Shares of Ross Stores Inc. (ROST) saw a more than 4% increase in the extended session on Thursday following the release of strong second-quarter results. The retailer exceeded Wall Street expectations, citing the positive response from budget-conscious customers to its off-price offerings.
In the quarter, Ross reported earnings of $446 million, or $1.32 per share, compared to $385 million, or $1.11 per share, in the same period last year. Sales also showed improvement, rising to $4.9 billion from $4.6 billion a year ago. Analysts previously polled by FactSet had anticipated earnings of $1.16 per share on sales of $4.8 billion.
Ross’s same-store sales experienced a notable turnaround, increasing by 5% after a 7% decline in the second quarter of 2022, according to the company. Barbara Rentler, the Chief Executive of Ross Stores Inc., highlighted the impact of their improved value offerings on customer responsiveness. Rentler mentioned, “Along with easing inflationary pressures, customers responded well to our improved value offerings throughout our stores.”
While Rentler acknowledged the recent moderation in inflation, she emphasized that their low-to-moderate income customers still face persistently higher costs on necessities. As a result, the company remains cautious in its business planning moving forward.
Despite this caution, Ross Stores Inc. raised its sales and earnings outlook for the second half of the year. The company expects comparable-store sales to increase by 2% to 3% in the third quarter and by 1% to 2% in the fourth quarter. Furthermore, Ross projected third-quarter earnings per share in the range of $1.16 to $1.21 and a fiscal year range of $5.15 to $5.26.
Rentler emphasized the company’s commitment to delivering compelling bargains while also effectively managing expenses and inventory. “Moving forward, we remain focused on delivering the most compelling bargains possible while also carefully managing our expenses and inventory to maximize our potential for both sales and earnings growth,” Rentler concluded.
Overall, Ross Stores Inc.’s strong second-quarter performance and optimistic outlook for the remaining year demonstrate their ability to meet customer demands and drive growth in the off-price retail sector.
