PLEASANTON, Calif. (AP) -- Traffic at Ross Stores was healthy during the third quarter as shoppers looking for bargains drove net income up by 11 percent, but shares slide nearly 5 percent Thursday on a weak holiday forecast.
The holiday season can make up 40 percent of a retailer's annual revenue.
The company said that it is difficult to predict how consumers will behave heading into the season because of the economy and it doesn't know how marketing by rivals will affect its sales.
"While we hope to do better, we believe it is prudent to maintain our prior fourth quarter guidance," CEO Michael Balmuth said.
The company predicts fourth-quarter earnings of between 99 cents and $1.04 per share. Analysts polled by FactSet predict earnings of $1.04 per share.
Shares of Ross Stores declined $2.60, or 4.7 percent, to $52.53 in morning trading. The stock has traded in a 52-week range between $41.99 and $70.82.
Fourth-quarter revenue at stores open at least a year is expected to rise 1 percent to 2 percent. In the prior-year period, the company reported a 7 percent increase in the figure. It's a key indicator of a retailer's health because it excludes volatility from recently opened or closed locations.
For the third quarter, which ended Oct. 27, Ross Stores earned $159.5 million, or 72 cents per share. A year earlier it earned $144 million, or 63 cents per share.
Revenue rose to $2.26 billion, up 10 percent from $2.05 billion.
The quarterly results met Wall Street's expectations.
Revenue at stores open at least a year increased 6 percent, compared with a 5 percent gain a year ago.
Ross Stores Inc., based in Pleasanton, Calif., runs 1,097 Ross Dress for Less locations in 33 states, the District of Columbia and Guam.