* Q3 EPS $0.84 in line with est
* Maintains Q4 EPS outlook
* Shares down 4 pct
(Adds analyst comment, background)
By Mihir Dalal
BANGALORE, Nov 19 Off-price retailer Ross
Stores Inc (ROST.O) posted an in-line quarterly profit, helped
by better margins, but the company maintained its
fourth-quarter earnings forecast which was below market
expectations, sending its shares down 4 percent.
Though the company posted solid third-quarter results, "the
market was looking for a slight beat and looking for a raise to
the 4Q outlook that didn't materialize," Jefferies analyst
Randal Konik said in a note.
"While the guidance is likely conservative, with the
company not raising their outlook, gives us signals that
management is starting to rein in the expectations bar and that
the level of earnings upside over the next 12 months could
wane," Konik said.
Ross' low prices for branded merchandise, from clothes to
home goods, have attracted consumers seeking deep discounts
amid the recession, but there are questions if the company can
maintain its market share as the economy starts coming off its
lows, and consumer spending becomes less restrained.
Earlier this week, rival TJX Cos Inc (TJX.N) had posted a
higher-than-expected quarterly profit but its shares fell as
investors questioned whether the company could hold on to
shoppers once the economy improves.
Ross confirmed its fourth-quarter earnings forecast of 88
to 94 cents a share, below analysts' average estimate of 99
cents a share, according to Thomson Reuters I/B/E/S.
Third-quarter net income was $105.1 million, or 84 cents a
share, up from $57.3 million, or 44 cents a share, a year ago.
Operating margin grew about 385 basis points while gross
margin rose by 340 basis points, helped partly by a fall in
freight and distribution expenses as a percent of sales.
Earlier in November, the company reported quarterly revenue
rose 12 percent to $1.74 billion.
Ross, like other off-price chains, buys excess apparel,
accessories and home goods in bulk from manufacturers to sell
them at deep discounts.
Shares of Ross were down $1.26 at $44.81 Thursday morning
(Editing by Jarshad Kakkrakandy)