21 May Ross Stores Sees 17 Percent Q1 Gain
Ross Stores Inc. reported earnings per share for the 13 weeks ended May 1, 2021 grew 17 percent to $1.34 on net income of $476 million. This compares to $1.15 per share or net earnings of $421 million for the 13 weeks ended May 4, 2019. Sales totaled $4.5 billion, with comparable-store sales up a robust 13 percent versus 2019.
As previously announced, financial results and guidance throughout fiscal 2021 will be compared against fiscal 2019. Ross said it believes the significant impact from the extended closure of its operations in the spring of 2020, and the disruptions caused by COVID-19 throughout last year, make this a more relevant basis for comparison.
Barbara Rentler, CEO, commented, “First quarter sales significantly exceeded our expectations as we benefited considerably from a combination of government stimulus payments, ongoing vaccine rollouts, easing of COVID restrictions, and pent-up consumer demand. In addition, customers responded enthusiastically to the broad assortment of great bargains we offered throughout our stores. Operating margin of 14.2 percent was well above plan and slightly above 2019 as leverage from the strong comparable sales gains offset the expected expense pressures from higher freight and wages, as well as ongoing COVID-related operating costs.”
Board Approves New $1.5 Billion Stock Repurchase Program Through Fiscal 2022
The company’s Board of Directors authorized a new program to repurchase up to $1.5 billion of its common stock through fiscal 2022, with plans to buy back $650 million this year and $850 million in 2022.
Rentler noted, “The reinstatement of our share repurchase program reflects the current strength of our balance sheet, confidence in the company’s ability to generate excess cash after funding our growth and other capital needs of the business, and our long-standing commitment to enhancing stockholder value and returns.”
Fiscal 2021 Guidance
Looking ahead, Rentler said, “Our results and the clear improvement in the macroeconomic environment make us optimistic about our prospects for the balance of the year. That said, it is difficult to precisely predict the lasting impact from the factors that benefited our first-quarter sales results, especially the recent government stimulus payments. While we hope to do better, we are forecasting same-store sales to be up 5 percent to 7 percent for the 13 weeks ending July 31, 2021 versus the same period in 2019. Second-quarter 2021 earnings per share are projected to be $0.80 to $0.89, versus $1.14 in fiscal 2019. For the 52 weeks ending January 29, 2022, we are planning annual comparable-store sales gains of 7 percent to 9 percent versus 2019 and earnings per share of $3.93 to $4.20. Guidance for both periods reflects our expectation for increased freight costs, higher wages, and COVID-related expenses.”
Rentler concluded, “Over the longer term, we remain confident about our opportunity to gain market share as we expect to benefit significantly from a favorable competitive climate given a large number of retail store closures and bankruptcies in recent years. This, along with consumers’ heightened focus on value and convenience, bodes well for our ability to achieve solid results into the future.”