Despite the elements and difficult retail environment, Ross Stores pulled off increases in the top and bottom lines in the first quarter.
In a Nutshell: While it battled unseasonable weather and a stormy retail landscape, Ross Stores Inc. scored strong earnings and sales gains in the first quarter of fiscal 2018. The company said the strongest merchandise category at Ross was men’s wear, while geographic trends were broad-based when normalized for weather. Operating margin for the period of 15.1% was down slightly from the prior year as an improvement in merchandise gross margins and favorable timing of packaway-related expenses were offset by higher freight costs and wage-related investments.
The company said its store expansion program is on schedule, with 23 new Ross Dress for Less and six dd’s Discounts locations opening in the first quarter. The retailer said it’s on track to open 100 locations in 2018, comprised of 75 Ross and 25 dd’s Discounts doors, while it plans to close or relocate about 10 older stores. At the end of the quarter, the company operated 1,432 Ross off-price stores and 219 moderate-priced dd’s Discounts units.
Sales: Sales for the first quarter ended May 5 rose 9 percent to $3.59 billion from $3.31 billion in the year ago period. Comparable store sales for the 13 weeks grew 3 percent over the three months ended May 6, 2017.
Earnings: Net earnings for the first quarter increased 30 percent to $418 million compared to $321 million in the prior-year period, including a benefit from recently enacted tax legislation. Earnings before taxes improved 8.8% to $542.48 million in the quarter from $498.48 a year earlier.
CEO’s Take: Barbara Rentler, CEO, said: “Despite unfavorable weather throughout the period, we achieved above-plan growth in both sales and earnings in the first quarter. For the 13 weeks ending August 4, 2018, we are forecasting same store sales to be up 1 percent to 2 percent over the 13 weeks ended August 5, 2017. Second quarter 2018 earnings per share are projected to be 95 cents to 99 cents, which includes the benefit from lower taxes… Based on our first quarter results and guidance for the second quarter, we now project earnings per share for the 52 weeks ending February 2, 2019 to be in the range of $3.92 to $4.05, which includes the benefit from lower taxes.”