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

Ross Stores, Inc. ROST reported third-quarter fiscal 2025 results, showcasing strong financial performance as both earnings and sales surpassed the Zacks Consensus Estimate. Net sales and earnings per share also increased compared with the prior-year period.

Ross Stores, a leading off-price apparel retailer, posted earnings of $1.58 per share, exceeding the Zacks Consensus Estimate of $1.40. The fiscal third-quarter earnings per share (EPS) included a 5-cent per share negative impact from tariff-related costs.

Total sales reached $5.6 billion, up 10% year over year and well above the Zacks Consensus Estimate of $5.41 billion. Comparable store sales (comps) improved 7% year over year. The company highlighted that its merchants delivered a compelling assortment of brand-name values, contributing to broad-based strength across all major merchandise categories. Additionally, new marketing campaigns helped drive higher consumer engagement and increased traffic.

In the fiscal third quarter, cosmetics, shoes, and ladies were the strongest merchandise areas, while children’s and men’s remained relatively in line with the chain. Region-wise, the Southeast and Midwest saw broad-based strength. However, performance for the bigger markets, like California, Florida, and Texas, was in line with the chain.

Shares of the Zacks Rank #3 (Hold) company have gained 6.1% in the past three months, outpacing the industry's 1.7% growth.

Insight Into ROST’s Q3 Performance

COGS increased 35 basis points (bps) year over year. Distribution costs rose 60 bps, driven by the new distribution centre opened early this year and higher tariff-related processing costs. Merchandise margin deleveraged 10 bps, while buying expenses were flat versus last year. These pressures were partly negated by 25 bps lower domestic freight and 10 bps reduced occupancy costs.

SG&A remained flat year over year, despite the CEO transition-related cost headwinds. The company’s operating margin of 11.6% was down 35 bps year over year due to tariff-related costs.

Ross Stores, Inc. Price, Consensus and EPS Surprise

Ross Stores, Inc. price-consensus-eps-surprise-chart | Ross Stores, Inc. Quote

Sneak Peek Into ROST’s Other Financials

Ross Stores ended the fiscal third quarter with cash and cash equivalents of $3.8 billion, after funding business growth and capital requirements. The company has a long-term debt of $1.02 billion and a total shareholders’ equity of $5.7 billion.

In the fiscal third quarter, Ross Stores repurchased 1.7 million shares for an aggregate cost of $262 million. The company is on track to buy back a total of $1.05 billion worth of shares in fiscal 2025.

ROST’s Store Update

In third-quarter fiscal 2025, the company opened 36 Ross stores and four dd’s DISCOUNTS stores. With this, the company completed its targeted expansion program of opening 90 locations in fiscal 2025, including 80 Ross stores and 10 dd’s. The company noted that performance was strong across stores opened this fall, particularly in new markets, like the New York Metro area.

For the fourth quarter of fiscal 2025, the company plans to close or relocate 10 locations and expects to end fiscal 2025 with 1,903 Ross stores and 360 dd’s locations.

What ROST Expects for Q4 & FY25

Looking ahead, Ross Stores is confident about its growing business momentum as it moves into the crucial holiday period. The company is strongly positioned to offer an engaging and differentiated merchandise assortment throughout its store network.

For the fourth quarter of fiscal 2025, the company raised its comps growth outlook. It expects comps growth of 3-4% in the fiscal fourth quarter, with total sales estimated to increase 6-7% year over year.

Operating margin is expected to be in the range of 11.5-11.8%, compared with 12.4% last year, primarily due to the prior-year benefit from the sale of a packaway facility. The company anticipates net interest income of $30 million for the fiscal fourth quarter, with a tax rate of 24%. ROST expects average shares outstanding to be 322 million at the end of the fourth quarter of fiscal 2025.

Earnings per share are projected to be in the range of $1.77-$1.85 for the fiscal fourth quarter, including an estimated impact of 3 cents per share from the timing of packaway expenses. As a result, the company raised its EPS outlook for fiscal 2025. ROST now anticipates EPS of $6.38–$6.46 for fiscal 2025 compared with $6.32 reported in fiscal 2024. The fiscal year outlook includes a negative impact of 16 cents per share from tariffs.

Stocks to Consider

American Eagle Outfitters, Inc. AEO operates as a multi-brand specialty retailer in the United States and internationally. At present, American Eagle holds a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for AEO’s current fiscal-year sales and earnings implies a decline of 0.1% and 35.6%, respectively, from the year-ago figures. AEO delivered a trailing four-quarter earnings surprise of 30.3%, on average.

Boot Barn Holdings, Inc. BOOT operates specialty retail stores in the United States and internationally. At present, Boot Barn holds a Zacks Rank of 2.

The Zacks Consensus Estimate for Boot Barn’s current fiscal-year sales and earnings implies growth of 16.2% and 20.5%, respectively, from the year-ago figures. BOOT delivered a trailing four-quarter earnings surprise of 5.4%, on average.

Amazon.com, Inc. AMZN engages in the retail sale of consumer products, advertising, and subscription services through online and physical stores in North America and internationally.  At present, Amazon holds a Zacks Rank of 2.

The Zacks Consensus Estimate for Amazon’s current fiscal-year sales and earnings implies growth of 11.9% and 29.7%, respectively, from the year-ago figures. AMZN delivered a trailing four-quarter earnings surprise of 22.5%, on average.

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