Another off-pricer soars in Q3

The U.S. shopper’s love affair with the off-price channel shows no signs of winding down any time soon.



Ross Stores easily beat analysts’ expectations as its earnings increased 13% in the quarter ended Oct. 29, amid better-than-expected revenue growth and stronger margins.



It was the second strong showing by an off-price retailer in less than a week. On Tuesday, TJX Companies also reported better-than- expected third quarter results. http://www.chainstoreage.com/article/price-giant-soars-q-raises-outlook



Ross reported a better-than-expected profit of $244.5 million, or 62 cents a share, in the quarter, up from $215.7 million, or 53 cents a share, in the year-ago period.



Revenue increased 11% to a $3.1 billion, better than the $2.96 billion analysts had expected. Same-store sales rose 7%.



Operating margin rose 0.55 percentage point to 12.6%, mostly on stronger merchandise margins.



“We are very pleased with our better-than-expected sales and earnings growth in the third quarter as customers responded favorably to the compelling values we offered throughout our stores,” said Barbara Rentler, CEO. “Operating margin of 12.6% was ahead of plan, increasing 55 basis points mainly from higher merchandise margin."



Rentler noted that as the chain enters the holiday season, it faces it most challenging multi-year sales comparisons.



“In addition, the ongoing uncertainty in the macro-economic, political, and retail environments could, once again, lead to a very promotional fourth quarter,” she added. “While we hope to do better, given these potential headwinds, we are maintaining our comparable sales guidance for a 1% to 2% increase on top of 6% and 4% gains in 2014 and 2015, respectively.”



Earnings per share for the period are expected to be $.72 to $.75, up from $.66 in last year's fourth quarter. Based on its year-to-date results and updated guidance, Ross is forecasting fiscal 2016 earnings per share to be $2.78 to $2.81, up 11% to 12% on top of a 14% gain last year.



During the fiscal third quarter, the company completed its store opening target for fiscal 2016 with the addition of 25 new Ross and nine dd’s Discounts stores. As of Oct 29, 2016, Ross operated 1,342 Ross Dress for Less stores across 36 states, the District of Columbia and Guam as well as 193 dd’s outlets across 15 states.



The company anticipates closing fiscal 2016 with 1,338 Ross and 192 dd’s Discounts, marking an increase of 84 stores in the year.