Ross Stores Shares Jump 7% on Q3 Earnings Beat Despite Missed Sales Results

Ross Stores (NASDAQ:ROST) saw its stock climb over 7% in pre-market today after reporting third-quarter earnings that exceeded analyst expectations, even as sales fell short.

For the quarter, the off-price retailer delivered earnings per share of $1.48, surpassing the Street consensus estimate of $1.40. Revenue, however, came in at $5.07 billion, below the anticipated $5.16 billion. Comparable store sales increased 1% year-over-year, reflecting slower growth compared to the first half of the year.

Despite the sales shortfall, Ross Stores demonstrated strong profitability. Gross margin expanded to 28.3%, a 71-basis-point increase year-over-year and above the consensus estimate of 27.5%. Operating margin also improved to 11.9%, up from 11.2%, and exceeded the projected 11.1%, as lower operating costs helped offset planned reductions in merchandise margins.

Looking ahead, Ross Stores provided cautious fourth-quarter guidance. The company expects comparable store sales to grow by 2% to 3% and forecasts EPS between $1.57 and $1.64, below the consensus estimate of $1.67. Full-year EPS guidance of $6.10 to $6.17 aligned closely with analyst expectations of $6.13.