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Ross Stores earnings, sales rise amid ‘resilience’ of off-price sector

Ross Stores beat third quarter expectations.

Ross Stores reported better-than-expected third-quarter earnings and sales as value-seeking consumers continued to shop its stores for bargains.

In October, the off-price retailer said it completed its growth plans for fiscal 2023, with the addition of 97 new locations, for a total of 2,112 stores.

“Despite the current macroeconomic and geopolitical uncertainties, we remain confident in the resilience of the off-price sector and our ability to operate successfully within it,” stated CEO Barbara Rentler. “Our business model offers shoppers both value and convenience, and we believe consumers’ heightened focus on these important factors bodes well for us for the foreseeable future.”

Ross reported net income of $447 million, or $1.33 a share, in the quarter ended Oct. 28,  topping Street estimates of $1.22 per share and up from $342 million, or $1.00 a share, in the year-ago quarter.

Sales rose to $4.9 billion, up from $4.6 billion. Analysts had expected sales of $4.84 billion. Comparable store sales gained 5%.

“We are pleased that both sales and earnings outperformed our expectations for the quarter as customers responded favorably to the terrific values we offered throughout our stores,” stated Rentler. “Operating margin for the period was 11.2%, up from 9.8% last year, as leverage from the same store sales gain and lower freight costs was partially offset by higher incentives and store wages.”

During the third quarter, Ross repurchased 2.1 million shares of common stock for an aggregate price of $239 million. The company said it remains on track to buy back a total of $950 million in common stock during fiscal 2023 to complete its two-year $1.9 billion repurchase program by year end.

Ross maintained its fourth-quarter earnings guidance of $1.56 to $1.62 per share. Same-store sales are expected to rise 1% to 2%. 

Based on its results to date and an extra week in the fiscal year, it adjusted its  forecast for the full year’s earnings to be between $5.30 and $5.36 per share, compared with a previous guidance of between $5.15 and $5.26 for the year.

“We continue to face macroeconomic volatility, persistent inflation, and more recently, geopolitical uncertainty,” Rentler said. “In addition, we are up against our most difficult quarterly sales comparisons versus 2022 in the fourth quarter. As a result, we believe it is prudent to maintain a cautious approach in forecasting our business and are reiterating our prior sales guidance for the fourth quarter.”

Headquartered in Dublin, Calif., Ross had fiscal 2022 revenues of $18.7 billion. The company operates a total of 2,112 locations — including 1,765 Ross stores and 347 DD’s Discounts stores — in 43 states, the District of Columbia and Guam.

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