Ross Stores Reports Q2 Sales Up 13%, Raises Full-Year EPS Outlook to $8.61-$8.77; Quarter Includes $253 Million IEEPA Tariff Refund
The off-price retailer said comparable store sales rose 10% in the quarter ended August 1, 2026, and that about $0.60 per share of its results came from refunded tariffs the Supreme Court invalidated in February.
A 37% Beat, and $253 Million of It Came From a Court, Not a Cash Register
Ross Stores told investors on August 20, 2026 that it had a strong quarter. That much is not in dispute. Total sales rose 13% to about $6.3 billion, comparable store sales at stores open at least a year climbed 10%, and earnings came in at $2.66 a share, far above the company's own guidance of $1.85 to $1.93[1][2].
But roughly $0.60 of that per-share number, about $253 million of operating profit, did not come from selling clothes[1][2]. It came from the federal government, refunding tariffs that the Supreme Court had ruled, back in February, were never legally owed in the first place[11]. Ross disclosed the figure clearly. It just did not put it in the headline of its own release, which was titled "Strong Second Quarter Sales and Earnings Results"[1].
Both of those facts are true at once, and they point in different directions. One says Ross is winning on the merits. The other says a chunk of this quarter's profit is a one-time court-ordered payment that will not repeat. Untangling which one matters more is the real story here.
Where the Refund Came From, and Why It Landed on Ross's Books
The mechanism starts with a law called IEEPA, the International Emergency Economic Powers Act. During the tariff push of the mid-2020s, the executive branch used it to justify duties on imported goods. On February 20, 2026, the Supreme Court ruled 6-3 that IEEPA does not actually give a president that power[11].
Once the tariffs were ruled unlawful, the money importers had already paid at the border had to come back. The Court of International Trade ordered Customs and Border Protection to issue refunds, and CBP began paying out in phases starting April 20, 2026[12][13]. The checks go to the "importer of record" — the company that wrote the original payment to Customs, not the shopper who bought the sweater at the register[13].
That is a procedural rule, not a judgment about who actually felt the cost. Ross imports the goods it sells, so Ross got a refund. Walmart got $2.9 billion. Target got nearly $1 billion. Ross's slice, in this one quarter, was about $253 million[1][6][7].
Strip Out the Refund, and the Underlying Story Barely Changes
Ross's own numbers let you do exactly that subtraction, and it is worth doing. Operating margin, the share of each sales dollar left over after running the business, rose 610 basis points year over year. A basis point is one hundredth of a percentage point, so 610 of them means margin widened by 6.1 percentage points. Of that, 405 basis points came from the tariff refund[1][2][4].
Take the refund out entirely, and margin still rose 205 basis points, more than the 130 to 150 basis points the company had planned for the quarter[4][5]. Comparable sales, meanwhile, rose 10% mainly because more customers walked into stores, not because each customer spent more per visit[1][2]. That distinction matters for how durable the growth looks: traffic gains tend to reflect a real shift in where people choose to shop, while price-driven comps can just mean existing customers paying more.
Ross has no e-commerce business at either of its chains, Ross Dress for Less and dd's DISCOUNTS[14]. Every one of those sales required someone to physically drive to a store and choose the discount option over somewhere else. That is why management, and much of the investor-facing coverage, reads the 10% traffic gain as evidence of a genuine trade-down: shoppers feeling squeezed by prices elsewhere, moving toward off-price retail[3][4][14].
The Same Money, a Very Different Story a Few Steps Downstream
Follow that $253 million further than Ross's income statement, and it runs into a separate argument that has nothing to do with merchandising. More than 80 proposed class-action lawsuits have been filed since the Supreme Court's ruling, against companies including Walmart, Target, Ford, Amazon, Costco, Nike and Lululemon[8][9]. No such suit against Ross Stores specifically turned up in this reporting.
