Ross Stores (NASDAQ:ROST) released first-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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Watch the full earnings call below:
Summary
Ross Stores reported a strong first quarter with total sales up 21% and earnings per share growth of 37%, driven by a 17% increase in comparable store sales.
The company opened 13 new Ross and 4 dd’s Discount locations, planning for 110 new stores this year, indicating a strategic focus on expansion.
Management highlighted robust customer acquisition and engagement through marketing initiatives, with notable growth in customer count across all demographics.
Inventory levels were up 12%, with a focus on maintaining balanced inventory to support demand.
Looking ahead, Ross Stores projects second quarter comparable store sales growth of 6-7% and full-year EPS growth of 13-17%.
Full Transcript
OPERATOR
Good afternoon and welcome to the Ross Stores First Quarter 2026 Earnings Release Conference call. The call will begin with prepared comments by management, followed by a question and answer session. If anyone should require operator assistance during the conference, please press Star0 on your telephone keypad before we get started. On behalf of Ross Storrs, I would like to note that the comments made on this call will contain forward looking statements regarding expectations about future growth and financial results, including sales and earnings forecasts, new store openings and other matters that are based on the company’s current forecast of aspects of its future business. These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical performance or current expectations. Risk factors are included in today’s press release and the company’s fiscal 2025 form 10K and fiscal 2026 form 8Ks on file with the SEC. And now I’d like to turn the call over to Jim Conroy, Chief Executive Officer.
Jim Conroy (Chief Executive Officer)
Thank you John and good afternoon everyone. Joining me on our call today are Michael Hartshorn, Group President and Chief Operating Officer Bill Sheehan, Executive Vice President and Chief Financial Officer and Connie Kao, Senior Vice President, Investor Relations. Before we walk through the results, I would like to thank our associates for an exceptional first quarter. The entire organization contributed to the very strong performance. Our marketing team drove strong customer acquisition and engagement through a combination of creative messaging and changes to our media mix. Our merchants and planners delivered compelling assortments and worked tirelessly to secure product to feed the outsized demand. Our supply chain network stepped up their efforts to keep the stores in stock in a timely manner and finally, our stores team executed extremely well in supporting the increased product flow and customer activity. It was a remarkable group effort and I couldn’t be more proud of the teamwork demonstrated across the entire organization. Thank you to the entire team. I will now turn to our first quarter results. We delivered an outstanding quarter with total sales of 21% and earnings per share growth of 37%. The overall growth in total sales was driven by a very robust 17% increase in comparable store sales. While we attribute a portion of this growth to the increase in tax refunds versus last year, we are quite pleased that the underlying fundamentals of our growth were extremely healthy. The comp increase was primarily driven by a growth in transactions and we saw healthy increases in customer count on a comp store basis across income levels, ethnicities and all age groups, including the young customer. In terms of monthly cadence, the quarter started strongly as we transitioned well from holiday season from the holiday selling season into spring, supported by more balanced inventory levels that allowed us to drive strong demand in February where we historically struggled. The strength continued with solid mid teen comps for the balance of the quarter. Performance at Ross was broad based across both merchandise areas and geographies. While Ladies and Cosmetics were our strongest businesses, every major merchandise category posted comp growth in the teens or higher. Similarly, we saw strength across the entire country with the Midwest performing the best CDs. Discounts also delivered solid top line sales with strong performance across merchandise categories and geographic regions. Moving to inventory Consolidated inventories at the end of the quarter were up 12% and Packaway represented 36% of total inventory compared with 41% last year. We are pleased with the overall level and composition of our inventory entering the second quarter. Turning to store group, we expanded into new and existing markets and opened 13 new Ross and 4 dd’s discount locations in the first quarter. We continue to plan for 5% unit growth for approximately 110 new stores this year comprised of about 85 Ross and 25 DeeDees. As usual, these numbers do not reflect our plans to close or relocate about 10 to 15 older stores. Consistent with our performance in 2025, we continue to be encouraged by the strength of the store openings and in both new and existing markets. Overall, we remain confident in our fundamental strategy to better connect merchandising, marketing and stores to create an improved customer experience. While the initial results are quite encouraging, we believe we are still in the early stages with many of our initiatives and the opportunities to drive continued growth in sales going forward. Now Bill will provide further details on our first quarter results and additional color on our second quarter outlook.
