What: Shares of off-price retailer Ross Stores (NASDAQ:ROST) jumped on Friday following the company's third-quarter report. Ross beat analyst estimates for both revenue and earnings, posting a rise in comparable-store sales. At 2:30 p.m. Friday, the stock was up about 9%, after rising as much as 10.4% earlier in the day.
So what: Ross reported quarterly revenue of $2.78 billion, up 7% year-over-year and about $10 million higher than analysts expected. Revenue was driven by a 3% increase in comparable-store sales, as well as 82 new stores being opened over the past year, bringing the total store count to 1,448.
Earnings came in at $0.53 per share, up from $0.46 per share during the same period last year, and $0.03 higher than the average analyst estimate. Operating margin rose 30 basis points year-over-year to 12.1%, while $530 million of share buybacks over the past nine months helped boost per-share numbers.
Now what: Ross left its prior fourth-quarter guidance unchanged, with the company expecting comparable-store sales to be flat to up 1%. EPS is expected to be between $0.60 and $0.63, compared to $0.60 during the fourth quarter of last year. The company pointed to a difficult macro-economic environment, challenging prior year comparisons, and a highly promotional holiday season as reasons for the subdued guidance.
Earnings reports from apparel retailers have been hit-or-miss so far this quarter. Macy's (NYSE:M) reported extremely weak results earlier this month, with comparable-store sales slumping 3.6% year-over-year. Meanwhile, department store Kohl's (NYSE:KSS) managed an earnings beat, posting 1% comparable-store sales growth and improving profitability. Ross's performance during the third quarter was solid despite an uncertain retail environment, and the stock is surging as a result.
Timothy Green owns shares of Kohl's. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
Why Ross Stores Stock Gained 20% in November
The off-price retailer raised its holiday outlook last month.
3 Amazon-Proof Stocks to Buy Now
Amazon.com is threatening to cannibalize the sales of a large swath of retailers. However, a handful of best-in-class retail companies have Amazon-proof business models.
Ross Stores, Inc. Surges to New Highs With Another Earnings Beat
Ross Stores overcame the headwinds that hurt other retailers last quarter, posting 8% sales growth and a 16% surge in earnings per share.