Off-price retailer Ross Stores Inc. posted sales and earnings gains in its fiscal first quarter and upped its guidance for the year.
In a Nutshell: Ross Stores delivered sales gains at the high end of its guidance, despite what it said was continued underperformance in women’s apparel. Operating margin of 14.1 percent was down from the prior year, but above plan mainly due to higher merchandise margin. However, the improvement was outweighed by increases in freight and wage costs and the timing of packaway-related expenses that benefited the prior-year period.
Sales: Sales for first quarter ended May 4 grew 6 percent to $3.8 billion from $3.59 billion in the year-ago period. Comparable store sales in the three months were up 2 percent compared to a year earlier. The company, which operates the Ross Dress for Less off-price apparel and home fashion chain, and the dd’s Discounts chain of moderately priced name brand apparel, accessories, footwear and home fashions, had 1,745 stores open at end of the quarter compared to 1,651 units a year earlier.
Earnings: Net earnings for the first quarter ended May 4 rose 0.7 percent to $421.14 million compared to $418.25 million in the prior-year period.
CEO’s Take: Barbara Rentler, CEO, said: “For the 13 weeks ending Aug. 3, 2019, we are forecasting same store sales to be up 1 percent to 2 percent on top of a 5 percent gain last year. Second quarter 2019 earnings per share are projected to be $1.06 to $1.11, up from $1.04 in the prior year period. Based on our first quarter results and guidance for the second quarter, we now project earnings per share for the 52 weeks ending Feb. 1, 2020 to be in the range of $4.38 to $4.52, up from $4.26 last year, which included a 7 cents per share benefit in the fourth quarter from the favorable resolution of a tax matter.”