Ross Stores(ROST -0.58%) reported fiscal second quarter 2025 earnings on June 30, 2025, with total sales up 5% year-over-year to $5.5 billion and comparable store sales rising 2%. Earnings per share (GAAP) of $1.56 slightly surpassed internal guidance, aided by lower-than-expected tariff costs. The company is maintaining a cautious outlook amid persistent tariff pressures, guiding for fiscal 2025 earnings per share of $6.08 to $6.21, compared to $6.32 last year, and forecasting 5%-7% full-year sales growth. Key strategic updates include aggressive store expansion, successful mitigation strategies for tariffs, and early momentum in back-to-school sales, all set against a backdrop of ongoing margin pressure and an evolving pricing environment.

Tariff headwinds reduce Ross Stores margin

Operating margin for Ross Stores declined 95 basis points year-over-year to 11.5% in the fiscal second quarter 2025, with tariffs contributing a 90 basis point hit. This margin compression comes on top of incremental distribution center (DC) and packaway (advance purchase/allocated inventory) costs, and is expected to persist, though at diminishing levels, through year-end.

"Operating margin decreased 95 basis points to 11.5% compared to the prior year period, primarily reflecting tariff-related costs. Total sales for the period grew 5% to $5.5 billion, up from $5.3 billion last year, with comparable store sales up 2%. Earnings per share for the thirteen weeks ended August 2, 2025, were $1.56 on net income of $508 million. Included in this year's second-quarter earnings is an approximate $0.11 per share negative impact from tariff-related costs."
— Jim Conroy, Chief Executive Officer

Sustained tariff pressures are directly impacting profit margins and earnings growth, reinforcing the importance of ongoing mitigation strategies and prudent pricing discipline for long-term value preservation.

Ross Stores accelerates store expansion and refresh

Ross Stores opened 28 new Ross stores and three dd's Discounts, entering new markets such as Puerto Rico for the first time, and remains on track for approximately 90 total new locations this year. Concurrently, it is executing broad store refreshes, targeting half the chain in 2025, alongside piloting self-checkout in about 80 stores, aiming for a complete chain update by 2026.

"we opened 28 new Ross and three dd's Discount locations. These openings reflect our expansion into new and existing markets. New market entries included several stores in the New York Metro Area, as well as our three inaugural stores in Puerto Rico. We remain on track to open a total of approximately 90 new locations this year, comprised of about 80 Ross and 10 dd's. As usual, these numbers do not reflect our plans to close or relocate about 10 to 15 older stores."
— Jim Conroy, Chief Executive Officer

The vigorous pace of new store openings and ongoing investments in modernization will enhance Ross Stores’ market footprint, refresh brand perception, and provide new long-term growth engines, particularly in untapped regions and urban markets.

Tariff mitigation and category strength support value

The buying team’s dynamic response involved shifting to greater closeout merchandise, vendor negotiation, and sourcing adjustments, while the cosmetics and ladies’ apparel categories both showed growth above chain averages. These tactical moves contributed to sales momentum and margin protection even as inflation and tariff pass-throughs rippled across retail.

"The team has worked tirelessly to execute a multipronged approach including vendor negotiations, diversifying our sourcing mix, and adjusting prices strategically. Additionally, we're able to expand the portion of our business driven by closeouts which further mitigate the impact. Looking ahead, we are confident that we can continue to offset most of the impact of tariffs but we do anticipate modest pressure in the third quarter which we expect will be further mitigated in the fourth quarter."
— Jim Conroy, Chief Executive Officer

Proactive mitigation tactics and category outperformance not only cushion downside risk in a turbulent environment but also reinforce the company’s competitive edge as an off-price leader positioned to capture market share in periods of retail disruption.

Looking Ahead

Management forecasts fiscal 2025 comparable store sales up 2%-3% in both third and fourth quarters, with full-year GAAP earnings per share targeted between $6.08 and $6.21, reflecting a $0.22 to $0.25 per share tariff impact and a planned $1.05 billion in stock buybacks. Operating margin is expected in the 10.1% to 10.5% range, with guidance incorporating negative effects from tariffs and timing of packaway inventory. No incremental full-year strategic milestones or new quantitative targets were disclosed beyond 2025.