Ross Stores, Inc. reported earnings in the second quarter slightly below year-ago levels due to tariff-related costs but exceeded company guidance due to an acceleration in July sales, driven by healthy back-to-school demand.
The off-price retailer reinstated guidance for the year that was below its initial forecast.
Earnings in the second quarter ended August 2 reached $508 million, or $1.56 a share, down from $527 million, or $1.59, a year ago. Included in this year’s second-quarter earnings is an approximate 11 cents per share negative impact from tariff-related costs. Ross has forecast EPS for the second quarter in the range of $1.40 to $1.55.
Total sales for the 2025 second quarter increased 5 percent to $5.5 billion, up from $5.3 billion for the same period in 2024, with comparable store sales up 2 percent versus last year. Ross had guided same-store sales to be flat to up 3 percent.
For the six months ended August 2, 2025, earnings per share were $3.03 on net income of $987 million. These results compare to earnings per share of $3.05 on net earnings of $1.0 billion in the first half of 2024. Sales for the first six months of 2025 grew to $10.5 billion, up from $10.1 billion in the prior year. Comparable store sales for the first half of 2025 were up 1 percent.
Ross Stores CEO, Jim Conroy, commented, “We are encouraged by the sequential improvement in sales trends relative to the first quarter. During the second quarter, sales in May were strong and softened in June, before rebounding sharply in July. We were pleased to see the improved trend at the end of the quarter, particularly with the early sales performance related to the back-to-school selling season. We ended the period with second-quarter sales in line with our expectations, while earnings modestly exceeded the high end of our guidance range, mainly due to lower-than-expected tariff-related costs. Operating margin for the quarter decreased 95 basis points to 11.5 percent compared to the prior year, primarily reflecting tariff-related costs.”
Update on Shareholder Payouts
During the second quarter of fiscal 2025, a total of 1.9 million shares of common stock were repurchased for an aggregate price of $262 million under the company’s two-year $2.1 billion authorization approved by its Board of Directors in March 2024. The company remains on track to buy back a total of $1.05 billion in common stock during fiscal 2025 and complete the program as planned.
Fiscal 2025 Guidance
Looking ahead, Conroy commented, “We are encouraged by the tone of the business in the second quarter and feel we are well-positioned as we begin the third quarter. However, given the uncertainty associated with the macroeconomic environment, we will maintain a somewhat cautious approach to planning our business for the balance of the year.”
Conroy continued, “For both the third and fourth quarters, we are planning comparable store sales growth of up 2 percent to 3 percent. If the second half of 2025 performs in line with these sales projections, earnings per share for the third quarter are projected to be $1.31 to $1.37 versus $1.48 last year, and $1.74 to $1.81 for the fourth quarter compared to $1.79 in 2024. These guidance ranges include an approximate $0.07 to $0.08 and $0.04 to $0.06 per share cost impact from the announced tariffs for the third and fourth quarters, respectively.”
Conroy added, “Based on our first half results and second half guidance, earnings per share for the 52 weeks ending January 31, 2026, are now planned to be in the range of $6.08 to $6.21 versus $6.32 last year. For fiscal 2025, we anticipate approximately $0.22 to $0.25 per share impact from announced trade policies. As a reminder, last year’s fourth quarter and full year’s results included a one-time benefit to earnings, equivalent to approximately $0.14 per share, related to the sale of a pack away facility.”
When it reported first-quarter results, Ross withdrew its annual sales and earnings guidance due to uncertainty created by the tariffs. At the start of the year, Ross had forecast annual EPS in the range of $5.95 to $6.55.
Conroy concluded, “We expect the current uncertainty in the macro and geopolitical environments to persist through the remainder of the year. In addition, we anticipate pricing across retail will move higher as we progress through the year, which will lead consumers to seek more value this Fall season. As a result, we remain intensely focused on delivering high-quality, branded merchandise at compelling price points to reinforce our value proposition and strengthen our competitive position to capture market share.”
Image courtesy Ross Stores
