Ross CEO: Vendors Eye Growing Retail Channels to Grab Market Share
Last week Ross Stores Inc. posted a third quarter beat on Wall Street’s profit and sale expectations.
Cosmetics and accessories turned in the best quarterly performance while apparel and home underperformed, CEO Barbara Rentler told investors during a conference call.
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Company merchants are focused on finding compelling deals across categories and prices. “[I]f there’s a really unbelievable deal, we’re gonna price it the way we think we need to price it,” Rentler said.
Vendors “are really looking for ways to increase their market share,” she added. “And so they’ve shifted some of their business towards growing retail channels.” The market is awash with plenty of product, and there’s little sign of this changing, she noted.
For the fourth quarter, the off-price retailer has entered some new categories, Rentler didn’t want to “talk about that” during the call. She suggested that the new categories are reflected in seasonal gift offerings.
Heading into 2024, “I think we have some opportunities to expand into our businesses and then also coming back into some businesses that we exited during COVID,” Rentler said.
The company expects to end the year with 1,764 Ross Stores and 345 DD’s discount locations after opening 43 news Ross Dress for Less doors.
Net income for the three months ended Oct. 28 rose 30.8 percent to $447.3 million, or $1.33 a diluted share, from $342.0 million, or $1.00, a year ago. Net sales were up 7.9 percent to $4.92 billion from $4.57 billion, with comparable sales up 5 percent primarily driven by higher traffic. Wall Street was expecting diluted earnings per share of $1.22 on revenue of $4.85 billion. Same store sales gains and lower freight costs were partially offset by higher expenses and store wages during the quarter. For the nine months, net income rose 18.8 percent to $1.26 billion, on a sales gain of 6.5 percent to $14.35 billion.
Despite the gains and increase in comparable sales in the third quarter, the company reiterated its prior fourth quarter guidance with earnings per share between $1.56 to $1.62 and same-store sales up 1 percent to 2 percent.
“There’s a lot…going on in the external environment,” Michael Hartshorn, chief operating officer, told investors. “We expect it to be a very promotional retail environment. And now you have geo-politics into the mix and it is our toughest compare for the year. So given everything going on externally, we think it’s prudent to remain very conservative.”
For the full year ending Feb. 3, 2024, Ross guided earnings per share in the range of $5.30 to $5.36, which includes a benefit of 16 cents from the extra 53rd week in the retail calendar.
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