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Ross Stores (ROST) 3Q Earnings Rise 11 Pct, Yet In Line With Estimates

 November 15, 2012 10:11 AM

(By Balachander) Ross Stores Inc. (NASDAQ: ROST), which operates off-price apparel and home fashion chain, reported a 11% increase in quarterly earnings on strong store sales. Results came in line with Street's expectations.

Earnings for the third quarter were $159.52 million or $0.72 per share, up from $143.97 million or $0.63 per share last year.

Sales grew 11% to $2.26 billion. Comparable store sales increased 6% for the latest quarter.

Analysts, on average, polled by Thomson Reuters had expected a profit of $0.72 per share on revenue of $2.26 billion for the third quarter.

Operating margin grew about 35 basis points to 11.3% as higher merchandise margin, lower distribution costs and leverage on occupancy and general, selling and administrative expenses were partially offset by a lower shortage benefit than the prior year and increases in freight and buying costs.

[Related -Ross Stores, Inc. (ROST): A Look At Multiple Long-Term Growth Catalysts]

"Our better-than-expected results year-to-date were driven by our ongoing ability to offer shoppers a fresh and exciting array of compelling name brand bargains for the family and the home. In addition, operating our stores on lower inventories while strictly controlling expenses continues to enhance profit margins," said Michael Balmuth, Chief Executive of Ross Stores.

Looking ahead into the fourth quarter, the company expects earnings of $0.99 to $1.04 per share, while Street predicts $1.04 per share. The guidance range includes the projected $0.08 to $0.09 benefit to earnings per share from the 53rd week in fiscal 2012.

[Related -Ross Stores, Inc. (ROST): Multiple Prongs To Drive Comp Upside]

For the 13 weeks ending January 26, 2013, the company continues to forecast same store sales to be up 1% to 2% on top of a 7% gain for the 13 weeks ended January 28, 2012.

The company expects to buy $116 million in common stock during the fourth quarter, which will complete the two-year $900 million program announced in early 2011.

ROST is trading down 3.31% at $53.31 on Thursday. The stock has been trading between $41.99 and $70.82 for the past 52 weeks.

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