Off-pricer tops earnings expectations

The off-price segment continues to be one of the brightest spots in brick-and-mortar retail.



Ross Stores on Tuesday reported earnings per share for the fourth quarter ended January 28, 2017 of $.77, up 17% from the prior year, on net earnings that rose 14% to a better-than-expected $301 million. But the retailer offered a cautious outlook amid economic and industry challenges.



Ross’ sales quarter grew 8% to $3.5 billion. Same-store sales increased 4%.



For the full fiscal year, earnings per share rose 13% to $2.83, while net earnings increased 10% to $1.1 billion. Sales grew 8% to $12.9 billion, with same-store sales up 4%.



Ross also announced its board of directors authorized a two-year, $1.75 billion stock buyback program and a 19% increase in the company's quarterly dividend, to 16 cents a share.



“We are very pleased with our better-than-expected sales and earnings results for the fourth quarter and fiscal year, especially given our strong multi-year comparisons and the highly competitive and promotional holiday season,” Barbara Rentler, CEO, Ross Stores, which operates some 1,275 stores under the Ross and dd’s Discounts banners. “Fourth quarter operating margin grew 90 basis points to 13.6% up from 12.7% in the prior year. This improvement was mainly driven by our above-plan sales along with a favorable comparison of packaway-related costs versus last year’s fourth quarter. For the 2016 fiscal year, operating margin increased 40 basis points to a new record of 14.0%.”



Looking ahead, Rentler noted the chain faces ongoing uncertainty in the political, macro-economic, and retail climates, along with its own challenging sales and earnings comparisons.



“Thus, while we hope to do better, we believe it is prudent to remain somewhat cautious in planning our business for the 2017 fiscal year,” she said.



For the 53 weeks ending February 3, 2018, earnings per share are projected to be $3.02 to $3.15, up 7% to 11% from $2.83 in fiscal 2016. Incorporated in this guidance range is an estimated benefit to earnings per share of approximately $.08 from the 53rd week in fiscal 2017.



Same-store sales are forecast to grow 1% to 2%.