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Ross Stores’ Fiscal 2Q17 Sales Surpass Expectations

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Sales beat estimates

Off-price retailer Ross Stores (ROST) generated sales of $3.43 billion in fiscal 2Q17, which ended July 29, 2017. The company’s fiscal 2Q17 sales exceeded analysts’ estimate of $3.37 billion, marking the fifth consecutive quarter in which it has done so.

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Strong sales growth

Ross Stores’ sales grew 7.9% YoY (year-over-year) in fiscal 2Q17, an improvement from the sales growth of 7.0% in fiscal 1Q17 and 7.2% in fiscal 2Q16. The company’s same-store sales grew 4.0% YoY in fiscal 2Q17, driven by higher store traffic and an increase in average basket size. In terms of merchandise categories, shoes performed the best. The Midwest and Southeast regions performed well.

Ross Stores’ fiscal 2Q17 sales were better than The TJX Companies’. In fiscal 2Q18, which ended on July 29, 2017, The TJX Companies’ sales grew 6.0% to $8.4 billion. The company’s same-store sales grew 3.0% in fiscal 2Q18, driven by higher consumer traffic.

Ross Stores and The TJX Companies proved the strength of their business model yet again and performed better than major department stores. In fiscal 2Q17, sales of Macy’s (M), Nordstrom (JWN), and Kohl’s (KSS) grew -5.4%, 3.9%, and -0.9%, respectively. Nordstrom’s sales growth was driven by the performance of its online business and off-price Nordstrom Rack stores.

Sales guidance

In fiscal 3Q17, which ends October 28, 2017, Ross Stores expects same-store sales to grow by 1%–2% YoY. The company has the same guidance for fiscal 4Q17. Next, we’ll look at the company’s margins in fiscal 2Q17.

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