“Above-Plan” Sales Give Ross Stores a 17% Profit Hike

Ross grand opening recently at Lincoln Village, Chicago

Ross grand opening recently at Lincoln Village, Chicago

Pleasanton, CA—Ross Stores credited “above-plan sales and merchandise gross margin” in helping it book a 17% hike in its second quarter profit.

For the quarter ended August 3, the off-price retailer posted a profit of $213.1 million, or 98 cents a share, compared with a profit of $182 million, or 81 cents a share, a year earlier. In May, the company projected per-share earnings of 89 cents to 93 cents. Analysts’ average estimate expected 93 cents a share.

Net revenue grew 9% to $2.55 billion, beating the $2.52 billion expected by analysts. Comparable store sales were up 4%.

Operating margin widened to 13.6% from 12.8%, as gross margin strengthened 70 basis points to 28.5%. The year-over-year expansion in gross margin was primarily due to higher sales.

‘Somewhat Cautious Outlook’

Best performing merchandise categories were accessories and juniors. By region, Texas and Florida were the most productive, the company said.

“We are pleased with our better-than-expected results for the second quarter and first six months of 2013, which were mainly driven by above-plan sales and merchandise gross margin,” said Michael Balmuth, chairman/ceo.

“Our performance for both the quarter and year-to-date periods continues to benefit from the solid execution of our core off-price strategy of delivering compelling name brand bargains to today’s value-focused consumers.”

For its third quarter, Ross Stores forecast earnings per hare at 75 to 78 cents a share but below the 79 cents from analysts’ average estimate.

Ross Stores expects fiscal full year earnings to be $3.80 to 3.87 a share, up from its previous forecast of $3.70 to $3.81 a share.

“Looking ahead, given the ongoing uncertainty in the macro-economic environment and the potential for a more promotional and competitive retail climate, we believe it is prudent to maintain a somewhat cautious outlook for the remainder of the year,” Balmuth said.

 

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Jeff Prine

Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com