Earnings Preview: Ross Stores

Ross Stores (ROST) is expected to report Q2 earnings before market open Wednesday, Aug. 20, with a conference call scheduled for 11:00 am ET.

Guidance

Analysts are looking for a profit of 54c on revenue of $1.61B. The consensus range is 52c to 54c for EPS, and revenue of $1.56B to $1.64B, according to First Call. Ross recently raised its Q2 forecast to 53c to 54c from 51c to 53c; the company also reported Q2 revenue $1.64B, same-store sales rose 6% in Q2 and July SSS increased 4%.

Analyst Views

Between the faltering economy, soaring food and gas prices, limited credit, slumping home prices and worries about jobs, shoppers remain unnerved and have cut back spending on discretionary items. Instead of spending at department stores, bargain-hunters are flocking to wholesale clubs and discount apparel chains.

In an August 8 note to clients, Citigroup downgraded the stock to Hold from Buy with a $39 target. The firm remains enthusiastic about the company's "impressive off-price business," but also expects the stock to be range bound in the near-term. Further, the firm said it would become more constructive on Ross if benefits from its micromerchandising efforts or potential store operating leverage occurs sooner than expected, or if oil prices climb meaningfully.