Shares of Ross Stores (ROST) surged after the discount retailer reported earnings that exceeded expectations and increased its outlook for the fiscal year. This success further demonstrates the resilience of the off-price model in the current macroeconomic climate.
Strong Earnings and Revenue
Ross reported earnings of $1.32 per share, surpassing estimates of $1.16. The company also recorded revenue of $4.9 billion, ahead of projections for $4.75 billion.
Prudent Business Planning
Despite the recent moderation in inflation, CEO Barbara Rentler acknowledges that their low- to moderate-income customers continue to face persistently higher costs on necessities. In light of this, Ross remains cautious in its business planning. However, due to their improved second-quarter performance, they have raised their sales and earnings outlook for the second half of the year.
Improved Fiscal Year Outlook
Ross now expects earnings for the fiscal year to be between $5.15 and $5.26 per share, surpassing analysts’ forecasts of $5 per share. The previous guidance ranged from $4.77 to $4.99 per share.
Upcoming Quarters Expectations
The company also provided guidance for the third and fourth quarters, anticipating earnings per share of $1.16 to $1.21 and $1.58 to $1.64, respectively. Analysts had projected earnings per share of $1.17 and $1.56 for the third and fourth quarters.
Following this positive news, Ross Stores saw a 5.7% increase in its stock price during after-hours trading on Thursday, reaching $119.52. Despite a year-to-date decline of 2.6%, the company’s shares still outperformed the S&P 500’s 14% gain.
Off-Price Sector Resilience
These results further reaffirm the off-price sector’s ability to navigate the current retail landscape, which has taken a toll on full-price retailers. Ross Stores’ competitor TJX Cos. (TJX) also recently reported a strong quarter, surpassing expectations and raising its guidance.