Ross Stores Inc. turned its off-price business model into a third-quarter success story, but the retailer still thought it “prudent” to lower projections for the rest of the year because of reduced consumer spending.
For the three months ended Nov. 1, profits climbed 17.6 percent to $57.3 million, or 44 cents a share, from $48.7 million, or 36 cents a year ago. Sales increased 5.9 percent to $1.56 billion from $1.47 billion, while comparable-stores sales came in flat.
“Our steadfast focus on delivering compelling values has helped to offset some of the impact on our business from the recent slowdown in consumer spending,” Michael Balmuth, vice chairman, president and chief executive officer, said on a conference call with Wall Street analysts. “That said, based on the increasingly difficult macroeconomic and retail climate and our expectation of a very promotional holiday season, we believe it is prudent to adopt a more conservative outlook for the fourth quarter.”
The Pleasanton, Calif.-based firm cut its fourth-quarter profit projections to 69 cents to 75 cents a share from the 76 cents to 81 cents forecast last month.
Ross might be caught in the same tides as the rest of retail, but it’s also positioned to gain when other stores find themselves with a glut of merchandise. “Our merchants have been able to take advantage of the increased supply of terrific closeout opportunities in today’s markets to create fresh and exciting assortments of sharply priced name-brand bargains and gifts,” Balmuth said.
This year, the company’s earnings are up 24.9 percent to $208.1 million, or $1.57 a diluted share, from $166.6 million, or $1.21, a year earlier. Sales advanced 9.9 percent to $4.75 billion from $4.32 billion with a 3 percent comp rise. The company operates 906 Ross Dress for Less stores and 57 dd’s Discounts doors.
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