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Investing.com — Ross Stores, Inc. (NASDAQ:) got a boost after the retailer reported a stronger-than-expected second quarter and offered fourth quarter guidance above consensus targets.
The company earnings of $1.32 a share on revenue of $4.93 billion, up 7.7% from the same time last year. Analysts expected earnings of $1.16 a share on revenue of $4.75B.
Comparable store sales were up 5%, and the operating margin was 11.3%. Both measures were better than its earlier guidance.
Shares rose 4.7% in pre-market Friday trading. They are down 2.6% so far this year.
For the third quarter, Ross sees earnings per share of $1.16 to $1.21, which is in line with expectations. Fourth quarter guidance is for earnings per share of $1.58 to $1.64, which is above expectations.
“We are pleased with our second quarter results, with both sales and earnings well above our expectations,” CEO Barbara Rentler said. “Along with easing inflationary pressures, customers responded well to our improved value offerings throughout our stores.”
The report comes after another off-price retailer, TJX Companies (NYSE:), beat expectations on stronger-than-expected customer traffic.
Citi analysts hiked the price target to $136 per share.
“Whether traffic comes from existing customers with some extra money to spend as inflation eases or customers trading down to ROST as they seek deals, we believe ROST (and off-pricers overall) are well-positioned in the current environment. The attractive buying environment and relatively easy comparisons set the company up well for the remainder of F23,” they said.
TD Cowen analysts also lifted the price target as they see “upside to valuation and 2H guidance.”
“ROST’s initiatives on sharpening its value proposition and merchandise assortment are yielding better than expected traffic results within a favorable environment for Off-Price. These tailwinds are set to continue into at least 2H:23. FY23 guidance increased, leaving room, in our view, for further positive revision to comps and gross margin.”
Additional reporting by Senad Karaahmetovic
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