Bill Sheehan (Executive Vice President and Chief Financial Officer)
Thank you, Jim. Turning to our financial results starting with the first quarter, as Jim mentioned earlier, total sales for the quarter grew 21% to $6.0 billion. Comparable store sales grew a very robust 17%, primarily driven by an increase in the number of transactions. First quarter 2026 operating margin expanded 120 basis points to 13.4% compared to last year’s 12.2% and significantly exceeded our expectations. Cost of goods sold was 145 basis points lower in the quarter. Merchandise margin improved by 85 basis points while occupancy leveraged by 60 basis points. On the strong sales results, distribution and domestic Freight costs declined by 15 and 10 basis points respectively. Partially offsetting these benefits were buying costs that rose 25 basis points due to higher incentives. Given the earnings upside, SG&A for the period rose 25 basis points due to higher incentives given the outperformance. Both marketing and store related costs leveraged during the quarter first quarter net income $650 million compared to $479 million last year and earnings per share rose 37% to $2.02 from $1.47 in the prior period. Now to our shareholder return activity. As noted in today’s Release, we repurchased 1.5 million shares during the quarter for an aggregate total cost of $319 million. Under the new two year $2.55 billion authorization approved by our Board of Directors in March of this year. We remain on track to buy back a total of $1.275 billion in stock during 2026. Before turning to our forward outlook, I’d like to briefly address tariff refunds. Like other companies, we have submitted refund claims for tariffs. Given ongoing uncertainties related to the timing and ultimate amount of the reimbursement, we have excluded potential refunds from our forward guidance. Now turning to our outlook for the second quarter. As Jim noted earlier, we exited spring with solid momentum. As a result, we are projecting comparable store sales for the 13 weeks ending August 1, 2026 to be up 6 to 7% and earnings per share to be in the range of $1.85 to $1.93. The operating statement assumptions that support our second quarter guidance include the total sales are projected to increase 9 to 11% compared to last year as same store sales perform in line with our forecast. Operating margin for the second quarter is expected to be in the range of 12.8 to 13.0% compared to 11.5% last year. The expected improvement reflects an increase in merchandise margin as well as lower distribution costs as we anniversary the opening of the new distribution center and tariff related ticketing costs. In the second quarter of 2025, we plan to add 47 new stores consisting of 35 Ross and 12 DeeDee’s discounts during the period. Net interest income is estimated to be $24 million. Our tax rate is expected to be approximately 25% and weighted average diluted shares outstanding are forecasted to be about $320 million. Now turning to the full year, we are raising our fiscal 2026 sales and earnings guidance to reflect the exceptional first quarter results and the solid second quarter guidance in addition to our assumptions for the second half remain unchanged. As a result, comparable store sales growth for fiscal 2026 are forecasted to increase 6 to 7% on top of a 5% gain last year. Earnings per share for the full year are now projected to be in the range of $7.50 to $7.74, up 13 to 17% when compared to $6.61 last year. Now I will turn the call back to Jim for closing comments.
Jim Conroy (Chief Executive Officer)
Thank you Bill. We are very encouraged by the strong momentum to start the year. I would like to take one more moment and recognize the entire team across the company. We were able to grow sales in the quarter by more than $1 billion and posted the highest same store sales growth in the company’s 40 year history. Thank you all for all of your hard work and for the fantastic execution on our new growth initiatives. At this point we would like to open the call and respond to any questions that you may have. John
OPERATOR
thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you’d like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question and one follow up. Thank you. One moment please while we poll for questions. And the first question comes from the line of Matthew Boss with JP Morgan. Please proceed.
Matthew Boss (Equity Analyst at JP Morgan)
Great. And congrats on a really great quarter. Thank you Matt. So Jim, I guess the question is could you help us to bottom-up build whether it’s the 17 comp in the first quarter or 9% comps. If I look at trends over the past year and maybe just relative to the consistent 4% comp that the business generated pre pandemic. What I’m trying to get at is how durability or belief that the drivers that’s putting together these kind of comps are today and anything that you believe the business would need to give back as we think multi year.
Jim Conroy (Chief Executive Officer)
Sure. Great question. The company performed extremely well for years before I got here. I think if we made any changes it’s really a a shift towards more focus on customer acquisition. So if you think of the health of our comp and I don’t think all comp sales growth is created equally so the health of our comp has been driven by transactions for the third consecutive quarter and it’s even more driven by transactions this quarter than even in the the fourth quarter and the third quarter in terms of the transactions as a component of their overall count. In terms of the durability, those transactions are driven by more customers so we’re seeing a double digit increase in customer count on a comp store basis. We’re seeing that very strong growth across all ethnicities, all age groups, including the young customer, all income levels. And then if you think about the flywheel concept of bringing in more customers through marketing initiatives, great in store environment, great merchandise selection, getting them in the store, converting shoppers into buyers with just compelling assortments and tidier stores and better in store merchandising and that just drives more comp store sales. It gives you more store labor and more marketing. And we talked about this on the last call. We just have gotten started on many of these initiatives. So I think it is durable. We probably had two unique cases in the first quarter. One was idiosyncratic to Ross, which was the first quarter historically had been one where we were very conservative. So we probably had a little bit more pent up demand to go after. The second one was across all of retail, at least all of retail at our kind of price tier, which is we do believe that some portion of the sort of outsized comp could be attributed to higher tax rebates versus last year. But even if you strip those two things out, we just had a very, very strong quarter and are quite pleased. It’s a really great team effort with every function in the business contributing great, great color.
