Ross Stores posts solid Q2 but sounds warning on tariff impact
Ross Stores’ second-quarter earnings and sales exceeded Street expectations, but the chain narrowed its full-year guidance on tariff concerns.
The off-price retailer reported net earnings of $412.72 million, or $1.14 a share, compared with $389.4 million, or $1.04 a share, in in the year-ago period. Analysts were expecting $1.11 a share.
Sales rose 6% to $4.0 billion. Analysts had expected $3.96 billion. Same- store sales rose 3%.
“We delivered respectable gains in both sales and earnings for the second quarter,” said CEO Barbara Rentler. “While our ladies business continued to trail the chain, trends in this important area showed some improvement during the period. Operating margin of 13.7% was better than expected, mainly due to favorable timing of expenses that are expected to reverse in the second half.”
The company opened a net of 27 stores in the quarter. It remains on track to add a total of about 100 locations this year.
Ross said its sales outlook remains unchanged. It continues to forecast same-store sales gains of 1% to 2% for both the third and fourth quarters. But, citing the recent announcement of 10% tariffs on goods sourced from China, including apparel and footwear, the chain narrowed its earnings guidance for narrowed its earnings guidance to the range of $4.41 to $4.50 per share from the previous range of $4.38 to $4.52 per share.
“We believe the additional tariffs may result in increased uncertainty in the apparel and footwear market,” she said. “Historically, disruptions like this have benefited off-price. As always, our focus will continue to be offering our customers the most compelling values possible throughout our stores.”