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.