Ross Stores raised its earnings guidance for the year after third-quarter results arrived ahead of targets. Profits grew 30.7 percent in the period on a 5 percent same-store gain and the benefit of lower freight costs.
Earnings per share for the 13 weeks ended October 28, 2023 of $1.33, up from $1.00 per share for the 13 weeks ended October 29, 2022. Net income for the period rose to $447 million versus $342 million last year. Sales for the 2023 third quarter were $4.9 billion, up from $4.6 billion in the prior year, with a comparable store sales gain of 5 percent.
For the nine months, earnings per share were $3.74 on net earnings of $1.3 billion, versus $3.08 per share on net income of $1.1 billion for the same year-to-date period in 2022. Sales for the first nine months of 2023 were $14.4 billion, with comparable store sales up 4 percent over the prior year.
Barbara Rentler, chief executive officer, commented, “We are pleased that both sales and earnings outperformed our expectations for the quarter as customers responded favorably to the terrific values we offered throughout our stores. Operating margin for the period was 11.2 percent, up from 9.8 percent last year, as leverage from the same store sales gain and lower freight costs was partially offset by higher incentives and store wages.”
Rentler added, “During the third quarter, we repurchased 2.1 million shares of common stock for an aggregate price of $239 million. We remain on track to buy back a total of $950 million in common stock during fiscal 2023 to complete our two-year $1.9 billion repurchase program by year-end.”
Fourth Quarter and Fiscal 2023 Guidance
Looking ahead, Rentler said, “We continue to face macroeconomic volatility, persistent inflation, and more recently, geopolitical uncertainty. In addition, we are up against our most difficult quarterly sales comparisons versus 2022 in the fourth quarter. As a result, we believe it is prudent to maintain a cautious approach in forecasting our business and are reiterating our prior sales guidance for the fourth quarter.”
Rentler continued, “While we hope to do better, we continue to project same-store sales for the 13 weeks ending January 27, 2024 to be up 1 percent to 2 percent. Earnings per share for the 14 weeks ending February 3, 2024 are planned to be in the range of $1.56 to $1.62, compared to $1.31 in the prior year. This guidance range includes an approximate $0.02 per share unfavorable impact from the timing of expenses that benefited the third quarter. Based on our year-to-date results and our fourth quarter forecast, earnings per share for the 53 weeks ending February 3, 2024 are now expected to be in the range of $5.30 to $5.36 versus $4.38 last year. Incorporated in this guidance for the fourth quarter and full year is an estimated benefit to earnings per share of approximately $0.16 from the 53rd week in fiscal 2023.”
Previous guidance called for EPS in the range of $5.15 to $5.26.
Rentler concluded, “Despite the current macroeconomic and geopolitical uncertainties, we remain confident in the resilience of the off-price sector and our ability to operate successfully within it. Our business model offers shoppers both value and convenience, and we believe consumers’ heightened focus on these important factors bodes well for us for the foreseeable future.”
Photo courtesy Ross