Matthew Boss (Equity Analyst at JP Morgan)
Jim, you cited exiting the quarter with continued momentum and I know you don’t lay out 6 to 7% forecast lightly. Have you seen any change in customer behavior so far in the second quarter or just any change in trends? Maybe if we’re thinking about by category.
Bill Sheehan (Executive Vice President and Chief Financial Officer)
Matt, I wouldn’t comment on the second quarter, but maybe it’d be helpful if I talked about the trends during the first quarter. The quarter started particularly strong in February. As Jim talked about this a little bit, but we transitioned very well from holiday to spring selling a place where we’ve struggled for a number of years. We’ve always been very, very conservative to start the year and the merchant and planning team did a fabulous job of planning and executing against that transition. We continued to see mid teen comp for the balance of the quarter. Some of that was likely aided somewhat by the tax refunds. Jim also mentioned that. And then the Easter calendar shift did move some demand and again that’s demand versus last year earlier in the quarter. So all in, we started very strong and had good momentum throughout the quarter.
Matthew Boss (Equity Analyst at JP Morgan)
Great color, best of luck.
Jim Conroy (Chief Executive Officer)
Thanks, Matt.
OPERATOR
Thank you. And the next question comes from the line of Lorraine Hutchinson with Bank of America. Please proceed.
Lorraine Hutchinson
Thank you. Good afternoon. 17 was an unprecedented comp and probably was the result of unprecedented amounts of chase inventory. So can you just talk about how comfortable you are with your inventory reserve levels and quality and ability to continue to chase into this 6 to 7 comp?
Jim Conroy (Chief Executive Officer)
Sure. I think we’re very comfortable. The availability of closeouts in the marketplace is still outstanding. I think you’ll hear that from each of the players in the industry. I think our buyers and our merchants have been very aggressive. We did really have to react to a pretty sharp spike in sales and we’re able to feed demand. The other great thing is I think the market is now recognizing that our growth rate is a bit outsized and we’re getting a lot of first calls now. And again, hats off to both of our chief merchants, Karen and Karen and their teams for really hustling to make sure we had product available and seasonally appropriate product to transition us from holiday into spring through Easter into Mother’s Day. It’s just been a fantastic execution, but I would not be worried about availability of product.
Lorraine Hutchinson
Thank you.
Jim Conroy (Chief Executive Officer)
Thank you.
OPERATOR
And the next question comes from the line of Paul Lajuie with Citigroup. Please proceed with your question.
Tracy Cogan
Thanks. It’s Tracy Cogan filling in for Paul. I think you guys said domestic freight leverage this quarter, and I was wondering what the driver was there and what you’re building in for the year. And then I think ocean is a smaller piece for you, but wondering if you could give some color on what you’re seeing on that piece of freight as well. And then I have one follow up. Thanks.
Bill Sheehan (Executive Vice President and Chief Financial Officer)
As you mentioned, freight Costs did Lever 10bps year over year, but higher expected fuel prices did limit some of that leverage that we typically get from that sales outperformance. And going forward, we’re kind of finalizing freight contracts as we speak. And our guidance does reflect the assumption that we’ll have elevated fuel prices that will pressure freight costs both ocean and domestic in the second quarter and the full year.
Tracy Cogan
Thank you. And you guys mentioned traffic being the driver this quarter. I was hoping you could talk about some of the other metrics, like average basket, aur units conversion. Thank you.
Bill Sheehan (Executive Vice President and Chief Financial Officer)
Sure, Tracy. So, as we said, the primary driver was traffic. The average basket also grew by a significantly lower proportion of the sales growth. And the units sold were flat.
Tracy Cogan
You mentioned flat
Bill Sheehan (Executive Vice President and Chief Financial Officer)
units per transaction.
Tracy Cogan
I apologize, I was just clarifying.
Bill Sheehan (Executive Vice President and Chief Financial Officer)
Yes, use for transaction.
Tracy Cogan
Thank you. Thank you.
Bill Sheehan (Executive Vice President and Chief Financial Officer)
Thanks, Tracy.
OPERATOR
And the next question comes from the line of Corey Tarlow with Jeffries. Please proceed with your question.
Corey Tarlow
Great. Thanks. I guess. Jen, as you think about how broad based this really strong comp has been, can you talk about if you saw any inflections by category, whether it’s ladies, home footwear or even juniors, perhaps within ladies. And is there anything specific you think that’s driving that mix shift? Because there’s very clearly been quite a strong acceleration in trends quarter over quarter.
