Ross Stores Q3 Earnings Beat, Comparable Sales Hurt by Weather

Ross Stores, Inc. ROST reported results for the third quarter of 2024, wherein the bottom line surpassed the Zacks Consensus Estimates, while the top line missed the same. Net sales and earnings increased from the year-ago period.Ross Stores, Inc. Price and Consensus  Ross Stores, Inc. price-consensus-chart | Ross Stores, Inc. QuoteThe company faced challenges as its low-to-moderate-income customers grappled with persistently high living costs, limiting discretionary spending. Additionally, Hurricanes Helene and Milton, and unseasonably warm temperatures, negatively impacted comparable sales (comps). Despite these hurdles and below-plan sales results, the company delivered earnings that exceeded expectations.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.The Zacks Rank #4 (Sell) company’s shares have risen 8.4% in the past six months compared with the industry's 10.5% growth. Image Source: Zacks Investment Research Insight Into ROST’s Q3 PerformanceRoss Stores, the leading off-price apparel retailer, delivered earnings of $1.48 per share, which surpassed the Zacks Consensus Estimate of $1.39. The bottom line also improved 11.3% from $1.33 per share in the third quarter of fiscal 2023.Total sales of $5.07 billion rose 3% year over year and missed the Zacks Consensus Estimate of $5.15 billion. Comps declined 1%, mainly driven by hurricanes Helene and Milton, and unseasonably warm temperatures.The cost of goods sold (COGS) was $3.6 billion, up 1.9% year over year. As a percentage of sales, COGS was 71.7%, marking a year-over-year decrease of 70 basis points (bps). The gross profit rose 5.6% year over year to $1.4 billion, whereas the gross margin expanded 70 bps to 28.3% from the year-ago quarter.Sneak Peek Into ROST’s Other FinancialsRoss Stores ended third-quarter fiscal 2024 with cash and cash equivalents of $4.3 billion, long-term debt of $1.5 billion, and total shareholders’ equity of $5.3 billion.In the third quarter, the company repurchased 1.8 million shares for $262 million under its two-year $2.1-billion authorization. The company is on track to buy back a total of $1.05 billion in fiscal 2024. As of Nov. 3, 2024, Ross Stores operated 2,192 stores.What ROST Expects for FY24For the fourth quarter of 2024, Ross Stores anticipates comps growth of 2-3% compared with growth of 7% achieved in the fourth quarter of fiscal 2023. The company foresees fourth-quarter EPS to be $1.35-$1.41, down from $1.82 in the prior-year quarter. Based on Ross Stores' performance in the year-to-date period in 2024 and its outlook for the fourth quarter, the company now anticipates EPS for the 52 weeks ending Feb. 1, 2025, to be $6.10-$6.17, suggesting an increase from $5.56 in fiscal 2023. The company’s fourth quarter and fiscal 2024 EPS include a 20-cent gain from the 53rd week.Stocks to ConsiderWe have highlighted three better-ranked stocks in the broader sector, namely Deckers DECK, Abercrombie & Fitch Co. ANF and Nordstrom Inc. JWN.Deckers, a footwear and accessories dealer, currently sports a Zacks Rank #1 (Strong Buy). DECK delivered an average earnings surprise of 41.1% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Deckers’ current financial-year sales and earnings indicates growth of 13.6% and 12.6%, respectively, from the year-ago reported figures.Abercrombie, a leading casual apparel retailer, presently carries a Zacks Rank of 2 (Buy). Abercrombie has a trailing four-quarter earnings surprise of 27.9%, on average.The Zacks Consensus Estimate for ANF’s current financial-year sales and earnings indicates growth of 13% and 64.2%, respectively, from the year-ago reported figures.Nordstrom is a leading fashion specialty retailer in the United States. The company offers an extensive selection of both branded and private-label merchandise. It currently has a Zacks Rank of 2.The Zacks Consensus Estimate for Nordstrom’s fiscal 2024 sales indicates growth of 0.9% from the fiscal 2023 reported figure. JWN has a trailing four-quarter average negative earnings surprise of 17.8%.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Abercrombie & Fitch Company (ANF): Free Stock Analysis Report Deckers Outdoor Corporation (DECK): Free Stock Analysis Report Nordstrom, Inc. (JWN): Free Stock Analysis Report Ross Stores, Inc. 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