Value never goes out of style during the holiday’s and Ross Stores is well positioned to capitalize on this most enduring of seasonal behaviors.
Even so, following the release of third quarter results on Thursday, Ross stopped short of increasing its fourth quarter forecast the way some investors thought the company might. Ross maintained its full year profit outlook and also offered a conservative projection for same store sales to increase in the range of 1% to 2% during the fourth quarter. The tepid outlook was due in part to a comparison with a prior year fourth quarter when comps rose 7%.
"Our focus on bargains continues to make our stores attractive destinations for value-conscious customers," said Ross vice chairman and CEO Michael Balmuth. "During the holiday season, however, it is always difficult to predict how promotional other retailers may become or how current macro-economic and political uncertainties may impact consumer spending. We are also anniversarying the robust 7% increase in same store sales from last year's fourth quarter. So, while we hope to do better, we believe it is prudent to maintain our prior fourth quarter guidance."
Fourth quarter earnings for the 14 week period ended February 2, 2013 are expected to range from 99 cents to $1.04 compared to the prior year’s 85 cents a share profit. The additional week in this year’s fourth quarter is expected to add between eight and nine cents to profits.
Balmuth issued the holiday outlook in conjunction with the release of third quarter results that saw sales increase 11% to a little less than $2.3 billion and comparable sales rise 6% on top of a 5% gain the prior year. Earnings for the period were 72 cents, compared to 63 cents the prior year and net income increased 11% to $159.5 million from $144 million.
"We are pleased with the strong sales and earnings increases we generated in the third quarter and first nine months of 2012," Balmuth said. "Our better-than-expected results year-to-date were driven by our ongoing ability to offer shoppers a fresh and exciting array of compelling name brand bargains for the family and the home. In addition, operating our stores on lower inventories while strictly controlling expenses continues to enhance profit margins."