross chain. The company applies its good, better, best strategy to dd's, with a focus on finding the right balance of branded and private-label merchandise. The reacceleration of dd's is not due to changes in store size, but rather strong new store performance.

Ross Stores's A-Score