Ross Stores Q3 Profits Grow 11 Percent

 Net earnings for the third quarter ended November 2, 2013 were $171.6 million, up from $159.5 million for the third quarter ended October 27, 2012.  Fiscal 2013 third quarter sales increased 6 percent to $2.398 billion, with comparable store sales up 2 percent on top of a 6 percent gain in the prior year. 

For the nine months ended November 2, 2013, earnings per share were $2.86, up from $2.46 for the nine months ended October 27, 2012.  These results represent 16 percent growth versus 22 percent for the first nine months of 2012.  Net earnings for the 2013 year-to-date period grew to $619.4 million, up from $550.2 million in the prior year.  Sales for the first nine months of 2013 increased 8 percent to $7.489 billion, with comparable store sales up 3 percent on top of a 7 percent gain for the first nine months of 2012. 

Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, “Third quarter sales were in line with our guidance, while earnings were better-than-expected mainly due to above-plan merchandise gross margin.  Operating margin of 11.3 percent was relatively flat to last year.  As a percent of sales, an improvement in cost of goods sold was offset by an increase in selling, general and administrative expenses.”

Balmuth also noted, “We continued to enhance stockholder returns through our share repurchase and dividend programs in the third quarter.  During the first nine months of fiscal 2013, we repurchased 6.4 million shares of common stock for an aggregate price of  $421 million.  We expect to buy an additional $129 million during the fourth quarter, which puts us on track to complete about $550 million of the two-year $1.1 billion stock repurchase authorization announced at the beginning of this year.”  

Fourth Quarter 2013 Guidance

Looking ahead, Mr. Balmuth 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 are up against our own challenging multi-year comparisons and an upcoming holiday season that we believe will be the most intensely competitive and promotional selling period in recent years.  As a result, while we hope to do better, we believe it is prudent to adopt a more cautious outlook for the fourth quarter.”

For the 13 weeks ending February 1, 2014, the company is now projecting comparable store sales to be up 1 percent to 2 percent on top of a 5 percent increase in last year's fourth quarter.  Earnings per share are forecast to be $.97 to $1.01, compared to $1.07 for the 14 weeks ended February 2, 2013.  For the 52 weeks ending February 1, 2014, earnings per share are now projected to be $3.83 to $3.87, up from $3.53 for the 53 weeks ended February 2, 2013.  The 53rd week in 2012 added approximately $.10 to last year's fourth quarter and fiscal year earnings per share.