Ross Stores Q3 Earnings & Sales Beat Estimates, Comps Outlook Raised

Core Insights - Ross Stores, Inc. reported strong financial performance in Q3 fiscal 2025, with both earnings and sales exceeding expectations, showcasing a year-over-year increase in net sales and earnings per share [1][2]. Financial Performance - Earnings per share (EPS) for Q3 reached $1.58, surpassing the Zacks Consensus Estimate of $1.40, despite a 5-cent negative impact from tariff-related costs [2]. - Total sales amounted to $5.6 billion, reflecting a 10% year-over-year increase and exceeding the Zacks Consensus Estimate of $5.41 billion. Comparable store sales improved by 7% year over year [3][9]. - The strongest merchandise categories included cosmetics, shoes, and ladies' apparel, while children's and men's categories performed in line with the overall chain [4][9]. Cost and Margin Analysis - Cost of Goods Sold (COGS) increased by 35 basis points year over year, with distribution costs rising by 60 basis points due to a new distribution center and higher tariff-related processing costs [5]. - The operating margin for the company was 11.6%, down 35 basis points year over year, primarily due to tariff-related costs [6][14]. Cash and Debt Position - At the end of Q3, Ross Stores had cash and cash equivalents of $3.8 billion, with long-term debt of $1.02 billion and total shareholders' equity of $5.7 billion [7]. Share Repurchase and Expansion - In Q3, the company repurchased 1.7 million shares for a total cost of $262 million, with plans to buy back $1.05 billion worth of shares in fiscal 2025 [10]. - The company opened 36 new Ross stores and four dd's DISCOUNTS stores, completing its target of 90 new locations for fiscal 2025 [11]. Future Outlook - For Q4 fiscal 2025, Ross Stores expects comparable store sales growth of 3-4% and total sales growth of 6-7% year over year, despite ongoing tariff costs [13][15]. - The company raised its EPS outlook for fiscal 2025 to a range of $6.38-$6.46, compared to $6.32 reported in fiscal 2024, accounting for a negative impact of 16 cents per share from tariffs [15].