Earnings Preview: Ross Stores

Ross Stores (ROST) is expected to report Q3 earnings before market open Wednesday, November 19, with a conference call scheduled for 11:00 am ET.

Guidance

Analysts are looking for a profit of 43c on revenue of $1.56B. The consensus range is 42c to 44c for EPS, and revenue of $1.56B to $1.63B, according to First Call. On November 6, Ross Stores reported its October same-store sales fell 2% with sales of $490M; the company updated its Q3 EPS outlook to 43c to 44c. The company said October sales were hurt by unseasonably warm weather in many of its markets and the challenging economy. U.S. consumers have stayed away from making discretionary purchases for months as rising food and fuel prices put pressure on budgets hurt by job losses, the credit crunch and the turmoil in the housing market. Instead of spending at department stores, consumers are flocking to wholesale clubs and discount apparel chains.

Analyst Views

After retailers reported disappointing October SSS, analysts are pessimistic about Q3 results; at the same time, few analysts expect retailers' stock to fall significantly further because shares are down so much over the past few months. While Jefferies analyst Randal Konik expects weak results and soft Q4 outlooks, Ross Stores is expected to be among the best performers in the group. Due to a weakening economic environment and weak traffic that is likely to persist for the remainder of the year, C.L. King analyst Mark Montagna lowered estimates on Ross. He said some retail executives have told him this is the worst retail environment they have ever seen.