Ross Falls Most Since March as Retailers Cast Holiday Gloom

Ross Stores Inc. (ROST) joined retailers from Gap Inc. (GPS) to Macy’s Inc. (M) in forecasting a disappointing holiday-shopping quarter, citing heavy discounting and heightened competition.

Shares of Ross slumped 5.7 percent, the biggest decline since March 7, after the retailer of discount designer wear lowered its fourth-quarter profit outlook -- a revision that trailed analysts’ estimates.

Faced with wary shoppers and a shorter holiday season, retailers are piling on deals as they jockey for market share during the most important sales period of the year. With shoppers expected to visit fewer stores this holiday, sales are projected to advance 2.4 percent, the smallest increase since 2009, according to ShopperTrak, a Chicago-based researcher.

“We are up against our own challenging multiyear comparisons and an upcoming holiday season that we believe will be the most intensely competitive and promotional selling period in recent years,” Ross Chief Executive Officer Michael Balmuth said in a statement yesterday after the markets closed.

The trend is affecting retailers of all kinds. Gap, the biggest specialty-apparel retailer, yesterday maintained an annual profit forecast range signaling that the crucial holiday-season quarter may produce profit of 50 cents to 58 cents a share, falling short of analysts’ estimates of 69 cents a share. Macy’s and Best Buy Co. (BBY) have warned that profitability would come under pressure in the fourth quarter as they add deals and slash prices.

Photographer: David Paul Morris/Bloomberg

Pedestrians pass in front of a Ross Stores Inc. location in San Francisco. Close

Pedestrians pass in front of a Ross Stores Inc. location in San Francisco.

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Photographer: David Paul Morris/Bloomberg

Pedestrians pass in front of a Ross Stores Inc. location in San Francisco.

‘Cautious Outlook’

Ross, which owns off-price apparel and home fashion chains, said fourth-quarter profit will be as much as $1.01 a share, reduced from a previous forecast of a maximum of $1.03 a share. Analysts projected $1.08, on average.

The shares dropped to $75.67 at the close in New York. Gap tumbled 1.3 percent to $41.31.

Ross, based in Pleasanton, California, said comparable-store sales would increase by as much as 2 percent in the quarter, compared with a 5 percent increase last year.

“While we hope to do better, we believe it is prudent to adopt a more cautious outlook for the fourth quarter,” Balmuth said in the statement.

To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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