Ross Stores earnings top estimates, raises outlook for crucial Q4
Ross Stores beat analyst estimates for the third quarter, crediting an expanded brand assortment, a strong back-to-school season, and a fresh marketing campaign for its strong performance.
For the third quarter ended Nov. 1, net income was $512 million. Despite an approximate $0.05 per share negative impact from tariff-related costs, income increased from $489 million for the same period a year ago.
The parent company of off-price retailers Ross Dress for Less and DD’s Discounts grew sales for the quarter by 10% to $5.6 billion versus $5.1 billion the prior year. Comparable store sales increased a strong 7%.
“We are pleased with our third quarter sales results, which accelerated from the prior quarter,” said CEO Jim Conroy.
In addition to a strong back-to school season, Ross credited its gains to a merchandise assortment of compelling brand names, and a new marketing campaign that drove excitement and higher customer engagement.
“The strong execution by the entire team led to broad-based sales growth across merchandise areas and geographical regions,” he added. “The strength in top-line, coupled with our continued focus on expense control, resulted in an operating margin of 11.6% that was much stronger than expected.”
Ross' solid quarter also proved that “its core value shopper remained resilient despite lapsed SNAP benefits and broader tariff uncertainty weighing on household budgets,” said Suzy Davidkhanian, Emarketer VP.
Banking on its strong third-quarter results and resilient shoppers, Ross raised its fourth quarter outlook. Heading into the crucial holiday season, the off-price retailer bolstered its comparable store sales forecast to between 3% to 4%, with earnings per share in the range of $1.77 to $1.85.
Additionally, Ross increased earnings guidance for fiscal 2025 to range between $6.38 to $6.46, which includes approximately $0.16 per share negative impact from tariff-related costs.
Driven by an ongoing focus on delivering quality, branded merchandise at exceptional value, “[we] expect this strategy to gain strong traction with the consumer, particularly in an environment of rising prices across mainstream retail,” Conroy said.
“Additionally, the store and supply chain teams are well-positioned for the holiday season, and our new marketing campaigns have continued to build excitement,” he added. “We believe that this multi-faceted approach will help us continue our positive momentum and enable us to capture additional market share.”
Analysts concur, crediting the company’s opportunistic buys and department-store excess helped margins. Further, Ross’ no-frills, warehouse-style stores will “deliver exactly what budget-conscious families need this season — strong, compelling assortment mix at sharp price points,” Emarketer’s Davidkhanian added. “Holiday gifting may still skew toward essentials for this shopper, but the quarter underscores that the lower-income consumer is holding up better than many feared."
Ross Stores operates 1,909 locations in 44 states, the District of Columbia, Guam, and Puerto Rico. The company also operates 364 DD’s Discounts stores in 22 states.
