8:02 AM, Aug 23, 2019 — Ross Stores (ROST), the operator of off-price retail apparel and home fashion stores, reported fiscal second-quarter results that outpaced forecasts but its earnings guidance for the next three months lagged the market’s expectations amid the proposed 10% tariffs on China, including apparel and footwear.
Revenue increased to $3.98 billion during the three months that ended August 3, from $3.74 billion a year ago, and also beat the $3.96 billion average analyst estimate compiled by Capital IQ. Comparable store sales were also higher by 3% year-on-year, the Dublin, California-based firm said in a statement late on Thursday.
In line with stronger sales, earnings per share climbed to $1.14, from $1.04 a year earlier, surpassing the market consensus of $1.11. The company said its operating margin of 13.7% was “better than expected,” mainly due to favorable timing of expenses that are set to reverse in the second half.
“We delivered respectable gains in both sales and earnings for the second quarter,” Chief Executive Officer Barbara Rentler said in the statement. “While our Ladies business continued to trail the chain, trends in this important area showed some improvement during the period.”
While the firm continues to forecast same-store sales gains of 1% to 2% in its third and fourth quarters, it has “updated” earnings guidance for the balance of the year, given the recent announcement in the US of 10% import tariffs on goods sourced from China, including apparel and footwear.
If sales perform in line with its guidance, including a “slight” impact from the recently announced tariffs, the group expects earnings to come in the range of $0.92 per share to $0.96 per share in its third quarter, lagging the $0.98 per share analyst forecast but higher than a year ago.
In the following quarter, the firm is projecting earnings per share of between $1.20 to $1.25, which is in line with the Street’s view of $1.24.
Based on its first-half results and second-half guidance, the company anticipates fiscal full-year earnings of $4.41 per share to $4.50 per share, in line with the Capital IQ analyst estimate of $4.50, but tighter than a previous forecast — set out in first-quarter results — of $4.38 to $4.52.
Companies: Ross Stores, Inc.
Price: 105.00 Price Change: -2.40 Percent Change: -2.23