2Q Beat & Raise w/ July ‘Stack-Breaker‘; Mgmt Follow-Up Takes; OWI/AFL Raising PT to $272

Research evidence excerpt

J P M O R G A N

North America Equity Research

20 August 2026

Ross Stores

2Q Beat & Raise w/ July “Stack-Breaker”; Mgmt FollowUp Takes; OW/AFL Raising PT to $272

Overweight

ROST, ROST US

Price (20 Aug 26):$228.99

▲Price Target (Dec-27):$272.00

Prior (Dec-27):$262.00

I. 2Q SSS & EPS Above Street: ROST reported 2Q EPS of $2.66, or ~$2.06

excluding ~$0.60 of Net IEEPA Tariff Refunds, exceeding our above-Consensus

previewed $2.03 forecast, Consensus at $1.95, and mgmt’s $1.85-$1.93 guidance.

Retailing – Department Stores &

Specialty Softlines

Matthew R. Boss, CPA AC

+10% Same-Store-Sales Growth Exceeds the Bar: +10.0% same-storesales growth exceeded the buyside bar (by incoming call volume) for ~9%

comp growth, our above-Consensus previewed +9.0% comp, Consensus at

+8.0%, and mgmt’s +6-7% outlook. Specifically, 2Q’s +10% comp

represented a +12% 2-year stack, or the 3rd consecutive quarter of +doubledigit 2-yr stacked growth (w/ 1Q26 +17% & 4Q25 +12%). Supporting the

same-store-sales growth momentum, management cited broad-based comp

growth across regions (led by the Midwest) & categories (led by Home and

Cosmetics as outperforming categories in the quarter vs. Ladies Apparel &

Cosmetics in 1Q).

1-Year & 2-Year Exit Rate Strength to Close the Quarter in July: On

the cadence of the quarter, management cited “sales were strong in May

and improved sequentially each month, with July delivering our strongest

performance despite cycling a strong back to school performance last

year”. More explicitly, management confirmed that July exited with

same-store-sales growth in excess of 10%, implying on our math a 2-yr

stacked exit rate in July of +Mid-to-High-Teens (> 2Q’s total +12%

2-yr stack & above the implied 13% 2-yr stack in 2H at the midpoint

of mgmt’s guidance).

Transaction-Led Comps w/ Initiatives Only In Early Stages Today: On

composition, 2Q’s +10.0% same-store-sales growth was primarily driven

by transactions growth (i.e. traffic) including new customer acquisition,

recapture of lapsed customers, and existing customers shopping more

frequently, with broad-based customer acquisition across demographics,

…