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Ross Stores Q3 Results Meet Estimates, Backs Q4 Outlook

Off-price retail chain Ross Stores, Inc. (ROST: Quote) reported Thursday a profit for the third quarter that increased 11 percent from last year, reflecting a 6 percent sales growth at established stores and improved margins. Earnings per share and quarterly revenues matched analysts' expectations. The company also reaffirmed its earnings forecast for the fourth quarter.

"Our better-than-expected results year-to-date were driven by our ongoing ability to offer shoppers a fresh and exciting array of compelling name brand bargains for the family and the home. In addition, operating our stores on lower inventories while strictly controlling expenses continues to enhance profit margins," Vice Chairman and CEO Michael Balmuth said in a statement.

The Pleasanton, California-based apparel and home accessories retailer posted net earnings of $159.52 million or $0.72 per share for the third quarter, higher than $143.97 million or $0.63 per share in the prior-year quarter.

On average, 26 analysts polled by Thomson Reuters expected the company to earn $0.72 per share in the third quarter. Analysts' estimates typically exclude special items.

Sales for the quarter increased 11 percent to $2.26 billion from $2.05 billion in the same quarter last year, and matched twenty-one Wall Street analysts' consensus estimate.

Comparable store sales were up 6 percent on top of a 5 percent increase in the year-ago quarter.

The company noted that its operating margin improved about 35 basis points to 11.3 percent from last year.

"As a percent of sales, higher merchandise margin, lower distribution costs and leverage on occupancy and general, selling and administrative expenses were partially offset by a lower shortage benefit than the prior year and increases in freight and buying costs," Balmuth noted.

Ross Stores also said its board declared a regular quarterly cash dividend of $0.14 per common share, payable on December 28 to stockholders of record as of December 5, 2012.

Looking ahead to the fourth quarter, the company continues to expect earnings in a range of $0.99 to $1.04 per share on projected same-store sales increase of 1 to 2 percent. Analysts estimate earnings of $1.04 per share for the quarter.

"Our focus on bargains continues to make our stores attractive destinations for value-conscious customers. During the holiday season, however, it is always difficult to predict how promotional other retailers may become or how current macro-economic and political uncertainties may impact consumer spending," Balmuth added.

ROST closed Wednesday's regular trading session at $55.13, down $1.66 on a volume of 2.30 million shares. In the past 52-week period, the stock has been trading in a range of $41.99 to $70.82.

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by RTT Staff Writer

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