Ross Stores Cautious Ahead as Q4 Profit Falls

ross dress for less springPleasanton, CA—Ross Stores reported late Thursday a 7.9% drop in its fourth-quarter profit, weighed down by lower sales and promotions.

For the quarter ended Feb. 1, net earnings reached $217.95 million, or $1.02 a share, compared with $236.6 million, or $1.07 a share, in the same period of the prior year. That met analysts’ average estimate for $1.02 a share.

Sales declined to $2.74 billion from $2.76 billion last year, while 28 analysts expected sales of $2.75 billion

Sales edged down 0.7% to $2.74 billion from $2.76 billion last year, missing analysts’ sales estimate for $2.75 billion. Comparable store sales were up 2%.

Outlook: ‘Somewhat Cautious’

Gross margin contracted 50 basis points (bps) to 27.3% “primarily due to lower sales, offset by an increase in cost of sales, as a percentage of revenue.”

Vice chairman/CEO Michael Balmuth said: “Our fourth quarter sales performed in line with our guidance, with earnings that were slightly better-than-expected primarily due to above-plan merchandise gross margin. Despite a very promotional retail environment throughout the holiday season, customers responded favorably to the compelling bargains we offered on a wide assortment of fresh and exciting name brand fashions and gifts.”

During the full year, however, earnings increased 6.4% to $837.3 million from $786.8 million in the prior year period, while sales reached $10.23 billion, up 5.2% from $9.72 billion.

The company expects fiscal 2014 earnings per share to be $4.05 to $4.21, up from $3.88 in fiscal 2013, and sales are forecast to grow 1% to 2%.

“As we enter 2014, in addition to our own challenging multi-year sales and earnings comparisons, we also continue to face ongoing uncertainty in the macro-economic and retail climates,” Balmuth added. “While we remain well-positioned as an off-price retailer, these likely headwinds have prompted us to stay somewhat cautious in our outlook.”


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