Ross Stores joins off-price winners circle

Ross Stores joined rival off-price retailer TJX in avoiding the weak traffic trends that have plagued other retailers in the third quarter, as shoppers continue to be attracted to value-priced merchandise.



Ross Stores reported that earnings per share for the 13 weeks ended Oct. 31 increased 15% to 53 cents on net earnings that rose 12% to $216 million. Sales for the fiscal 2015 third quarter grew 7% to $2.783 billion, with same store sales up 3%.



"We are pleased with the better-than-expected sales and earnings growth we achieved in the third quarter," said Barbara Rentler, CEO. "These results demonstrate that customers continue to respond positively to the wide assortments of fresh and exciting bargains we offer throughout our stores. Third quarter operating margin of 12.1% was ahead of plan, up 30 basis points over last year, mainly driven by higher merchandise margin."



Ross Stores and TJX have been surpassing expectations over the last several quarters due to increased traffic from consumers who value their assortment of brand-name bargains.



"During the first nine months of fiscal 2015, we repurchased 10.4 million shares of common stock for an aggregate price of $530 million. We remain on track to repurchase a total of $700 million in common stock during fiscal 2015 under the two-year $1.4 billion authorization approved by our Board of Directors in February of this year," Rentler said.



Despite its strategy of providing customers with attractive bargains and an off-price business model, Ross Stores says it remains cautious amid the challenging retail climate.



"In the upcoming fourth quarter, we face challenging prior year comparisons, ongoing uncertainty in the macro-economic environment, and a holiday season that will be highly promotional," Rentler added. "Therefore, while we hope to do better, we believe it is prudent to maintain our prior guidance for this period. For the 13 weeks ending January 30, 2016, we continue to project same store sales to be flat to up 1%, versus a strong 6% gain in the prior year, with earnings per share of $.60 to $.63 compared to $.60 in last year's fourth quarter. For fiscal 2015, earnings per share are now forecast to be in the range of $2.45 to $2.48, up 11% to 12% from $2.21 in fiscal 2014."



Ross Stores operates the largest off-price apparel and home fashion chain in the United States with 1,276 locations.