What happened
Shares of Ross Stores (ROST 1.33%) surged on Friday after the retailer reported better-than-expected second-quarter results. As of 11:30 a.m. EDT, the stock was up 9%.
So what
Ross Stores reported second-quarter revenue of $3.43 billion, up 8% year over year and $60 million higher than the average analyst estimate. Comparable sales rose 4% year over year, on top of a 4% increase during the prior-year period. "We are pleased with the better-than-expected growth we delivered in both sales and earnings in the second quarter, especially given our strong multi-year comparisons and today's volatile retail climate," said Ross Stores CEO Barbara Rentler.
Image source: Ross Stores.
Earnings per share came in at $0.82, up from $0.71 in the prior-year period and $0.05 higher than analysts were expecting. Operating margin rose to 14.9% in the second quarter, up from 14.3% in the second quarter of 2016. The company pointed to higher merchandise margin and operating leverage due to increased sales as the main drivers of the improvement.
Now what
Ross Stores expects to grow comparable-store sales by 1% to 2% during the third quarter, on top of a 7% gain during the third quarter of 2016. EPS is expected between $0.64 and $0.67, up from $0.62 in the prior-year period. For the fourth quarter, a 1% to 2% comparable-sales increase is also expected, along with EPS between $0.88 and $0.92.
With many retailers reporting lackluster results, Ross Stores is a standout this earnings season. Solid guidance suggests that the trouble plaguing the retail industry isn't having much of an impact on the company.
