The quarter beat published expectations. Revenue reached $1.261 billion versus consensus near $1.24 billion, while adjusted diluted EPS was $1.68 versus roughly $1.41 expected. That is a genuine beat, not merely a year-over-year rebound: adjusted EPS more than doubled from $0.81, although the comparison is helped by last year's weaker base.
| Metric | Q2 FY2026 | Q2 FY2025 / prior outlook | Read-through |
|---|---|---|---|
| Net sales | $1.261B | $1.027B | +22.8% year over year (Income Statement) |
| Reported diluted EPS | $3.99 | $0.77 | Includes $2.33 per-share tariff refund (Non-GAAP reconciliation) |
| Adjusted diluted EPS | $1.68 | $0.81 | Underlying earnings more than doubled (Non-GAAP reconciliation) |
| Adjusted operating income | $113.2M | $55.1M | Underlying operating profit roughly doubled (Non-GAAP reconciliation) |
| FY net sales outlook | $5.63B–$5.71B | $5.40B–$5.48B | Raised by $230M at both ends (Outlook) |
| FY adjusted diluted EPS outlook | $9.83–$10.31 | $8.65–$9.05 | Raised by $1.18–$1.26 (Outlook) |
| FY comparable-sales outlook | +10% to +12% | +6% to +8% | Raised by four percentage points (Outlook) |
The operating improvement is real, but the headline profit is overstated by a one-time refund. Reported EPS of $3.99 includes a $2.33-per-share IEEPA tariff refund; excluding that item and smaller adjustments, adjusted EPS was $1.68. The same distortion appears in operating income: reported operating income was $275.4 million, but adjusted operating income was $113.2 million.
Management raised the full-year outlook materially, strengthening the beat beyond the quarter itself. The comparable-sales forecast moved to +10%–12% from +6%–8%, and adjusted diluted EPS rose to $9.83–$10.31 from $8.65–$9.05. Store growth stayed at approximately 150 new locations, so the upgrade is being driven primarily by stronger sales productivity and profitability rather than a larger expansion plan. 〔0〕
The main caveat is that the earnings quality is mixed even within a positive result. The company says the outlook includes tariffs currently in place but excludes any future tariff refunds, while the first-half reported results already benefited from a $163.6 million refund. That makes the adjusted figures the cleaner benchmark for the quarter and means investors should not extrapolate the $3.99 GAAP EPS headline into future quarters.
Capital returns add a secondary positive signal. The board authorized a new $600 million share-repurchase program on August 29, replacing the prior authorization, and the company had already repurchased $60.4 million of stock through August 1. This supports per-share results over time, but the filing does not establish the pace or timing of future repurchases, so it is incremental rather than the core reason for the beat.
Read the original 8-K on SEC EDGAR ↗