Jim Conroy (Chief Executive Officer)
Thank you. The strength was broad based and the sequential improvement was pretty broad based. Also some of the categories that tend to get more focused. The ladies business had a very nice sequential improvement from the first quarter and actually outperformed the balance of the businesses. We called out cosmetics, also a nice sequential improvement and outperformed. But within ladies, lots of strength there. The juniors business was very strong. Just as we look down the categories in an effort to try to give a little bit more transparency and a little bit more color than I think is typical, we wanted to comment that every category was positive in the teams or higher. So we were obviously very, very pleased with the performance across the board. And every buying office should be just thrilled with what they were able to achieve.
Corey Tarlow
Makes sense. And that’s also very helpful. I have a follow up for Bill. Just as we think about the flow through on comp versus plan, could you just remind us how to think about that and maybe what you saw in the quarter. Thanks so much.
Bill Sheehan (Executive Vice President and Chief Financial Officer)
You know, for the quarter, the earnings flow through on the robust sales was about was actually above our expectations but right in line with the model. So that felt pretty good. And then, and then going forward from our guidance perspective and as we talked about, we beat Q1 by about 35%. Sorry. And are flowing about 38 cents for the full year based on the higher Q2 guide. So, you know, we feel like we’re right in line where we should be on the flow through. So we typically say every point of comp is worth about 10 to 15 basis points. We were within that range at the high end of the range in the first quarter. Some movement between categories. We were slightly better on merchandise margin in our normal flow through, but we did spend more store payroll to support the increased product flow.
Corey Tarlow
That’s really helpful. Thanks so much and best of luck.
Bill Sheehan (Executive Vice President and Chief Financial Officer)
Thanks, Corey.
OPERATOR
And the next question comes from the line of Michael Binetti with Evercore isi. Please proceed with your question.
Michael Binetti
Hey guys, thanks for taking our question. Congrats on the quarter. Let me think about that. The last answer there is, you know, we delevered SGA on a 17 comp. It sounds like there was some potential investment in incentive comp, certainly incentivized employees can help grow top line. So seems like a good investment. But does SG and a leverage on the 6 or 7 comp in the second quarter or the 2 to 3 comp that’s baked in the back half or you know, if we come in above that, do we start looking for other buckets to invest in to support the top line?
Bill Sheehan (Executive Vice President and Chief Financial Officer)
Michael, Maybe I give some more color on the first quarter, as you said. And as we said in the commentary, we delivered by 25 basis points. That was all due to higher incentives. Without the incentives, both marketing and store related costs leveraged during the quarter, we had in our guidance planned selling costs up slightly and that was due to wage growth and with some investments and improvements in the store experience to drive top line growth. So with the strong comp that we believe was somewhat helped by those investments, we got leverage there and then on the go forward. Right. From a guidance perspective, the largest driver Right. Is going to be merge margin. And we would expect to see some benefit in DC costs as we anniversary the opening of our Arizona distribution center. But we do again anticipate merch margin to remain a benefit in Q3 and Q4.
Michael Binetti
Okay, and then if I could follow that on new stores, you gave us kind of a higher new store productivity assumption last year. Last quarter, Michael, as far as modeling out relative to the 65 you gave us historically, but you’re delivering numbers well above that new guidance. I think it was 75. I think it was something with a nine handle this quarter. Can you just give us a little idea of the financial bridge into what looks to be a pretty different new store opening profile?
Bill Sheehan (Executive Vice President and Chief Financial Officer)
Sure. As we said, we have 110 openings and we are in, I’d say, possibly the best shape we’ve been in in terms of getting leases done. So this year looks very, very, very good. And then our pipeline into next year also looks very good to maintain that 5% unit growth. You asked about new store productivity last year. Our new store productivity was above that level. So there’s a number of stores that haven’t comped yet. Those stores continue to do very, very well. We gave you guidance for 70 to 75% of a mature store for the new stores this year. I’d say it’s very early, but we hope to beat that number.
Michael Binetti
Okay, thanks a lot, guys.
Bill Sheehan (Executive Vice President and Chief Financial Officer)
Thank you.
OPERATOR
And the next question comes from the line of Chuck Grom with Gordon Haskett. Please proceed with your question.
Chuck Grom
Hey, thanks very much. Just to follow up on Michael’s question. Just, you know, NSP really strong. How are you thinking about units going forward? Do you still want to target the 5%? Do you think about densifying in the Northeast more? Just a little bit of thought on unit growth maybe over the next several years, given how strong you’re opening up stores right now?
