Off-price retailer Ross Stores saw its sales and earnings rise in the third quarter ahead of the company’s projections as it prepared for the holiday season push.
For the third quarter ended November 3, Ross Stores posted net earnings of $338.1 million, or 91 cents per diluted share, versus $274.4 million, or 72 cents per diluted share, for the period a year before. Earnings per diluted share beat a Zacks Investment Research analyst consensus estimate by a penny.
Comparable store sales gained 3% in the quarter year over year. Sales rose 7% to $3.55 billion from the period a year previous.
Barbara Rentler, Ross CEO, said, “Both sales and earnings for the quarter were ahead of our forecast, despite being up against very strong multi-year comparisons. Though above plan, operating margin of 12.4% was down from last year as higher merchandise margin was more than offset by increases in freight costs and this year’s wage investments.”
She added, “As we enter this year’s holiday season, not only are we up against our toughest sales comparisons from 2017, but we are also expecting another fiercely competitive retail environment. As a result, while we hope to do better, we continue to project fourth quarter comparable store sales gains of 1% to 2% versus a strong 5% increase last year. We are now forecasting our earnings per share for the 13 weeks ending February 2, 2019 to be in the range of $1.09 to $1.14, which includes a one-time, non-cash benefit of approximately seven cents per share related to the favorable resolution of a tax matter. This updated guidance compares to earnings per share for the 14 weeks ended February 3, 2018 of $1.19, which included a per share benefit of 14 cents from a one-time revaluation of deferred taxes and 10 cents from the 53rd week.”