Ross Stores Stock Jumps on Earnings Beat, Raised Guidance

Trending 3 weeks ago

Key Takeaways

  • Ross Stores hit profit and income forecasts and raised its guidance arsenic nan off-price retailer reduced costs.
  • CEO Barbara Rentler said nan results came moreover arsenic nan institution faced macroeconomic headwinds that squeezed its lower-income customers.
  • Rentler noted Ross Stores would negociate inventory and expenses "tightly" passim nan year.

Shares of Ross Stores (ROST) surged complete 8% successful early trading Friday arsenic nan off-price apparel and location equipment retailer posted better-than-anticipated results and raised its guidance arsenic it trim costs.

Ross Stores reported first-quarter earnings per stock (EPS) of $1.46, up from $1.09 a twelvemonth ago. Revenue gained 8% from nan year-ago 4th to $4.86 billion. Both exceeded forecasts. Same-store sales roseate 3%.

Cost-Cutting Measures Boost Profit

CEO Barbara Rentler said that while nan retailer had hoped to do better, nan capacity was successful statement pinch its expectations “despite macroeconomic headwinds that continued to unit our customers’ discretionary spending.” She added nan betterment successful profit stemmed chiefly from reduced costs. arsenic nan institution slashed expenses by $1 cardinal from nan 4th quarter.

Operating margin jumped 205 basis points (bps) to 12.2%, which Rentler attributed chiefly to “lower distribution, incentive, and freight costs that were partially offset by nan planned diminution successful merchandise margin.” 

Managing Inventory and Expenses 'Tightly'

Rentler said that continued uncertainty successful nan macroeconomic and geopolitical environments, including inflationary pressures, “continue to compression our low-to-moderate income customers’ purchasing power.” Rentler said because of that, nan institution would support managing inventory and expenses “tightly” to maximize income and net maturation nan remainder of nan year. 

She said that based connected first-quarter results and guardant guidance, Ross Stores boosted its full-year EPS outlook to a scope of $5.79 to $5.98, up from nan erstwhile estimate of $5.64 to $5.89.

Ross Stores shares were up 8.3% astatine $142.74 arsenic of astir 10:20 a.m. ET Friday and person gained astir 3% since nan commencement of nan year.


Source investopedia