Although feeling some pressure from the COVID-19 pandemic, labor and transportation issues, Ross Stores still managed to post a double-digit third-quarter comparable store sales gain versus the 2019 period and higher earnings as well.
Earnings per diluted share in the 2021 third quarter topped a MarketBeat-published analyst consensus estimate of 78 cents and revenues topped a revenue estimate of $4.35 billion.
Comparable store sales, Ross pointed out, gained 14% versus the 2019 period.
The company reported that overall sales in the quarter were $4.57 billion versus $3.75 billion in the 2020 quarter and $3.85 billion in the 2019 period.
In a conference call, Adam Orvos, Ross evp and CFO, noted that a larger average basket drove the comp gain with traffic down slightly versus 2019. The operating margin came in at 11.4% and above Ross guidance range, he added. A decline in overall profitability versus 2019 was mainly due to ongoing headwinds from higher freight, wage and COVID-related costs.
Barbara Rentler, Ross CEO pointed out that the company’s dd’s DISCOUNTS division, although otherwise performing well, took a particular profitability hit from the effects of the COVID-19 pandemic, wages and freight costs.
Michael Hartshorn, group president and COO, noted that although in-store inventory was down only 1%, the company had some concern about building home merchandise stock to meet its plans due to transportation and port issues
In announcing the financial results, Rentler summed up recent developments, saying, “Third quarter sales and profitability significantly exceeded our expectations as consumers continued to respond favorably to our broad assortment of great bargains. We achieved these results despite waning government stimulus and uncertainty related to the spread of COVID variants. Operating margin of 11.4% was better than plan, though down from 2019 as leverage from the robust sales gains was partially offset by ongoing headwinds from higher freight, wage and COVID-related costs.”