Ross Stores reported an increase in comparable store sales of 5% in Q3 2023, as total sales in the quarter totalled $4.9bn – up from $4.6bn in Q3 2022.
The discount chain currently has 1,765 locations across the US and 347 Dd’s Discounts stores, which focus on more heavily-discounted products. During Q3 2023, the company opened 43 new Ross Stores and eight Dd’s Discounts.
The retailer’s CEO Barbara Rentler said in a statement: “We are pleased that both sales and earnings outperformed our expectations for the quarter as customers responded favourably to the terrific values we offered throughout our stores. Operating margin for the period was 11.2%, up from 9.8% last year, as leverage from the same store sales gain and lower freight costs was partially offset by higher incentives and store wages.”
In Q2, Ross Stores increased its sales and earnings forecast for fiscal year 2023 as it exceeded expectations, with an analyst telling Just Style it is a good signal the market is starting to “pick up”.
Key statistics for Ross Stores Q3 2023
- Net income for Q3 2023 was $447m, up from $342m in Q3 2022
- Total sales rose from $4.6bn in Q3 2022 up to $4.9bn in Q3 2023
- Operating margin for the quarter was 11.2%, up from 9.8% in 2022
Speaking on a call with investors as the results were announced, Rentler explained that same-store sales gain and lower freight costs had been partially offset by higher incentives and store wages. She added that the strongest performing parts of the businesses included accessories and shoes, as well as cosmetics.
Rentler attributed much of Ross Stores’ success to the financial pressure currently faced by US consumers. Speaking on the call she said: “Whenever you can give the customer a better branded bargain at an unbelievable value she’s going to respond which is why we’re highly focused on that and that would therefore take us through stronger market share.”
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At Dd’s Discounts, Rentler said that these consumers have also responded favourably to its value offering, during a time a of financial pressure, with improved sales in Q3.
Looking ahead to 2024
Speaking on a call with investors as the results were announced, Rentler said: “Despite all the challenges in the external environment, we are encouraged by our healthy above-plan results to date this year. We also remain confident in the resilience of the off-price sector and our ability to operate successfully within it, especially given consumers’ heightened focus on value and convenience.”
In a statement, Rentler added: “We continue to face macroeconomic volatility, persistent inflation, and more recently, geopolitical uncertainty. In addition, we are up against our most difficult quarterly sales comparisons versus 2022 in the fourth quarter. As a result, we believe it is prudent to maintain a cautious approach in forecasting our business and are reiterating our prior sales guidance for the fourth quarter.
Rentler concluded: “Despite the current macroeconomic and geopolitical uncertainties, we remain confident in the resilience of the off-price sector and our ability to operate successfully within it. Our business model offers shoppers both value and convenience, and we believe consumers’ heightened focus on these important factors bodes well for us for the foreseeable future.”
In August 2023, value retail group TJX Co., the parent company of T.J. Maxx, Marshalls, TK Maxx and HomeGoods, also achieved an increase in sales and profits compared to the previous year, which it said was driven entirely by customer traffic.