Ross Stores Q2 Profit Rises, Lifts FY Outlook; Shares Up

(RTTNews) - Ross Stores Inc. (ROST) Thursday said its second-quarter profit improved from a year ago, as the discount apparel retailer's revenue grew above expectations with operating costs declining. Earnings for the quarter trumped Wall Street estimates. Moving ahead, the retailer lifted its full year outlook, sending its shares up 6 percent in the after-hours trade.

Pleasanton, California-based Ross Stores' second-quarter profit rose to $239.6 million or $1.14 per share from $213.1 million or $0.98 per share last year. On average, 30 analysts polled by Thomson Reuters expected earnings of $1.08 per share for the quarter. Analysts' estimates typically exclude special items.

Ross Stores, which owns the Ross Dress for Less and Dd's Discounts chains, said second-quarter revenues increased 7 percent to $2.73 billion from $2.55 billion a year ago. Analysts had a consensus revenue estimate of $2.71 billion for the quarter.

Same-store sales for the 13 weeks ended August 2, 2014 rose 2 percent over last year second quarter.

Chief Executive Barbara Rentler said, "Our second quarter sales performed at the high-end of our expectations as today's value-focused consumers continued to respond to our wide assortment of competitive name brand bargains. Merchandise gross margin was above plan, which coupled with strong expense controls, enabled us to deliver quarterly earnings per share that were above the high end of our guidance."

Operating margin for the second quarter advanced to 14.3 percent from 13.6 percent last year, helped by higher merchandise gross margin and a 45 basis point decline in selling, general and administrative expenses.

Looking forward to the third quarter, the company expects earnings of $0.83 to $0.87 per share. Analysts currently expect earnings of $0.86 per share for the quarter. Ross Stores expects fourth-quarter earnings of $1.05 to $1.09 per share.

The company raised its fiscal year 2014 earnings guidance to a range of $4.18 to $4.26 per share from its prior guidance of $4.09 to $4.21 per share. Analysts currently expect earnings of $4.21 per share for the fiscal year 2014.

ROST closed Tuesday's trading at $69.25, down $0.62 or 0.89%, on the Nasdaq. The stock, however, gained $4.35 or 6.28% in after-hours trade.