Jim Conroy (Chief Executive Officer)
I think what we’re modeling internally is the 5% unit growth over the longer term. If we happen to get a big deal through bankruptcy or get ahead of that store opening, I don’t think we’d hesitate to increase that target.
Chuck Grom
Okay. Anything geographically you’d think about differently?
Jim Conroy (Chief Executive Officer)
Well, the Northeast is certainly open. That’s certainly built into our five year plan. In New York. We have a location and obviously we’ll go further into the Northeast. But we exited 25 with 12 stores in the New York area and have two locations in the first quarter and those stores are doing very well for us.
Chuck Grom
Gotcha. Great. And then as you think about the second half. Right. And the tougher comparison about the lap, how do you think about the drivers to help you comp the comp? The implicit Comp is a 2 to 3. What gives you the confidence there in terms of the marketing in store changes, the product assortment? I guess. How would you force rank? What gives you the confidence to lap that positively?
Jim Conroy (Chief Executive Officer)
I would circle back to some of my earlier comments on this call and on the prior call. There are two schools of thought. One is you’re up against strong comps and how you’re possibly going to get put numbers on top of that. But the second is you’re in the early stages of transforming a company. You’re starting to build momentum. The comp is driven by more customers. That customer count increase continues to get stronger with each quarter. And we also have a lot of merchandising initiatives. Right. The merchants are constantly opening up new brands. We found the confidence now to introduce brands that are more in the better and best price points and add those to the great stable brands that we already have. So that may give us some more comp increase. The stores have proven that they can contribute to the store growth, but they’re in their very early stages of changing visual merchandising and store labor models and shifting hours, reallocating store labor hours to sales, driving activities. And Erin and that team have just done incredible work. But we’re still learning. Right. We’re in the very, very early stages of many of these initiatives. So you know, I hear you that people will constantly wonder if you can comp a 7, a 9 or a 17 given the momentum that we’re seeing and given the underlying KPIs in the growth, meaning customer count, customer count across geographies, the strength in the transactions. At the risk of laying out new second half guidance right now, I think we have plenty of more opportunity for continuing very solid comps. Maybe not a 17, but very solid comps for the balance of the year.
Chuck Grom
Got it. Thanks for that answer.
Jim Conroy (Chief Executive Officer)
Thank you.
OPERATOR
And the next question comes from the line of Brooke Roach with Goldman Sachs. Please proceed with your question.
Brooke Roach
Good afternoon. Thank you for taking our question. Jim. I was hoping you could reflect on what’s working very well in marketing today and what we should expect might change as we look into the back half of the year. As you annualize some of these initiatives.
Jim Conroy (Chief Executive Officer)
Sure. I think you’ll see more of what we have been doing. We’re really trying to modernize the creative message. We’re mixing up our media mix, we’re doing more events. All of those things are adding to the proverbial top of funnel. We’ve got some pretty exciting things upcoming. In a competitive industry like off price, sometimes it’s hard to get give more color because you then see it end up in one of your competitors and what they’re doing. But suffice it to say, I think that we’re in the very, very early stages of focusing on the Ross and Dee Dee’s brands, contemporizing them and having them get their own sort of followership. And you can see it right? You can follow us on social media, you can see our television spots. And I think it’s a very refreshed view of how to go to market in retailing and certainly in off price retailing. So stay tuned. There’s a lot more coming over the next few months from a marketing standpoint.
Brooke Roach
Great. And then just a quick follow up. I was hoping you could put a finer point on your expectations for fuel surcharges for the year. Can you quantify the headwind that you’re expecting in the back half and what oil price is embedded within the guide?
Bill Sheehan (Executive Vice President and Chief Financial Officer)
We try and estimate based on what the DOE and others estimate. And so like we said, we do expect some pressure in the second half. But again, if fuel prices differ materially from where they are now, then we’d see some additional pressure. So that’s something we’re monitoring closely and try and get the best estimates that we can.
Brooke Roach
Great, thanks so much. I’ll pass it on.
OPERATOR
Thank you. And the next question comes from the line of Mark Altschwager with Baird, please Proceed with your question.
Mark Altschwager
Good afternoon. Thanks for taking the question. Seems a little silly to ask about consumer headwinds when you reported a 17% comp in your guiding 6 to 7, but just wondering if you’re seeing any indications of shifts in consumer behavior as the inflationary pressures have ticked up. You said strength broad based across regions, but any color on California specifically, where gas prices are even higher.
Bill Sheehan (Executive Vice President and Chief Financial Officer)
Just to on your first question, on both customer count and comp growth, we did not see a variation across income levels. Actually all income levels were very strong. California performed in line with the chain during the quarter, I would say on fuel costs generally. Historically it’s been hard for us to see any immediate direct correlation between fuel prices and our sales performance. That said, obviously the potential impact can vary based on the magnitude and how long the increased fuel prices last. I would also add the silver lining for off price is that any uncertainty in the macro environment could lead to customers seeking more value when shopping and create closeout opportunities for us for the supply side.
