Ross Stores has posted uplifts in both sales and profit for the second quarter despite the discount retailer being more exposed to the constrained consumer environment.

The company’s sales for the 13 weeks ended August 13 grew 7.1 per cent year-on-year to $5.3 billion and came off the back of an 8 per cent improvement in the first quarter. Comparable sales rose 4 per cent, beating guidance and surpassing the growth in the prior quarter.

Neil Saunders, MD of GlobalData, attributed the sales growth to new store openings and higher number of shoppers amid a continued trading down to value channels.

This is a good outcome in a somewhat more challenging retail market, especially as Ross is exposed to a more constrained consumer than rival off-price retailer, TJMaxx, Saunders continued.

Another factor that helped the retailer, according to the analyst, was an improvement and “de-junkification” of assortments in stores. Ross now carries more brands and less basic products, and there has also been a more recent focus to localize ranges, he added.

Loyalty to Ross is also strong at present, partly because there are more limited options in terms of where to find low-price bargains, Saunders elaborated.

On the bottom line, net income grew by 18.1 per cent supported by a higher margin than both last quarter and last year. 

The company maintains a cautious approach to its forecast, expecting comparable sales growth of 2 to 3 per cent for both the third and fourth quarters.

“Our low-to-moderate income customers continue to face persistently high costs on necessities, pressuring their discretionary spending,” said Barbara Rentler, CEO of Ross Stores. “In addition, our prior year sales comparisons become more challenging during the second half of the year amidst an external environment that is uncertain and volatile.”

Headquartered in Dublin, California, Ross operates more than 2100 Ross Dress for Less and DD’s Discounts stores across the country.