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Ross Stores (ROST) is trading sharply higher and reaching new all-time highs after a strong start to FY27 with its Q1 (Apr) report last night. The off-price retailer comfortably beat expectations, delivering a large EPS beat, while revenue growth accelerated to 20.6% yr/yr to $6.01 bln. ROST also issued upside Q2 guidance for EPS and revenue, and raised its FY27 EPS and comp sales outlook.

• Comp sales accelerated sharply to +17%, the highest in company history, following +9% growth in Q4. While ROST attributed some of the outperformance to higher tax refunds, underlying trends remained very healthy, with the comp primarily transaction-driven. The cadence was also encouraging, with a strong February followed by solid mid-teen comps for the balance of the quarter.
• Importantly, ROST saw healthy comp-store customer count growth across income levels, ethnicities, and all age groups, including younger customers, reinforcing its position as a strong value destination with broad customer appeal.
• Operating margin expanded 120 bps to 13.4%, well ahead of expectations, as COGS as a percentage of sales declined 145 bps. Merchandise margin improved 85 bps, while distribution and domestic freight costs improved modestly. For Q2, ROST expects operating margin of 12.8-13.0%, up from 11.5% last year.
• Looking ahead, ROST now expects FY27 comps of +6-7%, up from its prior +3-4% outlook and on top of +5% growth in FY26, while EPS is now expected at $7.50-7.74. Management also noted that early results from its merchandising, marketing, and store initiatives are encouraging, but still in the early stages, leaving room for continued improvement.

Briefing.com Analyst Insight

This was a strong start to FY27, and ROST continues to execute well in a favorable off-price demand environment. The +17% comp was particularly impressive, especially coming off an already strong holiday quarter, and the cadence was encouraging, with strength continuing beyond February. Importantly, the comp was primarily transaction-driven, with healthy customer count growth across income levels, ethnicities, and age groups, suggesting Ross is broadening its appeal as a value destination. Management also cited improved messaging and media mix, which helped drive customer acquisition and engagement. While the stock is reaching new all-time highs and expectations are higher, the raised FY27 outlook and commentary that many initiatives remain in the early innings suggest ROST still sees room for continued growth.