The plaintiffs' argument runs like this: retailers said publicly, while the tariffs were in effect, that they were raising shelf prices to cover them. So customers already paid the cost of the tariff once, through a higher price tag. Now that the tariff has been ruled unlawful and the government is refunding the money to the retailer, keeping that refund on top of the earlier price increase would mean getting paid twice for the same cost. A complaint against Ford, over $1.3 billion in refunds, uses the phrase "double recovery and unjust windfall"[9].
Retailers and their defense lawyers respond that no shopper can actually trace a specific dollar. Prices move for dozens of reasons — freight costs, wages, currency swings, seasonal promotions — and no one can show that a specific refund check reverses a specific price increase on a specific item[8]. They also note that Customs pays the importer because the importer is the one who has a legal relationship with Customs; the statute was never built to trace a $30 shirt to the person who bought it[13]. No court has ruled on the underlying theory yet, in either direction[8].
What the Coverage Left Out, By Choosing What to Lead With
How this quarter got reported split largely along which of those two facts got top billing. Investor-facing sites like 24/7 Wall St. led with "a 37% EPS beat backed by real demand," language that treats the beat against Wall Street's estimate as proof of consumer strength, even though analysts could not have modeled a court-ordered refund into that estimate in the first place[3][4]. StockTitan took the opposite approach, putting the tariff caveat directly in its headline: "Ross Stores earned $2.66 a share, including a roughly 60-cent tariff refund"[2].
General-news outlets covering the refund wave across retail broadly, rather than Ross specifically, tended to frame the money as a windfall companies were being allowed to keep. CNN's actual headline on Walmart's $2.9 billion refund led with the company's pledge to cut prices in response, not with the raw dollar figure, though the article still raised the open question of whether shoppers see any of that money back[6]. None of these framings is factually wrong. Each one is a choice about which true fact goes first.
What Doesn't Change, Whoever Wins the Argument
Whatever happens in the class actions, the refund sits inside Ross's raised full-year guidance of $8.61 to $8.77 a share, and about $0.60 of that range will not repeat[1][4]. Next year, Ross will need to replace that money with actual sales growth, or the year-over-year comparison gets harder regardless of how this quarter gets remembered.
The 10% comparable-sales gain is not going anywhere either, and it can support two readings that are both accurate. It is good news for Ross Stores as a company, and it is a data point about how stretched American households are choosing to shop right now[14][16]. Ross is backing that trend with real money, planning about 115 new store openings this fiscal year[3] — a commitment that will still be standing long after the lawsuits over the tariff refunds are decided.
Summary
Ross Stores reported second-quarter results on August 20, 2026, and raised its profit outlook for the full year[1]. Total sales rose 13% from a year earlier, to about $6.3 billion[1][2]. Comparable store sales — sales at stores open at least a year, which strips out growth that comes just from opening new stores — rose 10%, and the company said the gain came mainly from more customers walking in, not from each customer spending more[1][2]. Earnings came in at $2.66 per share, against the company's own guidance of $1.85 to $1.93 and a Wall Street consensus near $1.94[4].
A large piece of that number was not from selling clothes. About $0.60 per share, or roughly $253 million of operating profit, came from refunded tariffs[1][2]. In February 2026 the Supreme Court ruled 6-3 that the International Emergency Economic Powers Act, or IEEPA, does not give a president the power to impose tariffs[11]. Courts then ordered U.S. Customs and Border Protection to pay the money back to the companies that had paid it at the border[12][13]. Ross was one of those importers.
The company raised full-year earnings guidance to $8.61 to $8.77 per share, and said about $0.60 of that is the tariff refund[1][4]. Back that out and the underlying range is roughly $8.01 to $8.17[4]. Ross also said it now plans about 115 new stores this fiscal year[3].
