Ross Stores reports earnings uptick in first quarter, strong men's sales
today May 24, 2019
Ross Stores on Thursday said net earnings increased in the first quarter ending May 4, as sales increased by 6 percent on the back on strong men's sales, offsetting the retailer's struggling ladies category.
The Dublin, California-based company said net earnings for the 2019 first quarter were $421 million compared to $418 million in the prior year, while earnings per share registered at 1.15, up from $1.11.
Sales for the period grew 6% to $3.8 billion, with comparable store sales up 2%, pushed on by an increase in the size of the average basket, said the company's CFO, Michael Hartshorn in an earnings conference call on Thursday.
Men's sales increased the most in merchandise terms, added Ross Stores CEO, Barbara Rentler, offsetting the company's struggling women's division.
"For the first quarter, we delivered sales gains at the high end of our guidance as well as better-than-expected earnings per share growth despite continued underperformance in ladies apparel," said Rentler.
"While operating margin of 14.1% was down from the prior year, it was above plan mainly due to higher merchandise margin. As expected, this improvement was more than offset by increases in freight and wage costs and the timing of packaway-related expenses that benefited the prior year period.”
Looking ahead, Ross Stores said it is forecasting same store sales to be up 1% to 2% for the second quarter, on top of a 5% gain last year. Second quarter earnings per share are projected to be $1.06 to $1.11, up from $1.04 in the prior year period, the company added.
For 2019, the company said its expansion program is on schedule with the addition of 22 new Ross and 6 DD's Discounts locations in the first quarter.
"We remain on track to open a total of approximately 100 locations in 2019 comprised of 75 Ross stores and 25 DD's Discounts," said Rentler.
The company projected earnings per share for the 52 weeks ending February 1, 2020 to be in the range of $4.38 to $4.52, up from $4.26 last year.
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