Key facts
- Ross Stores raised its annual profit forecast for the second time.
- The company reported better-than-expected second-quarter results, with revenue up 13% to $6.26 billion and adjusted earnings of $2.06 per share.
- Ross Stores now forecasts annual earnings per share between $8.61 and $8.77.
- Comparable store sales are expected to increase 6% to 7% in the third quarter and 4% to 5% in the fourth quarter.
- The retailer benefited from consumers trading down and its flexible buying model capitalizing on excess inventory.
Ross Stores raised its annual profit forecast for the second time, driven by resilient demand for discounted apparel and accessories, signaling that value-conscious shoppers continue to seek bargains amid elevated inflation and careful management of discretionary spending. The company's shares climbed approximately 7% in extended trading following the announcement.
CEO Jim Conroy highlighted increased consumer spending across various merchandise categories and regions, particularly in the U.S. Midwest, and noted growth in Ross's home and cosmetics businesses. He attributed the company's success to customers trading down from department and specialty apparel stores, a trend facilitated by Ross's flexible buying model that allows it to leverage excess inventory in the market.
For the full year, Ross Stores now projects earnings per share between $8.61 and $8.77, a significant increase from its previous outlook of $7.50 to $7.74. The company anticipates comparable store sales to rise between 6% and 7% in the third quarter and 4% to 5% in the fourth quarter, exceeding analysts' expectations. In the second quarter, revenue grew by approximately 13% to $6.26 billion, surpassing the $6.18 billion estimated by analysts. Adjusted earnings per share came in at $2.06, beating the $1.94 estimate.
Additionally, Ross Stores reported receiving about $253 million in tariff refunds during the second quarter. This performance contrasts with rival TJX, which reported a slowdown at its TJ Maxx and Marshalls chains, though TJX indicated the issues were controllable and sales were improving. Analyst Rachel Wolff of eMarketer suggested that Ross Stores' focus on assortment and store upgrades is resonating with shoppers, potentially at the expense of competitors, emphasizing the continued consumer preference for retailers offering both value and engaging experiences.