The genuine dispute is not over the numbers. It is over who the refunded money belongs to. Ross and other importers paid the duties, so the government is paying them back[13]. But more than 80 proposed class actions filed since February argue that retailers already recovered those duties once, by charging shoppers higher prices, and that keeping the refund on top is a double recovery[8][9]. No court has ruled on that theory[8]. As of this reporting, searches did not surface such a suit naming Ross Stores specifically.
The Event
On August 20, 2026, after the market close, Ross Stores reported results for the 13-week quarter ended August 1, 2026[1]. The company said total sales rose 13% versus the prior year to about $6.3 billion, comparable store sales rose 10%, and diluted earnings per share were $2.66[1][2]. Operating profit was about $1.1 billion and included approximately $253 million from IEEPA tariff refunds, worth about $0.60 per share[1][2]. Ross raised its fiscal 2026 earnings guidance to a range of $8.61 to $8.77 per share, a figure that includes the roughly $0.60 refund benefit[1][4]. Shares rose in after-hours trading[3][4].
Undisputed Facts
- Ross Stores reported second-quarter fiscal 2026 total sales up 13% year over year, to about $6.3 billion[1][2].
- Comparable store sales rose 10%, which the company attributed primarily to customer traffic[1][2].
- Diluted earnings per share were $2.66, above the company's own guidance range of $1.85 to $1.93[4].
- Second-quarter operating profit was about $1.1 billion and included roughly $253 million from IEEPA tariff refunds[1][2].
- Operating margin rose 610 basis points year over year, of which 405 basis points came from the tariff refunds; excluding the refunds, the increase was 205 basis points, above the company's plan of 130 to 150 basis points[4][5].
- Ross raised full-year fiscal 2026 EPS guidance to $8.61 to $8.77, including about $0.60 from tariff refunds[1][4].
- On February 20, 2026, the U.S. Supreme Court ruled 6-3 that IEEPA does not authorize the president to impose tariffs[11].
- Following that ruling, the U.S. Court of International Trade directed Customs and Border Protection to refund IEEPA duties, and CBP activated phase one of its refund process on April 20, 2026, paying the importer of record[12][13].
- More than 80 proposed consumer class actions have been filed since the ruling against companies including Walmart, Target, Ford, Amazon, Costco, Nike and Lululemon, arguing that retailers should not keep both tariff-driven price increases and the refunds; no court has ruled on the core theory[8][9].
The Pressure
Strip away the moralizing and blame. What structural realities persist regardless of which narrative wins?
- Off-price runs on traffic
- Ross has no e-commerce at either banner. Every sale requires a physical visit[14]. That makes customer counts the whole business, which is why management leads with traffic and why investors treat traffic-driven comps as more durable than price-driven ones[1][2].
- A one-time item inside a recurring number
- The refund sits in operating profit and therefore inside guidance. Ross disclosed it, but the raised range of $8.61-$8.77 still carries about $0.60 of non-repeating money[1][4]. Next year that $0.60 has to be replaced by operations or the comparison gets harder — regardless of how anyone frames this quarter.
- The refund follows the importer, not the shopper
- Customs pays the importer of record, because that is who wrote the check at the border[13]. That is a procedural rule, not a judgment about who bore the economic cost. The entire class-action wave exists in the gap between those two things[8][9].
- Trade-down cuts both ways
- Off-price gains when shoppers feel squeezed. So a strong Ross quarter is simultaneously a bullish corporate result and a signal of consumer stress — the same data point supports two opposite political stories[14][16].
Material realityRoss took in about $6.3 billion of sales in 13 weeks and about $1.1 billion of operating profit, roughly $253 million of which was refunded tariff money rather than retail earnings[1][2]. Even without that refund, margins beat the company's own plan by 55 to 75 basis points and comparable sales rose 10% on higher traffic[4][5]. Both facts are true at once. Separately, the federal government is paying out very large sums to importers under court order — $2.9 billion to Walmart, nearly $1 billion to Target[6][7] — and no court has yet decided whether any of that must reach the shoppers who paid the higher shelf prices[8]. Ross is opening about 115 stores this fiscal year[3], which is a capital commitment that will outlast whichever narrative wins.
