Ross Stores sales, earnings beat Street; to continue aggressive expansion

Ross Stores reported a strong fourth quarter with earnings well above analysts’ estimates. 

On an earnings call, executives from the off-price giant said the company plans to add about 100 stores this year, consisting of approximately 75 Ross and 25 dd's Discounts locations.

Ross reported fourth-quarter net earnings of $456.1 million, or $1.28 per share, versus $441.7 million, or $1.20 per share, in the year-ago quarter. Analysts had expected earnings of $1.25 per share.

Sales rose to $4.41 billion from $4.11 billion. Analysts had expected sales of $4.36 billion. Same-store sales increased 4%. The fourth-quarter operating margin of 13.3% was slightly better than expected, driven by higher merchandise margin.

For the 2019 fiscal year, earnings per share increased 8% to $4.60, compared to $4.26 in the prior year. Net income for the period was $1.7 billion, up from $1.6 billion last year. Sales for the 2019 year grew 7% to $16.0 billion.

“As we enter 2020, we continue to face our own strong long-term sales and earnings results plus ongoing uncertainty in the macro-economic, political, and retail landscapes,” said CEO Barbara Rentler. “Therefore, while we hope to do better, we believe it is prudent to maintain a somewhat cautious outlook when projecting our performance for the coming year.”

The retailer’s guidance also does not reflect the “potential unknown impacts” from the evolving coronavirus outbreak. 

“While we are closely monitoring the situation, there remains a high level of uncertainty over supply chain disruptions in China,” Rentler said. “In addition, it is unclear how a further possible spread of the coronavirus could negatively impact U.S. consumer demand.”

Ross operates 1,546 locations in 39 states, the District of Columbia, and Guam. It also operates 259 dd’s Discounts stores.