Ross Stores Crushes Q2 as TJX Stumbles in Off-Price Battle

Ross Stores Inc. delivered a Q2 that left its biggest rival looking flat-footed. Comparable sales at the off-price retailer surged 10% from a year earlier, the second straight quarter of double-digit growth. Customer traffic in the period rose more than 16%, according to Placer.ai data.

The gains came from all three customer types – new shoppers, lapsed customers who returned, and existing ones who visited more often, executives told analysts Thursday. The 10% comp beat expectations handily. It also stood in sharp contrast to TJX Cos., whose Marmaxx division – the U.S. T.J. Maxx and Marshalls chains – posted a surprise 1% comp increase Wednesday.

Under CEO James Conroy, who took over early last year, Ross has upgraded its merchandising, brought in more brand names, revamped stores, and stepped up marketing. The strategy is working.

“Ross is now retail's boss,” Wells Fargo analysts led by Ike Boruchow wrote in a Thursday note.

Total Q2 revenue rose 13% to $6.3 billion. Excluding $253 million in tariff refunds, operating margin expanded by 205 basis points. The refunds accounted for 405 of the 610-basis-point margin improvement, which pushed operating profit above $1 billion. Net income jumped 68% to $851.3 million.

Ross expects the momentum to carry into the second half. CFO William Sheehan told analysts the company is on track for 6% to 7% comp growth in Q3 and 4% to 5% in Q4.

Those numbers will eventually normalize, but William Blair analysts led by Dylan Carden said Ross's initiatives could sustain growth “through at least 2027 before the company likely settles into a more normalized low-single-digit comp cadence.”

For now, Ross is winning the off-price battle. The segment has long taken market share from department stores. Lately, the fight has turned inward. Ross appears to have grabbed share from TJX, helped by conservative pricing at a time when consumers are watching every dollar on groceries, gas, and discretionary goods.

“In the current environment, we think a better value proposition clearly is winning Ross incremental share, and it is nearly impossible to think some of that is not at the expense of TJX,” Carden said.

Conroy acknowledged Ross has gained share in off-price but declined to attribute it to one specific competitor.

“Mathematically, over the last four quarters, we've grown stronger than each of the other two players,” he said, likely referring to TJX and Burlington. “We've captured more share. Of the off-price retail market, we're a bigger piece than we were a year ago because we've outgrown them.”

He also praised the competition. “They're both extremely well run. We're all competing against each other, but we're also capturing share from a whole bunch of other places in the retail industry.”

The Q2 results have prompted Ross to expand its 2026 store-opening target from 110 to 115 locations. The company opened 35 Ross stores and 12 DD's Discounts stores in the quarter.

Ross Stores carries an Alpha Score of 63 out of 100 at AlphaScala, a Moderate rating within the Consumer Discretionary sector. TJX scores 45, also Consumer Discretionary but with a Mixed label. Wells Fargo, which covers both, scores 56 in Financials. For more on the sector, see our stock market analysis.