Narrative as a weaponThree parties are shaping how this reads. Ross wants you to see a retailer winning on traffic and merchandising, with the refund as a footnote — hence 'Strong' in the release title and the prominent ex-refund margin figure. Investor-facing outlets amplify that, and some go further: '37% EPS beat backed by real demand' converts a beat against a consensus that could not model a court refund into proof of consumer strength. Consumer-side and general-news coverage runs the opposite way, treating the refunds as a windfall retailers are pocketing, which frames an unresolved legal question as a settled moral one. The under-covered angle in all three is the plainest: a 10% comparable-sales gain at a deep-discount chain is good news for Ross and, at the same time, evidence about how American households are shopping right now. Which of those you lead with is an editorial choice, not a fact.
How Each Side Sees It
Each major actor’s view — how it frames things, its underlying incentive, and how it’s materially affected. Tap a side to read it.
Frames it asRoss argues the quarter was strong on its own merits, and points to the part of the report the refund cannot explain. Traffic rose. Comparable sales rose 10%, the second straight quarter of double-digit growth[2]. Strip the refund out entirely and operating margin still expanded 205 basis points, ahead of the 130-150 the company had planned[4][5]. A basis point is one hundredth of a percentage point, so 205 basis points means margin widened by 2.05 percentage points from merchandising and buying, not from Washington. On the refund itself, the company's position is the ordinary one for any importer: Ross paid duties at the border that a court has since held were never lawfully owed, so the government is returning its own money. Management also says it is investing the strength back into the business, raising planned store openings to about 115 this fiscal year[3].
WhyKeep the multiple. Off-price retail stocks are valued on comparable-sales momentum, so management wants investors reading a durable trade-down story, not a one-time legal refund[14]. Disclosing the refund cleanly, and guiding Q3 comps to 6-7% and Q4 to 4-5%, also lowers the bar it has to clear later[2].
Impact on themRoughly $253 million of pretax profit in one quarter, and a guidance range about $0.60 per share higher than it would otherwise be[1][4]. The stock rose after hours, and analysts raised price targets[4]. The offsetting exposure is legal and reputational: it is now a retailer holding a public tariff refund at a moment when peers are being sued over exactly that[8][9].
Frames it asThe bull case is that the trade-down is real and structural. Middle- and higher-income shoppers are managing inflation by moving down-market, and Ross is the purest expression of that trade — no e-commerce at Ross Dress for Less or dd's DISCOUNTS, so every sale is someone choosing to drive to a store for the lowest price[14]. Traffic-driven comps support that; price-driven comps would not. The bear case, argued by the same community, is that a headline 'beat' of $2.66 against $1.94 is misleading, because analysts could not model an unpredictable court-ordered refund into consensus[4]. On that view the true operating beat is closer to $2.06 versus $1.94, and next year faces a hole where this year's $0.60 sat.
WhyPrice the next four quarters, not the last one. Whether the refund is recurring decides whether the raised guidance is a real upgrade or an accounting bump.
Impact on themShares rose sharply after hours[4]. Peer read-across matters too: TJX had just reported softness in its largest division, and Ross's result cut against that[15][16].
Frames it asTheir claim is that the economics of a tariff and the law of a refund have come apart. A tariff is paid at the border by the importer, but retailers said publicly during 2025 that they were raising shelf prices to cover it. So shoppers already reimbursed the company for the duty. When the Supreme Court voided the duty, the government wrote the check back to the importer, not the shopper[13]. Keeping both, they argue, is a double recovery and unjust enrichment — the exact language used in the Ford complaint, which says Ford would get 'a double recovery and unjust windfall' by retaining $1.3 billion in refunds while keeping tariff-related price increases[9]. Their strongest analogy is a merchant who collects a tax from customers and then gets the tax struck down: the money, they say, should follow the person who actually bore the cost.
