Store comps at the off-price retailer soared 10% in Q2, thanks to new and returning customers, in sharp contrast to major rival TJX Cos.
Ross Stores Inc. on Thursday reported that customer traffic spiked Q2 comparable sales by 10% compared to last year, its second straight quarter with double-digit comp growth. Store visits in the period rose more than 16%, according to data from Placer.ai.
The increase in transactions came from new customers, lapsed customers who returned and existing customers who shopped more frequently, executives told analysts Thursday.
The comp strength beat analyst expectations, quite unlike the performance at off-price leader TJX Cos., whose Marmaxx division – including U.S. chains T.J. Maxx and Marshalls – on Wednesday posted a surprisingly weak 1% comp increase.
Under CEO James Conroy, who arrived early last year, Ross has been elevating its merchandising — bringing in more brand names and revamping its stores — as well as its marketing, and it’s all paying off.
“Ross is now retail's boss,” Wells Fargo analysts led by Ike Boruchow said in a Thursday research note.
Total Q2 sales rose 13% to $6.3 billion. Excluding $253 million in tariff refunds, operating margin expanded by 205 basis points. The refunds contributed 405 out of the 610 basis-point increase in operating margin, which topped $1 billion in the quarter. Net earnings ballooned 68% to $851.3 million.
The company expects the comp strength to continue into the second half of the year, on pace to rise 6% to 7% in Q3 and 4% to 5% in Q4, Chief Financial Officer William Sheehan told analysts.
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