Core Insights - Ross Stores, Inc. (ROST) reported a strong third-quarter fiscal 2025 performance with a 7% increase in comparable store sales and a 10% rise in total revenues to approximately $5.6 billion, significantly exceeding consensus estimates [1][9] - The company achieved earnings per share (EPS) of $1.58, up from $1.48 a year ago, indicating the resilience of its operating model [1] Sales Performance - The growth in comparable store sales was broad-based, with cosmetics, shoes, and ladies' apparel leading the performance, reflecting effective merchandising and the appeal of Ross Stores' value proposition in an inflation-aware environment [2] - The ladies' segment, previously a laggard, showed accelerated growth above the chain average during the fiscal third quarter [2] Expansion and Future Guidance - Ross Stores continued its expansion by opening 90 net new stores, including Ross and dd's DISCOUNTS, to capture existing and new market demand [3] - The company raised its guidance for fiscal fourth-quarter comparable store sales to 3-4% and indicated positive trends in inventory builds ahead of the holiday season [3] Strategic Outlook - As Ross Stores enters the critical holiday season, the company is positioned with strong traffic, healthy inventory levels, and a refined branded strategy, which may help sustain momentum despite potential macroeconomic challenges [4] - The off-price retail model historically performs well in value-seeking environments, suggesting that Ross Stores may continue to outperform its peers [4] Stock Performance - Ross Stores' shares have gained 23.4% over the past three months, outperforming the industry average increase of 4.9% [5] - The stock currently trades at a forward 12-month P/E ratio of 26.61X, which is lower than the industry average of 29.92X, indicating a modest discount relative to peers and the broader consumer staples sector [10]

Financial Data and Key Metrics Changes - Total sales for the third quarter grew 10% to $5.6 billion, with comparable store sales increasing by 7% [5][6] - Earnings per share for the third quarter were $1.58 on net income of $512 million, compared to $1.48 per share on net earnings of $489 million in the prior year [6][7] - For the first nine months, earnings per share were $4.61 on net earnings of $1.5 billion, compared to $4.53 per share on net income of $1.5 billion for the same period last year [7] - Operating margin for the third quarter was 11.6%, which was stronger than expected [6][12] Business Line Data and Key Metrics Changes - Strongest merchandise areas in the third quarter included cosmetics, shoes, and ladies' apparel [8] - The branded strategy has positively impacted the ladies' business, which comped above the chain average [10][48] - Average store inventories were up 15% as the company advanced inventory build for the holiday season [8] Market Data and Key Metrics Changes - Broad-based strength was observed across geographic regions, with the Southeast and Midwest performing the best [8][37] - Hispanic stores showed solid comparable sales despite trailing the chain slightly [37] Company Strategy and Development Direction - The company has fully embedded its branded strategy into its merchandising approach, focusing on delivering high-quality branded bargains [9][10] - The company plans to close and/or relocate 10 locations in the fourth quarter, expecting to end the year with 1,903 Ross stores and 360 dd's locations [9] - The company is optimistic about its prospects for the fourth quarter, supported by strong merchandising plans and product assortments [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macro uncertainties and maintain a strong value proposition [11][16] - The company expects tariff-related costs in the fourth quarter to be negligible, with a full-year cost of approximately $0.15 per share [14] - Management highlighted the importance of maintaining a strong value gap against traditional retailers [63] Other Important Information - The company repurchased 1.7 million shares of common stock for an aggregate cost of $262 million, remaining on track to buy back a total of $1.05 billion in shares this year [13] - The company opened 36 new Ross and four dd's DISCOUNTS stores during the third quarter [8] Q&A Session Summary Question: Can you break down the inflection in same-store sales? - Management noted broad-based strength across all major merchandise categories and geographic regions, attributing some improvement to internal initiatives and favorable weather conditions [20][22] Question: What are the major drivers of the improvement in momentum? - Management credited the sophisticated merchandising team and emphasized the importance of marketing and store experience in driving traffic [25][26] Question: How are you addressing the marketing changes? - Management indicated that the refreshed marketing message has improved engagement with both new and lapsed customers, with early metrics showing positive results [41][42] Question: Can you discuss the branded strategy's impact? - Management stated that the branded strategy has significantly improved the ladies' business and expects continued growth opportunities in this area [48][50] Question: What is the outlook for merchandise margins? - Management expects merchandise margins to remain stable over time, with ongoing opportunities for improvement as vendor relationships strengthen [101][104] Question: How is the self-checkout rollout progressing? - Self-checkout is currently in 80 stores, showing lower shrink and high customer adoption, with plans for further rollout next year [78] Question: How did dd's perform compared to Ross? - dd's performance was consistent with Ross, with no significant pressure noted during the quarter [82]

Financial Data and Key Metrics Changes - Total sales for Q3 2025 grew 10% to $5.6 billion, with comparable store sales increasing 7% [3][4] - Earnings per share for the quarter were $1.58 on net income of $512 million, compared to $1.48 per share on net earnings of $489 million in the prior year [4] - For the first nine months, earnings per share were $4.61 on net earnings of $1.5 billion, compared to $4.53 per share on net income of $1.5 billion for the same period last year [4] - Operating margin for the quarter was 11.6%, which was stronger than expected [4][10] Business Line Data and Key Metrics Changes - Strongest merchandise areas in Q3 included cosmetics, shoes, and ladies' apparel [5] - The branded strategy has positively impacted the ladies' business, which comped above the chain average [8][48] Market Data and Key Metrics Changes - Broad-based strength was observed across geographic regions, with the Southeast and Midwest performing the best [5][19] - Hispanic stores showed solid comps despite trailing the chain slightly [37] Company Strategy and Development Direction - The company has fully embedded its branded strategy into its merchandising approach, focusing on delivering high-quality branded bargains [6][8] - Plans to close and/or relocate 10 locations in Q4, expecting to end the year with 1,903 Ross stores and 360 dd's locations [6] - The company aims to maintain a strong value proposition relative to traditional retailers while mitigating impacts on merchandise margins [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the fourth quarter, raising comparable store sales forecast to 3-4% and earnings per share guidance for fiscal 2025 to $6.38-$6.46 [11][12] - The company expects tariff-related costs in Q4 to be negligible, with a full-year cost of approximately $0.15 per share [12] - Management acknowledged macro uncertainties but credited the team for executing well and navigating through challenges [20] Other Important Information - The company repurchased 1.7 million shares for an aggregate cost of $262 million, remaining on track to buy back a total of $1.05 billion in shares this year [11] - Total consolidated inventories were up 9% versus last year, with average store inventories up 15% [5] Q&A Session Summary Question: Can you break down the inflection in same-store sales? - Management noted broad-based strength across all major merchandise categories and geographic regions, attributing some improvement to internal initiatives and favorable weather conditions [19][20] Question: What are the major drivers of the improvement in momentum? - Management highlighted the sophistication of the merchandising team and the effectiveness of marketing and store teams in driving traffic and improving the in-store experience [24][25] Question: How is the branded strategy impacting the business? - The branded strategy has significantly improved the ladies' business, which has shown sequential improvement and is expected to continue driving growth [48][49] Question: What is the outlook for tariff costs? - Management expects tariff-related costs to be negligible in Q4 and has successfully mitigated impacts throughout the year [32][85] Question: How is the store experience being enhanced? - The company is refreshing stores to provide a modern look and feel, with positive customer feedback so far [60] Question: Are there plans for a loyalty program? - Currently, there is no active loyalty program, but the company has a decent email database and is exploring future marketing initiatives [122]