Ross Stores Stock Jumps 8.34% on Earnings Beat

Ross Stores ( ROST ) has reported better-than-anticipated results and raised its guidance as it reduced costs. The off-price apparel and home goods retailer beat profit and sales forecasts, despite facing macroeconomic headwinds that squeezed its lower-income customers. CEO Barbara Rentler said the results came even as the company faced macroeconomic headwinds that squeezed their discretionary spending.

Ross Stores( ROST ) reported first-quarter earnings per share (EPS) of $1.46, up from $1.09 a year ago, and revenue gained 8% from the year-ago quarter to $4.86 billion. Both exceeded forecasts. Same-store sales rose 3%. The improvement in profit stemmed primarily from reduced costs, as the company slashed expenses by $1 billion from the fourth quarter. Operating margin jumped 205 basis points to 12.2%, attributed mainly to lower distribution, incentive, and freight costs that were partially offset by the planned decline in merchandise margin.

Ross Stores ( ROST ) CEO Barbara Rentler said that continued uncertainty in the macroeconomic and geopolitical environments, including inflationary pressures, "continue to squeeze our low-to-moderate income customers' purchasing power." She said the company would keep managing inventory and expenses "tightly" to maximize sales and earnings growth the rest of the year. Based on first-quarter results and forward guidance, Ross Stores boosted its full-year EPS outlook to a range of $5.79 to $5.98, up from the previous estimate of $5.64 to $5.89.

Ross Stores shares ( ROST ) is up 8.3% at $142.72 as of the time of writing on Friday and have gained about 3% since the start of the year. The company's results echo that of its off-price peer TJX Cos, which posted better-than-expected first-quarter results and raised its annual profit forecast helped by easing costs and strong demand. With a Relative Strength Index (RSI) of 68.19, the stock is poised for further gains.