Positive customer response to value and convenience contributed to third-quarter results that outperformed expectations at Ross Stores.
The off-price retailer released its third-quarter earnings Thursday (Nov. 16), reporting strong sales and earnings.
“We are pleased that both sales and earnings outperformed our expectations as customers responded favorably to the terrific values we offered throughout our stores,” Ross Stores CEO Barbara Rentler said Thursday during the company’s quarterly earnings call.
During the third quarter, Ross Stores saw a 5% increase in comparable store sales, according to a Thursday earnings release.
The company’s operating margin also improved from the previous year, thanks to leverage from same-store sales gains and lower freight costs, Rentler said during the call. However, higher incentives and store wages partially offset the benefits of the improved operating margin.
Earnings per share for the quarter were $1.33, compared to $1 per share the previous year, per the release. Net income also rose to $447 million from $342 million in the same period last year. Total sales for the quarter reached $4.9 billion, up from $4.6 billion the previous year.
Ross Stores saw strong performance in categories such as cosmetics, accessories and shoes, Rentler said. The company’s subsidiary, dd’s Discounts, also experienced improved sales trends.
Ross Stores added a total of 97 locations throughout the year, including 72 Ross stores and 25 dd’s Discounts stores, expanding its presence into new markets such as Michigan and Minnesota.
For the fourth quarter, Ross Stores expects same-store sales to be up 1% to 2% for the 13 weeks ending Jan. 27, 2024, according to the earnings release. Earnings per share for the 14 weeks ending Feb. 3 are projected to be in the range of $1.56 to $1.62, compared to $1.31 in the fourth quarter of 2022.
“Looking ahead, despite all the challenges in the external environment, we are encouraged by our healthy, above-planned results to date this year,” Rentler said during the call. “We also remain confident in the resilience of the off-price sector, and our ability to operate successfully within it, especially given consumers’ heightened focus on value and convenience.”
Ross Stores has been benefitting from budget-conscious consumers looking for a deal amid high inflation.
As PYMNTS reported in August, Rentler said at the time that customers with lower and moderate incomes are dealing with increased expenses for essential items. She also highlighted that amidst these challenges, Ross products have maintained their appeal.
The company also reported a strong second quarter, a nod to their appeal among inflation-wary shoppers.
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