Although Ross Stores sales and earnings in its third quarter couldn’t surpass prior-year totals, the off-price retailer managed to beat Wall Street estimates for the quarter.
A Yahoo Finance-published analyst consensus estimate called for third quarter earnings per diluted share of 81 cents and revenue of $4.37 billion.
In the company’s third quarter conference call, Barbara Rentler, Ross CEO, said Florida and Texas were top sales regions for the namesake Ross banner, and shoes was the top merchandise category. She noted that dd’s Discounts sales trends improved from the first half of the fiscal year but still trailed Ross results with inflation having a greater impact on dd’s lower income customers. The company added 28 Ross Stores and 12 dd’s Discounts locations in the third quarter.
“Third quarter results were above our expectations as we delivered stronger values throughout our stores,” Rentler said. “Operating margin for the period was 9.8% versus 11.4% last year, reflecting the deleveraging effect from the comparable sales decline, as well as pressure from higher markdowns and unfavorable timing of packaway-related costs.”
In the months ahead, Rentler said, “We continue to expect a very promotional holiday selling season and ongoing inflationary headwinds to pressure our low-to-moderate income customers. That said, we face our easiest sales and earnings comparisons in the fourth quarter and are raising our guidance given our third quarter sales momentum and improved holiday assortments. There remains a high level of uncertainty in today’s macroeconomic and geopolitical environment that continues to negatively impact consumer sentiment and demand. However, we remain confident in the off-price business model, which offers both value and convenience. Given consumers’ heightened focus on both of these attributes, it should bode well for our ability to expand our market share and profitability in the future.”