PLEASANTON (dpa-AFX) - Ross Stores Inc. (ROST) on Thursday reported an increase in profit for the second quarter, as the discount apparel retailer's revenues grew 9 percent, with both earnings and revenue topping Wall Street estimates.
However, shares of the company slipped about 10 percent in extended trading hours after the company detailed a mediocre outlook and said the second half of the year would be 'challenging.'
Pleasanton, California-based Ross Stores second-quarter profit rose to $258.6 million or $0.63 per share from $239.6 million or $0.57 per share last year. On average, twenty-six analysts polled by Thomson Reuters expected earnings of $0.62 per share for the quarter.
Ross Stores, which owns the Ross Dress for Less and Dd's Discounts chains, said sales for the second quarter grew 9 percent to $2.97 billion from $2.73 billion a year ago. Twenty-five analysts had a consensus revenue estimate of $2.94 billion for the second quarter.
Same-store sales for the quarter increased 4 percent.
CEO Barbara Rentler said the company benefited from higher merchandise margin and tight expense control.
Looking forward, the company expect earnings in the range of $0.48 to $0.50 per share for the third quarter and $0.60 to $0.63 per share for the fourth quarter. Analysts currently expect earnings of $0.50 per share for the third quarter.
For the fiscal year 2015, the company has now forecast earnings of $2.40 to $2.45 per share, up from its prior guidance of $2.36 to $2.44 per share. Analysts currently expect earnings of $2.45 per share for 2015.
Rentler said, 'While we hope to do better, we are maintaining a cautious outlook for the second half when we face more challenging sales and earnings comparisons. In addition, the macro-economic and retail landscapes remain uncertain.'
ROST closed Thursday's trading at $55.25, down $0.45 or 0.81%, on the Nasdaq. The stock plummeted $5.25 or 9.50% in after-hours trade.
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