What: Shares of off-price retailer Ross Stores (ROST -0.51%) 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 (M 1.44%) reported extremely weak results earlier this month, with comparable-store sales slumping 3.6% year-over-year. Meanwhile, department store Kohl's (KSS 2.83%) 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.