WhyEstablish the pass-through theory once, then apply it across an industry. The class sizes are enormous and the refund amounts are public and specific, which is unusual leverage in consumer litigation.
Impact on themMore than 80 suits filed so far; none has been decided on the merits[8]. Individual consumer recoveries, if any, would be small; the aggregate exposure to retailers is not.
Frames it asThe industry's answer is that no consumer can trace a specific dollar. Retail prices move on dozens of inputs — freight, wages, currency, promotions, mix — and no shopper can show that the sweater they bought carried a specific duty that a specific refund now reverses. Importers, not consumers, are the parties in privity with Customs; that is why the statute pays the importer of record[13]. Defense filings raise standing, the voluntary payment doctrine, and the absence of any price term promising a tariff-free price[8]. The trade side also notes the refunds were slow, partial and administratively messy — CBP had to build a new processing system, CAPE, from scratch — so treating them as a clean windfall overstates what companies actually got back[12][13].
WhyContain a novel theory before it becomes standard. A ruling that refunds flow to consumers would reshape how importers price under any future tariff regime.
Impact on themLaw firm alerts are already advising retailers on disclosure risk in filings that mention refunds — meaning the same paragraph that pleases investors can be used in a complaint[10].
Frames it asThe executive branch had argued IEEPA gave the president tariff authority; the Supreme Court rejected that 6-3[11]. The refund obligation that followed is now a fiscal problem: money already collected and counted must go back out. Customs' position is procedural and narrow — it refunds to the importer of record or its agent, because that is who paid[13].
WhyLimit and sequence the payout, and preserve tariff authority under other statutes not affected by the ruling.
Impact on themIndividual refunds are large and public: Walmart reported $2.9 billion, Target nearly $1 billion, Ross about $253 million in one quarter[1][6][7]. The Penn Wharton Budget Model has estimated the revenue and refund consequences of the ruling[17].
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The Bias Ledger average rating 4.1
The same story, as framed by outlets across the spectrum, ordered least to most biased. The bias score (1 = straight, 10 = heavily spun) is an AI assessment of that framing — click an outlet to see its track record. The tell is the word choice or omission that reveals the angle.
| Outlet | Vantage | Bias | How they frame it | The tell |
|---|---|---|---|---|
| StockTitan | U.S. market-data aggregator | 1 | 'Ross Stores earned $2.66 a share, including a roughly 60-cent tariff refund' | Puts the caveat in the headline itself, which is the least-spun construction of any coverage found. Aggregator style means little context on what the refund is or why it is contested. |
| Investing.com | U.S./Israeli-owned market data and news platform | 3 | 'Ross Stores tops Q2 2026 estimates, shares jump after hours' / 'Why is Ross Stores stock surging today?' | Trader-facing framing organized around the share price move. Its coverage does separate the ex-refund margin figure, which is the fact that matters most and which many beat-first stories omit. |
| CNN | U.S. center-left | 3 | 'Walmart promises price cuts after $2.9 billion tariff refund' | The actual headline leads with Walmart's pledge to cut prices — a company-favorable frame — not a bare refund-size figure. The body still notes shoppers do not get the refund directly and that Walmart's sales growth had slowed to 2.6%, so the underlying open question (do consumers see any benefit) is fairly posed, but the piece is less 'windfall'-framed at the headline level than earlier characterized. |
| Ross Stores | Company release — the subject of the story | 4 | 'Ross Stores Reports Strong Second Quarter Sales and Earnings Results' | The word 'Strong' is in the title; the $253 million tariff refund that supplied 405 of the 610 basis points of margin gain is disclosed accurately, but in the body. The release also uses 'very strong' as an adjective on the 10% comp figure — self-characterization inside a numbers document. |