Mark Altschwager
Thank you. And follow up for Jim if you could give us an update on the branded apparel rollout. How broad is the strategy beyond ladies at this point and with the acceleration you’re seeing in new customer acquisition and overall growth, how are you thinking about that balance between the good, better, best and what’s resonating most with that newer customer you’re bringing in? Thanks again.
Jim Conroy (Chief Executive Officer)
So the brand strategy in ladies and across the entire business is now very much in place and has been. I think we’ve lapped it a few quarters ago. It was a great adjustment to kind of correct the time when perhaps the business, certainly before I got here, had evolved away from some of the really compelling brands and the company was able to correct that also before I got here. So there’s a lot of people that are working really hard to put that in place and we can see it in the the strength and now the pervasive strength in the ladies business mostly. But perhaps it’s also a part of the strategy across the board in terms of good, better, best. We’re hyper focused on that right now because you’re right to call out the potential softness and pressure in consumer and it’s all over the news, it’s what other retailers are calling out, etc. So we have to ensure that we’re in stock with sort of the best bargains across price points, but certainly the good price points. But then when we look at our data, our customer KPIs are unbelievably strong. Right. More customers shopping more frequently and spending more on each trip. So now we’re trying to find if there’s even some more opportunities to stretch our prices not on same goods, but on new brands and new goods and really just deliver even a broader assortment for our customer out there. So we’re just, you know, we’re really thrilled with sort of the health of the business and we’re very cognizant of what’s happening in the macro environment. We want to deliver the absolute best bargains and best values for customers, particularly those under pressure from the prices of oil or gas prices, et cetera. But we also have this sort of growing customer base that seems to be responding across good, better and best.
OPERATOR
Thank you. And the next question. Thank you. And the next question. Sorry about that. The next question comes from Dana Telsey with the Telse Advisory Group. Please proceed with your question.
Dana Telsey
Hi, good afternoon. And congratulations on the very nice results given the new customer acquisition that seems to have accelerated and the flywheel of marketing driving new customers. As you think about the sales gains that you had, the new customer acquisition, any different demographic profile, Younger, maybe wealthier with a trade down. Anything you’re seeing there. And then how do you think of the cadence of marketing spend as you go through the balance of the year is one quarter more allocated than another. And then just lastly on the New York stores, the 12 that you mentioned, how much higher are they than your plan? What are you seeing that’s new or different? And how do you think of Northeast openings as a percentage of the total mix going forward? Thank you.
Jim Conroy (Chief Executive Officer)
All right, Anna, thanks for the questions. I’ll get started. I think Michael will take the stores in terms of my customer group. It’s one of those report cards that you just, you almost can’t believe it. We’ve had customer growth across every ethnicity, every age group and every income level. I think the part that, and we can, we’re using the sort of third party available credit card data. I think the two things that would make our customer count unique relative to the rest of retail right now is certainly the magnitude, I think the, the number of customers that we’re capturing and the year over year increase based on what we can see for us and for other players is higher. And then notably the younger customer that sort of very difficult to attract 18 to 24 year old customer. We’re just outperforming virtually every other retailer that we can track. So, so those two pieces, if you’re looking for nuances, that younger customer has really gravitated towards us, which has been part of the strategy and is really starting to take root in terms of the cadence of the spend. Firstly, where as a rate of sales where we didn’t spend any more in the first quarter than we did last year, in fact, we got a little bit leverage there. We continuously get questions as well, should we be investing more? And maybe over time we will. But right now we’re certainly driving healthy traffic and comps with the marketing spend that we have. As we look at it by quarter, there might be some small investments here or there in the balance of the year. Nothing that will move the needle in a material way. And clearly we spend more money in holiday quarter in absolute dollars, but not necessarily as a rate. So that’s sort of our view right now from a marketing standpoint and then from a store’s perspective. Michael will take that one.
Michael Hartshorn (Group President and Chief Operating Officer)
Dana. Obviously we’re very excited about further expansion into the Northeast. I don’t want to forget about our existing markets right now. Our new store growth. Only about 20% of our new store growth is in the newer markets. What I can tell you about the New York stores, as you know, not every store is created equal, but I can give you a benchmark versus our underwriting pro forma. And we far exceeded our expectations of what we thought or needed from an underwriting standpoint. So we’re very excited about the expansion. We see we can be very successful. Obviously the population density in the Northeast is very similar. Actually more population density than even our oldest market of California. So the Northeast real estate department has done a nice job of beginning to write leases there. And we’ll have more to say as we expand our rollout in 2027.
