Ross Stores Boosts Guidance as Q2 Earnings, Revenues, and Comps All Rise

ross-rost-logoDiscount clothing chain Ross Stores, Inc. (NASDAQ:ROST) lifted its full-year earnings forecast today, after reporting market-beating second quarter earnings and revenue.

The Dublin, CA-based company reported Q2 net income of $0.71 per share, easily beating Wall Street’s view of $0.67. Revenue rose 7.2% from last year to $3.18 billion, also eclipsing estimates of $3.13 billion.

Q2 comparable store sales rose 4%, much better than the 1% to 2% range the company had originally anticipated. Meanwhile, operating margin rose to 14.4%, up from 13.9% in the same period last year.

Looking ahead, Ross Stores also issued the following guidance:

  • Q3 EPS forecast of $0.52 to $0.55 (would miss Wall Street’s estimate of $0.57).
  • Q3 same-store sales growth of 1% to 2%.
  • Q4 EPS forecast of $0.73 to $0.76 (could beat Wall Street’s view of $0.73).
  • Raised full-year 2017 EPS guidance to $2.69 to $2.75 (up from a prior $2.63 to $2.72, and above Wall Street’s $2.71 expectation).

From the press release:

Barbara Rentler, Chief Executive Officer, commented, “Both sales and earnings results in the second quarter were ahead of our forecast. Higher merchandise gross margin during the quarter drove a 50 basis point increase in operating margin to 14.4%, up from 13.9% in the same period last year.”

Ms. Rentler continued, “During the second quarter and first six months of fiscal 2016, we repurchased 3.1 million and 6.2 million shares of common stock, respectively, for an aggregate price of $176 million in the quarter and $352 million year-to-date. As planned, we expect to buy back a total of $700 million in common stock during fiscal 2016 to complete the two-year $1.4 billion authorization approved by our Board of Directors in February 2015.”

ROST-2016-08-18

Ross Stores shares rose $1.37 (+2.18%) to $64.25 in aftermarket trading. ROST has gained nearly 17% year-to-date, easily beating the S&P 500’s 7% rise in the same period.

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