| StockStory | U.S. algorithmic equity-research publisher | 4 | 'ROST Q2 Deep Dive: Customer Traffic, Broader Merchandise Drive Sales Momentum' | Attributes the result to traffic and merchandising in the headline. Defensible — the company says comps were traffic-led — but it selects the operational driver and leaves the refund out of the framing entirely. |
| 24/7 Wall St. | U.S. retail-investor finance site, bullish house style | 6 | 'Q2 2027: A 37% EPS Beat Backed by Real Demand' | 'Backed by real demand' asserts the conclusion the refund puts in question — the 37% beat is measured against a consensus that could not include a court-ordered refund. Its pre-earnings piece was headlined 'Will Ross Crush Q2 Earnings.' Also labels the period 'Q2 2027,' a fiscal-year convention the company's own release does not use. |
| CNBC | U.S. center, investor-audience | 6 | 'A rare stumble at TJX has Wall Street spooked. We see a buying opportunity' | This is CNBC Investing Club commentary, not straight news — 'we see a buying opportunity' is a position, and it is written for subscribers who own the stock. Useful for the off-price sector read-across, but it is advocacy for a trade. |
| TheStreet | U.S. retail-investor finance media | 6 | 'Ross is stealing the crown from TJ Maxx in the inflation race' | Competitive-narrative framing — 'stealing the crown,' 'race' — built on one quarter of relative performance. The underlying observation about Ross's no-e-commerce, price-first positioning is substantive; the packaging is horse-race. |
References
- Ross Stores Reports Strong Second Quarter Sales and Earnings Results — Ross Stores · Company press release — the subject of the story
- Ross Stores Q2 Earnings: Sales Up 13%, EPS $2.66 — StockTitan · U.S. market-data aggregator, ad-supported
- Ross Stores Inc Q2 2027: A 37% EPS Beat Backed by Real Demand — 24/7 Wall St. · U.S. retail-investor finance site, bullish house style
- Why is Ross Stores stock surging today? — Investing.com · Commercial market-data platform, trader audience
- ROST Q2 Deep Dive: Customer Traffic, Broader Merchandise Drive Sales Momentum — StockStory · U.S. algorithmic equity-research publisher, subscription-funded
- Walmart promises price cuts after $2.9 billion tariff refund — CNN · U.S. center-left
- Target just received nearly $1 billion in tariff refunds: Will it reimburse customers directly? — Yahoo Finance · U.S. commercial finance portal
- Tariff Consumer Class Actions: What Businesses Need to Know — Holland & Knight · U.S. corporate law firm — writes for defendant-side clients
- Ford faces Michigan class action after keeping $1.3B tariff refund, not reimbursing buyers — Yahoo Finance · U.S. commercial finance portal
- IEEPA Tariff Refund Uncertainty After Supreme Court Decision: Retailers Face Disclosure and Litigation Risks — Morgan Lewis · U.S. corporate law firm — defendant-side client alert
- The Supreme Court Ends IEEPA Tariffs, Bringing Fresh Uncertainty for Companies — Skadden, Arps, Slate, Meagher & Flom · U.S. corporate law firm — corporate-client advisory
- Supreme Court Invalidates IEEPA Tariffs: Recent Developments Accelerate Refund Process — Stinson · U.S. corporate law firm — importer-client advisory
- IEEPA tariff refunds are moving forward — National Retail Federation · U.S. retail industry trade association — funded by retailers, was a party to tariff litigation
- Ross is stealing the crown from TJ Maxx in the inflation race — TheStreet · U.S. retail-investor finance media
- A rare stumble at TJX has Wall Street spooked. We see a buying opportunity — CNBC · U.S. center, investor audience — CNBC Investing Club commentary, not straight news
- Retail Earnings Will Show What Stretched Consumers Protect — PYMNTS · U.S. payments-industry trade publication, vendor-sponsored
- Supreme Court Tariff Ruling: IEEPA Revenue and Potential Refunds — Penn Wharton Budget Model · University of Pennsylvania research center — nonpartisan by charter, methodology publicly documented