Ross Stores Q3 Profit Rises, Results Beat View; Again Lifts 2014 Outlook

(RTTNews) - Ross Stores Inc. (ROST) on Thursday reported a 12 percent increase in profit for the third quarter from last year, reflecting higher revenue and margins. Both revenue and earnings per share for the quarter beat analysts' expectations.

Looking ahead, the discount apparel retailer affirmed its earnings outlook for the fourth quarter, but again raised its full-year outlook. The company's shares gained more than 5 percent in extended trades.

Barbara Rentler, Chief Executive Officer of Ross Stores, said, "We are pleased with the better-than-expected sales and earnings we achieved in the third quarter. These results were driven by our ongoing ability to deliver compelling bargains to our customers, which drove above-plan sales gains and strong merchandise gross margins."

Pleasanton, California-based Ross Stores' third-quarter net income rose to $192.72 million or $0.93 per share from $171.62 million or $0.80 per share in the same period last year. On average, 27 analysts polled by Thomson Reuters expected earnings of $0.87 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 third-quarter sales increased 8 percent to $2.60 billion from $2.40 billion a year ago. Analysts had a consensus revenue estimate of $2.55 billion for the quarter.

Comparable store sales for the quarter rose 4 percent over the year-ago period.

Total costs and expenses increased 8 percent from last year to $2.29 billion. Operating margin for the quarter grew 55 basis points due to a 40 basis point improvement in cost of goods sold and a 15 basis point decline in selling, general and administrative expenses.

Looking ahead to the fourth quarter, Ross Stores affirmed its forecast for earnings of $1.05 to $1.09 per share, with same-store sales up 1 to 2 percent. Analysts currently expect earnings of $1.10 per share for the quarter.

Rentler said, "As we enter the fourth quarter, our merchants have acquired a wide array of exciting and sharply-priced name brand fashions and gifts to appeal to today's value-focused shoppers. That said, we believe it is prudent to maintain a cautious outlook given the ongoing uncertainties in the macro-economic environment and the likelihood of an intensely competitive and promotional holiday season."

For fiscal 2014, Ross Stores raised its earnings guidance to a range of $4.28 to $4.32 per share from the prior range of $4.18 to $4.26 per share. Analysts currently expect earnings of $4.27 per share for the year.

ROST closed Thursday's trading at $83.21, up $1.05 or 1.28 percent on a volume of 2.21 million shares. In after-hours, the stock further gained $4.59 or 5.52 percent to $87.80.