Here’s Why Ross Stores (ROST) Stock Popped Today – August 18, 2017


Shares of Ross Stores, Inc. (ROST Free Report) jumped 10.67% in trading on Friday, closing at $59.02 per share, after reporting better-than-expected second quarter fiscal 2017 results.

Ross reported earnings of $0.82 per share, beating the Zacks Consensus Estimate of $0.76. Earnings grew 15.49% year-over-year. The company also reported revenue of $3.431 billion, surpassing our estimate of $3.370 billion and growing 7.88% year-over-year.

The company also stated that comparable store sales rose 4%. Ross Stores expects to earn between $0.64 and $0.67 per share during the third quarter.

This positive earnings report comes in sharp contrast to falling retail stocks resulting from poor earnings and sales this week. Today, Foot Locker (FL Free Report) fell 28% after missing analyst expectations, dragging other athletic retailers along with it. L Brands (LB Free Report) , the owner of Victoria’s Secret, also tumbled on Wednesday after reporting disappointing sales and a weak outlook for the third quarter.

Ross owes its success partially to its strategy of being an off-price retailer. The company offers designer and brand name products at deeply discounted rates. This has attracted consumers to its 1,340 U.S. stores, allowing Ross to succeed despite e-commerce retailer threats, like from (AMZN Free Report) .

TJX Companies Inc (TJX Free Report) , which owns T.J. Maxx, Marshalls, and the popular HomeGoods, also reported second quarter earnings this week that beat our estimates. The success of both these off-price companies demonstrates that department stores like Macy’s (M Free Report) and Nordstrom (JWN Free Report) aren’t doing well just because of online competition, but because consumers want quality products at low prices.

ROST remains a Zacks Rank #3 (Hold), with a VGM score of ‘A.’

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