Dana Telsey
Thank you.
OPERATOR
And the next question comes from the line of Simeon Siegel with Guggenheim. Please proceed with your question. Thanks.
Simeon Siegel
Hey, good afternoon everyone. Really nice job. I’m going to try and sneak three quick ones in if I can. What percent of the growth in transactions at this point are coming from new customer acquisition versus that greater frequenc of existing that you mentioned, Jim. And then how are you thinking about the timing of Capex this year? I think Q1 was somewhat similar to last year. But you do have the lift guided for the full year and then just taking a quick step back. Just any help on long term Ebit margin opportunity, recognizing the kind of the ongoing strength we’re hearing from you, maybe even how are you thinking about benchmarking that or analyzing that opportunity? Thanks guys.
Jim Conroy (Chief Executive Officer)
All right, Sybill, that was impressive. Very, very quick in getting all three of those questions. I’LL take the first one and then Michael will take the others without parsing out the components of the comps too. Finally I would say, and we’re on record already saying transactions was the primary driver of the comp and of the transactions. New customers was the primary driver of that.
Michael Hartshorn (Group President and Chief Operating Officer)
On the CapEx side we typically don’t get into parsing it out by quarter. It’s not skewed particularly at all. We are slightly up this year but I don’t think it’s very divergent by quarter. In total we’re still estimating about a billion one in capital versus 819 billion last year. I think your last question is on long term operating margin. Our model hasn’t changed at this point. You know we’ve said double digit eps growth about 5% unit growth at 60 to 70% productivity drives, 3 to 4% EPS growth, long term gains at 3 to 4% on comp and I’ll come back to that in a second. And 2 to 3% from share repurchase program. If we can comp higher than the 3 to 4% we’d expect outsized EBIT
Simeon Siegel
growth makes total sense. Thanks guys, Great job. Best luck for the rest of the year.
Jim Conroy (Chief Executive Officer)
Thanks so much.
OPERATOR
And the next question comes from the line of Christina Katai with Deutsche Bank. Please proceed with your question.
Christina Katai
Hey guys, great quarter. Congrats on. So I wanted to ask on cosmetics, obviously it was a standout in the quarter. Is that primarily branded availability? Is it consumer trade into prestige, just getting the trend right or increased base allocation? And how durable is that?
Jim Conroy (Chief Executive Officer)
Well, I think it’s several things. I think one, the team, Michael K and Stephanie have just done an unbelievable job of driving that business and that’s been a standout from a category perspective for several quarters now. Secondly, they’ve done a really nice job of bringing in new brands. You can see them in the store. But there’s some new hot kind of exploding brands that are now selling to us which have been fantastic. And then thirdly, there is a little bit of just a underlying consumer trend there. Korean beauty products is one of them and they really done a great job being on top of that. So in terms of space allocation, we haven’t really changed the space allocation stores for cosmetics in any meaningful way. So I think their sales productivity on a per square foot basis has just gone up quite nicely.
Christina Katai
Great. And if I can just ask, if I can just ask a follow up just very quickly you mentioned gaining priority access to deals. Just can you talk about how that is showing up at buying cost, imu speed to floor conversion rates and then just considering your strong top line, can that advantage expand further? Thank you.
Jim Conroy (Chief Executive Officer)
Sure, sure. I think the sentiment in the market and look, we’re one of three big competitors out there. The relationships that the merchants have with the off price market is critical and the relationships that the Ross merchandising team has is just remarkable. I marvel as a new entry into this world of how relationship based it is. Having said that, I think the market is starting to see the transformation of Ross going from a very good company and accelerating from there. And it’s getting noticed. And I think now when someone has a good deal or more closeouts, we’re getting calls and it’s partly because we can take the goods. We have seen some cancellations in the market, some from mainstream retail and some from other off pricers that we are able to pick up. So I think the last thing I would say is I think our merchants not only have great relationships but tend to be very easy to work with with the market. And that’s a philosophy that I inherited from my predecessor and we absolutely want to continue to do that. We want to be partner like and low friction, but we’ve opened up new vendors and we’ve seen a lot of sort of early calls on opportunistic goods.
OPERATOR
And the next question comes from Anisha Sherman with Bernstein. Please proceed with your question.
Anisha Sherman
Thank you and congrats on the quarter. I have two, please. Jim, you mentioned the word transformation earlier on in your comments. I wanted to ask, over the last year the company has pursued a lot of new initiatives in marketing, assortment, stores, etc. Do you think there’s been a cultural shift in how decisions are being made that is driving this broader set of ideas and initiatives across the company? And then I have a follow up as well.
