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Ross Q1 EPS beats expectations, raises FY'18 guidance

Ross Stores Inc.'s fiscal first-quarter EPS beat expectations and the company raised its full-year guidance as it booked benefits on U.S. federal tax reform.

The off-price retailer posted diluted EPS of $1.11 for the fiscal first quarter ended May 5, an increase from the 82 cents reported in the prior-year quarter. The S&P Capital IQ mean consensus estimate for GAAP EPS was $1.07.

Ross boosted its 2018 full-year guidance to a range of $3.92 to $4.05 per share, including benefits from tax reform. The company previously anticipated EPS in the range of $3.86 to $4.03.

Net earnings for the quarter jumped to $418.3 million from $321.0 million in the same quarter last year. Analysts expected $403.5 million, according to the mean consensus estimate compiled by S&P Capital IQ.

Net sales increased 9% to $3.59 billion from $3.31 billion in the same quarter last year. Comparable store sales grew 3% over the 13 weeks ended May 5.

"Despite unfavorable weather throughout the period, we achieved above-plan growth in both sales and earnings in the first quarter," Ross CEO Barbara Rentler said in a company statement.

Ross' fiscal first-quarter earnings include a 17 cent per share benefit from U.S. federal tax reform and a 2 cent per share benefit from "the favorable timing of packaway-related expenses" that the company said it expects will reverse in future quarters. Packaway inventory is the merchandise that off-priced retailers receive from manufacturers, then store in warehouses to sell during next year's season. The company did not elaborate on the nature of the expenses.

For the fiscal second quarter, ending Aug. 4, Ross expects same-store sales to increase 1% to 2% over the 13-week-period. EPS for the fiscal second quarter is anticipated at a range of 95 cents to 99 cents, including the benefit from lower taxes and a negative impact from the reversed packaway inventory expenses.