Headwinds limited Ross Stores’ gains in the third quarter, the company reported, even as its customers remain wary of discretionary spending.
Net earnings for the quarter were $488.8 million, or $1.48 per diluted share, versus $447.3 million, or $1.33 per diluted share, in the year-prior period, Ross noted.
Comparable store sales increased by 1% in the quarter year over year. Net sales were $5.07 billion versus $4.92 billion in the year-previous period, the company stated.
Ross beat a Zacks Investment Research analyst consensus estimate of $1.39, but revenues fell short of the Zacks estimate of $5.15 billion.
Barbara Rentler, Ross CEO, said in a conference call that the strongest regions for the company’s namesake stores were California and Texas. As for merchandising categories, cosmetics, accessories and children’s were the top sellers. For its part, dd’s Discounts had the stronger quarter of the two banners, with its comps coming in higher than those at Ross stores, Rentler said, although she didn’t include actual figures.
In announcing the financial results, Rentler said, “We are disappointed with our third quarter sales results as business slowed from the solid gains we reported in the first half of 2024. Although our low-to-moderate income customers continue to face persistently high costs on necessities, pressuring their discretionary spending, we believe we should have better executed some of our merchandising initiatives. In addition, a combination of severe weather during the quarter from Hurricanes Helene and Milton, along with unseasonably warm temperatures, also negatively impacted our results. Despite the below-plan sales results, earnings were ahead of our expectations. Operating margin for the quarter was 11.9%, up from 11.2% last year, as lower incentive, freight, and distribution costs more than offset the planned decline in merchandise margin.”