Jim Conroy (Chief Executive Officer)
Look, I inherited a well run company with a great culture. I think if there’s been any sort of shift in how we operate, it was a little bit of hearkening back to the earlier days in Ross when it was very entrepreneurial and we sort of challenged ourselves to spark more growth, empower people to make quick decisions, be entrepreneurial, balance our pretty heavy focus on risk aversion with a little bit more of a growth orientation. And I think internally the team has been very welcoming of that. So yeah, I would say if you think of a continuum between playing defense and offense, we’ve shifted the whole company and the culture a little bit more towards offense, but still always being prudent and not taking undue risk. But again, I just want to say it one more time. I was very lucky to be able to inherit a company that was already very well run and already successful. And we’ve just been able to layer on some initiatives to augment that growth.
Anisha Sherman
Thank you. And then a follow up on an earlier comment on double digit growth in customer counts. Can you give us some color on what that looked like the last two quarters? The last couple quarters, Q3 and 4, I want to get a sense of has that run rate increased? Just to help us think through the back half of the year and the comp year over year growth in the back half.
Jim Conroy (Chief Executive Officer)
So it’s been building. We definitely didn’t get a double digit growth in customers and then comp lower than double digits fortunately. But it has. If you were to think of it in the way we think of retail, same store sales, you would say we’ve had sequential improvement in customer count growth on a comp store basis in each of the last two quarters.
Anisha Sherman
Okay, that’s helpful. Thank you.
Jim Conroy (Chief Executive Officer)
You’re welcome. Thank you.
OPERATOR
And the next question comes from the line of Marnie Shapiro with Retail Tracker. Please proceed with your question.
Marnie Shapiro
Hey guys, thanks and congratulations. And Jim, I love how you sound so pleasantly surprised that the market loves the Ross buyers. That’s always been the case. I knew them a long, long time ago and everyone loved them. So congratulations on that. You’ve talked about updating and renovating some of the stores. Some of it was just a light touch. If you can just modernizing them. If you can give an update on how that is going and are those stores outperforming and then could you just also give us an update? I’m assuming this is true that you will continue with your your buyback through the rest of the year.
Michael Hartshorn (Group President and Chief Operating Officer)
Hi Marnie, it’s Michael. As you said, we’ve been working on refreshing all stores in the chain and again it was to try to give a more modern look and feel for our customer. And the refresh was mainly new perimeter signing and way finding signage along with addressing cosmetic repairs. We got through about half of the chain last year. We decided to pause for two reasons. First, we wanted to be able to measure the sales impact. And we did see a sales impact in those stores. We saw improvement in customer surveys on the shopping experience. We decided this year to pause as we’re looking to see what kind of things we want to do to the store. And when I say that, it doesn’t mean we’re going to go back and refresh every single store in the chain come up with a new pro forma and have a big capital outlay.
Michael Hartshorn (Group President and Chief Operating Officer)
But we wanted to pause and see if there’s other changes we want to make in the next half of the stores and then also look at new store prototypes if there’s anything we want to change from look and feel or how we’re merchandising the store. So that’s where we are at this point.
Jim Conroy (Chief Executive Officer)
And then regarding the buyback, no change there. We remain on track to buy the total of $1.275 billion in stock during 2006. 26. Sorry. So that’s unchanged.
Marnie Shapiro
Fantastic. Thank you guys.
Jim Conroy (Chief Executive Officer)
Thanks, Marty.
OPERATOR
And the next question comes from the line of Dylan Cardin with William Blair. Please proceed with your question.
Dylan Cardin
Thank you. I’m curious, Jim, to the questions on in and around new customers. Do you feel that between access to brands, some of the new marketing you’re doing that you’re kind of meaningfully structurally expanding your market or is it just sort of recapturing share within your existing market, either going up or down market? You mentioned kind of younger customers this for more meaningful change go forward. Thanks.
Jim Conroy (Chief Executive Officer)
That’s a very insightful question. At the risk of tipping our hand too much, that’s absolutely part of the strategy. We have a bull’s eye of a core customer and we have to ensure that we’re constantly focused on that customer that has sort of built this business. But how do we in concentric circles around that core, how do we add new customer segments? So that’s part of the strategy. It’s very early in our evolution in doing that. But the early read is that we’ve been able to introduce the Ross brand into different pockets of consumer shoppers. And again, it’s a very insightful strategic question. Dylan, I appreciate it and I think you’re on the right track there.
Jim Conroy (Chief Executive Officer)
Thanks, Jim.
Dylan Cardin
Nice work.
OPERATOR
Ladies and gentlemen, there are no further questions at this time. I would like to turn the call back over to Jim Conroy for any closing comments.
Jim Conroy (Chief Executive Officer)
Well, thank you everyone for joining us today and we look forward to speaking with you on our next earnings call. Take care.
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