1) Strong Financial Performance
- Total sales increased by 13% YoY to $6.3 billion in Q2 2026, with comparable store sales growing 10%. - Net income rose to $851 million, up from $508 million last year, translating to earnings per share of $2.66, compared to $1.56 in the prior year. - For the first half of 2026, sales grew 17% to $12.3 billion, with comparable store sales up 13%.

2) Customer Engagement and Traffic Growth
- Increased customer traffic was a primary driver of sales growth, with gains from new and lapsed customers, as well as higher spending from existing customers. - The company is successfully attracting a diverse customer base, including younger shoppers, reflecting effective marketing strategies. - The strong performance was broad-based across merchandise categories, particularly in home and cosmetics.

3) Inventory Management and Store Expansion
- Consolidated inventories rose 18%, with packaway inventory at 36% of total inventory, down from 38% last year. - The company plans to open 115 new locations in 2026, an increase from the previous guidance of 110. This includes 51 stores in Q3, comprising 41 Ross and 10 dd's locations.

4) Operational Efficiency and Margin Improvement
- Gross margin improved by 625 basis points, driven by tariff refunds and lower distribution costs. - Operating margin increased by 610 basis points, with a notable contribution from tariff refunds. - SG&A expenses deleveraged by 15 basis points due to higher incentives linked to earnings performance.

5) Guidance and Future Outlook
- For Q3 2026, comparable store sales are expected to increase 6% to 7%, with earnings per share projected between $1.75 to $1.83. - The outlook for Q4 anticipates a 4% to 5% increase in comparable store sales, with earnings per share expected to be between $2.17 to $2.26. - The company remains confident in its growth strategies but acknowledges potential challenges from tougher year-over-year comparisons in the latter half of the year.

Bottom line: Ross Stores is experiencing robust growth driven by strong customer engagement and effective inventory management. With plans for continued expansion and positive sales momentum, the outlook remains optimistic for shareholders, despite potential headwinds in the second half of the year.