Costs in the supply chain decline, Rostek (ROST.US) raises full-year profit expectations

Ross Stores (ROST.US) raised its annual profit outlook as it cut shipping and supply chain costs. The company reported Q3 revenue of $5.07 billion, up 3.0% YoY, missing market expectations; net profit of $489 million, up 9.4% YoY; and diluted EPS of $1.48, topping market expectations of $1.40.

Ross Stores' Q3 sales were $5.1 billion, up from $4.9 billion a year ago, and same-store sales grew 1% YoY, missing market expectations of 2.5% growth.

Ross Stores' CEO said that despite lower comparable sales and "disappointing" performance, the company's sales and profitability improved in Q3, leading to a rise in its stock price after the market closed on Thursday. As of writing, it rose 7.17% to $153.21.

With shipping costs falling, Ross Stores saw some relief in a tough retail environment and discretionary spending being hit. Thrifty consumers were cautious about non-essential purchases, prompting the retailer to adjust its pricing strategy and expand its product range.

Ross Stores' operating margin in the quarter was 11.9%, up from 11.2% a year ago, as lower incentives, shipping and fulfillment costs offset planned declines in merchandise margins.

Guidance

Looking ahead, Ross Stores said: "The Company continues to expect same-store sales growth of 2% to 3% for the 13-week period ending February 1, 2025 (Q4)." Higher than market expectations of 2.5%.

Q4 EPS is expected to be between $1.57 and $1.64, while EPS for the 14-week period ending February 3, 2024 is $1.82, market consensus is $1.67.

Based on its performance so far this year and its Q4 forecast, the company expects full-year EPS to be between $6.10 and $6.17, compared to $5.56 last year.