To The Moon

Shares of Ross Stores Inc. raced higher after hours on Thursday after the discount retailer raised its full-year profit forecast and reported third-quarter results that topped expectations, despite higher prices and expected markdowns for the holiday season.

“We continue to expect a very promotional holiday selling season and ongoing inflationary headwinds to pressure our low-to-moderate income customers,” Chief Executive Barbara Rentler said in a statement. “That said, we face our easiest sales and earnings comparisons in the fourth quarter and are raising our guidance given our third quarter sales momentum and improved holiday assortments.”

Rentler said she now expected the off-price clothing and home-décor chain to report full-year earnings per share of $4.21 to $4.34, compared with an earlier forecast for a range of $3.84 to $4.12. Analysts polled by FactSet expected full-year earnings per share of $4.03, on revenue of $18.2 billion, with a 6.2% drop in same-store sales.

Rentler said she expected fourth-quarter same-store sales to be flat to down 2%, when compared with a 9% bump in the same quarter last year. She said she expected earnings per share of between $1.13 to $1.26. Those forecasts, too, were above FactSet estimates for a same-store sales decline of 4.6% earnings of $1.13 cents a share.

For the third quarter, Ross reported third-quarter net income of $342 million, or $1.00 a share, compared with $385 million, or $1.09 a share, in the same quarter last year.

Revenue of $4.6 billion was largely the same as the prior-year quarter. Same-store sales fell 3%, after a big gain during the same quarter last year.