Ross Stores Inc. on Thursday reported better-than-expected first-quarter results, but the off-price retailer’s outlook for profit and same-store sales came up short, as higher prices for essentials continue to weigh on demand for clothing and home goods.
The company said it still expected full-year same-store sales to remain relatively flat. And it said it expected earnings per share of $4.77 to $4.99 — a bit more bullish than the company’s profit outlook in February. Still, Wall Street was looking for a bit more, anticipating earnings of $4.94 a share and a 0.7% same-store sales increase, according to FactSet.
“There remains a high level of uncertainty in today’s macro-economic and geopolitical environments,” Chief Executive Barbara Rentler said in a statement. “In addition, prolonged inflationary pressures continue to negatively impact our low-to-moderate-income customers’ discretionary spend.”
For the second quarter, Ross Stores
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said it also expected “relatively flat” same-store sales, with earnings of $1.07 to $1.14 a share. FactSet forecast earnings per share of $1.25 and same-store sales gains of 0.9%.
Shares fell 1.5% after hours on Thursday.
The company reported results as higher prices for basics continue to squeeze consumers and cut into spending on less-essential products like clothing and electronics, with Ross’ lower- and middle-income shoppers feeling the pain more. Earlier in the day, Walmart Inc.
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Chief Executive Doug McMillon said that higher grocery prices had raised bigger concerns about consumer demand during the year.
For its first quarter, Ross reported net income of $371 million, or $1.09 a share, compared with $338 million, or 97 cents a share, in the same quarter last year. Revenue crept higher to $4.49 billion, compared with $4.3 billion in the prior-year quarter. Same-store sales rose 1%.
Analysts polled by FactSet expected adjusted earnings per share of $1.06, on revenue of $4.48 billion and same-store sales growth of 0.7%.
