Ross Stores (ROST) Stock Forecast & Price Target

Ross Stores entered FY26 with positive momentum, anticipating comp store sales growth of 7%-8% and reporting a significant 12.2% increase in total sales to $6.64 billion in the prior quarter, outperforming consensus expectations. In Q4, the company achieved a 9% improvement in comparable sales, attributed to increased transactions and customer counts, alongside modestly higher basket sizes. Furthermore, management's guidance for Q1 projects total sales growth of 10%-12%, supported by the opening of 17 new stores and improved marketing execution driving customer traffic.

Ross Stores has experienced a decline in key financial metrics, including a 30 basis point year-over-year reduction in its 3Q25 operating margin to 11.6%, which was higher than both company guidance and market forecasts but still reflective of underlying pressures. The anticipated operating margin for Q1 is expected to dip to between 11.8% and 12.1%, affected by rising distribution costs, unfavorable packaway expenses, and increased incentive costs, indicating challenges ahead for profitability. Additionally, there have been gross margin contractions and SG&A deleveraging, coupled with a core customer base under pressure from economic conditions and recent policy changes, leading to limited visibility for future performance.