Discount-retailer Ross Stores Inc. jumped after projecting inflation will push more consumers to seek its off-price wares and deliver sales growth above expectations.
Ross Stores retail products ranging from clothing to homeware – Ross Dress for Less
Same-store-sales will grow 2% to 3% a quarter for the next two quarters, Ross said in a statement Thursday. Analysts had expected 2.3% on average next quarter, and the high end of the range would be its largest expansion since the start of the year, based on data compiled by Bloomberg. Shares rose as much as 4% in post-market trading following the report, the most in the S&P 500 Index.
“We anticipate pricing across retail will move higher as we progress through the year, which will lead consumers to seek more value this fall season,” chief executive officer Jim Conroy said in the statement.
Budget-friendly chains from retailers to restaurants and even home-improvement stores are benefiting from inflation-weary shoppers trying to make their dollars go further. Shoppers in the US aren’t spending less, but they’re being more selective about where they spend as prices continue to climb.
The owner of TJ Maxx raised its profit targets on Wednesday, sales at Applebee’s unexpectedly grew last quarter after its $25 meal deal proved a hit, and Home Depot Inc. was boosted by DIY-ers doing smaller projects. Last quarter, sales grew 2%, rebounding in July after a lull in June. That bodes well for the critical third-quarter.
“We were pleased to see the improved trend at the end of the quarter, particularly with the early sales performance related to the back-to-school selling season,” Conroy said.
Profits came slightly ahead of the company’s most optimistic expectations after tariff-related costs were lower than expected. For the year, Ross expects the trade policies will cost as much as 25 cents a share. Ross had fallen 4.4% this year through market close Thursday, worse than the 8.3% gain for the S&P 500 Index over that time.
