Ross Stores Reports Q1 Earnings, Provides Updated Fiscal 2024 Guidance

DUBLIN, Calif.--(BUSINESS WIRE)-- Ross Stores, Inc. (NASDAQ: ROST) reported robust financial results for the first quarter of fiscal 2024, which ended May 4, 2024. The company delivered better-than-expected earnings, driven by lower expenses, despite ongoing macroeconomic challenges. Following the positive earnings announcement, Ross Stores' stock price increased by 7.95% in after-market trading.

Key Financial Metrics

• Earnings Per Share (EPS): $1.46, compared to $1.09 in Q1 FY2023.
• Net Earnings: $488 million, up from $371 million in the same period last year.
• Sales: $4.9 billion, an 8% increase from $4.5 billion in Q1 FY2023.
• Comparable Sales: Increased by 3% year-over-year.

Operating Performance

Barbara Rentler, Chief Executive Officer, highlighted the company’s performance amidst economic headwinds: “Though we had hoped to do better, first-quarter sales were in line with guidance despite macroeconomic headwinds that continued to pressure our customers’ discretionary spending. Earnings results for the period were better-than-expected primarily due to lower expenses relative to our plan.”

• Operating Margin: Improved to 12.2%, up 205 basis points from 10.1% in Q1 FY2023. This improvement was driven by reduced distribution, incentive, and freight costs, partially offset by a planned decline in merchandise margin.

Share Repurchase Program

During Q1 FY2024, Ross Stores repurchased 1.9 million shares of common stock for $262 million. This was part of the company’s new two-year $2.1 billion authorization approved by the Board of Directors in March 2024. The company aims to repurchase $1.05 billion in common stock throughout fiscal 2024.

Fiscal 2024 Guidance

Second Quarter Guidance

Looking ahead, Ross Stores projects continued growth despite economic uncertainties. Rentler emphasized the importance of offering value to customers and maintaining tight inventory and expense management.

• Comparable Store Sales: Expected to increase by 2% to 3% for the 13 weeks ending August 3, 2024, building on a 5% gain in Q2 FY2023.
• Earnings Per Share: Projected between $1.43 to $1.49, up from $1.32 in Q2 FY2023.

Full Year Guidance

For the full fiscal year ending February 1, 2025, Ross Stores maintains its previous guidance, projecting stable growth despite a challenging economic landscape.

• Comparable Store Sales: Anticipated to grow by 2% to 3%.
• Earnings Per Share: Expected between $5.79 to $5.98, compared to $5.56 for the 53 weeks ended February 3, 2024. Fiscal 2023 included a benefit of approximately $0.20 from the 53rd week.

CEO Commentary

Rentler concluded, “Ongoing uncertainty in today’s macroeconomic and geopolitical environments, including prolonged inflation, continues to squeeze our low-to-moderate income customers’ purchasing power. As a result, we believe it is more important than ever to offer our customers the best-branded values possible. In addition, we will continue to manage inventory and expenses tightly to maximize sales and earnings growth over the balance of the year.”

Ross Stores' strong Q1 performance and positive outlook have boosted investor confidence, as reflected in the significant after-market stock price increase.