Skip to main content

Shares of Ross Stores Fall After CEO Cites Challenges in 2019

Shares of Ross Stores Inc. fell in after-hours trading Tuesday following comments by the retailer’s chief executive officer regarding challenges for 2019. Things weren’t helped by the recent underperformance in the women’s apparel category and a first-quarter EPS projection that was flat to the year-ago result or potentially less.

In a Nutshell: Ross Stores CEO Barbara Rentler, said regarding the company’s guidance for fiscal year 2019, “While we hope to do better, we continue to take a prudent approach to forecasting our business for 2019. Although we remain favorably positioned as an off-price retailer, we face our own difficult sales and earnings comparisons, a very competitive retail landscape and an uncertain macro-economic and political environment.”

That said, the company did beat Wall Street’s estimates for both earnings per share and revenues for the fourth quarter. The retailer is also still growing, with plans to open 100 new stores this year. The new-store tally includes 75 more doors for Ross Dress for Less and 25 dd’s Discount sites.

Sales: For the fourth quarter ended Feb. 2, net sales rose 1 percent to $4.11 billion from $4.07 billion. Comparable-store sales rose 4 percent, which was on top of last year’s 5 percent comps gain.

Earnings: The company said net income fell 2 percent to $441.7 million, or $1.20 a diluted share, from $450.7 million, or $1.19, a year ago.

Wall Street was expecting EPS of $1.13 on revenues of $4.05 billion.

For the year ending Feb. 1, 2020, the company guided EPS at between $4.30 and $4.50, up from $4.26 in fiscal year 2018. For the first quarter, EPS was projected at between $1.05 to $1.11, compared with $1.11 for the first quarter in fiscal year 2018. First quarter comps are expected to be flat to up 2 percent, due to the underperformance in women’s apparel.

Shares of Ross Stores fell 3.3 percent to $91.07 in early after-hours trading. The company reported results after the equity markets ended the day’s trading sessions.

CEO’s Take: “Sales and earnings for both the fourth quarter and fiscal year outperformed our expectations. We achieved these results despite our own challenging multi-year comparisons and weakness in our ladies apparel business during the holiday season,” Rentler said.