Discount consumption shows resilience! Ross Stores, Inc. (ROST.US) saw a sharp increase of 7% in same-store sales in Q3, far exceeding expectations, prompting an upward adjustment in annual performance guidance.

Against the backdrop of macroeconomic uncertainty, Ross Stores, Inc. (ROST.US) raised its annual profit forecast on Thursday, optimistic about the resilient demand for its discounted clothing and accessories before the holiday season. At the same time, the company's third-quarter sales exceeded expectations, leading to a post-market increase in its stock price by about 3%. The financial report shows that Ross Stores, Inc. had third-quarter sales of $5.6 billion, exceeding market expectations of $5.42 billion. Comparable store sales for the quarter increased by 7%, well above market expectations of 3.3%. The company stated that back-to-school sales performed well, with strong momentum continuing throughout the quarter. The operating profit margin for the quarter reached 11.6%, higher than the market's expectation of 10.6%. Net profit was $512 million ($1.58 per share), compared to $489 million ($1.48 per share) in the same period last year, with the market expecting $1.41 per share. CEO Jim Conroy stated, "We are entering the holiday shopping season with strong momentum, with all stores ready to offer a highly attractive assortment of goods." As of the end of the quarter, Ross Stores, Inc. had a total of 2,273 stores, lower than the 2,291 stores in the same period last year. Inventory was $3.13 billion, compared to $2.86 billion in the same period last year. Looking ahead, Ross Stores, Inc. currently expects earnings per share for the year to be in the range of $6.38 to $6.46, higher than the previous forecast of $6.08 to $6.21. For the fourth quarter, the company expects earnings per share of $1.77 to $1.85, higher than the previous estimate of $1.74 to $1.81; it also raised its holiday season comparable store sales growth forecast from 2%-3% to 3%-4%. In an environment of ongoing inflation and trade policy fluctuations, consumers are increasingly inclined to purchase branded goods at lower prices, making Ross Stores, Inc. and other discount retailers continue to attract budget-conscious customers. "Despite the termination of Supplemental Nutrition Assistance Program (SNAP) benefits and increasing uncertainty regarding tariffs putting pressure on household budgets, the demand from core value consumers remains strong," said Suzy Davidkhanian, analyst at market research firm eMarketer. Its competitor TJX Companies (TJX.US) also raised its full-year profit target on Wednesday, supported by strong demand for discounted clothing and home goods. "The holiday gift purchases of these consumers may still lean towards essential items, but this quarter's performance shows that the consumption situation among low-income groups is more robust than many people worry about," added Davidkhanian. Regarding the impact of tariffs, Ross Stores, Inc. stated that the third quarter earnings per share were negatively impacted by approximately $0.05 due to tariff-related costs, but anticipates the fourth quarter's tariff-related costs to be negligible. The company's 2025 fiscal year guidance already includes an estimated negative impact of approximately $0.16 per share from tariff-related costs.