Ross Stores reported Q1 earnings and sales that topped Street estimates with comp sales that beat pre-pandemic levels.
The off-pricer reported net income of $476 million, with earnings per share of $1.34 per share, for the quarter ended May 1, up from $421 million, or $1.15 per share, in the same period in 2019. Analysts had expected earnings per share of $0.88. (The company said its financial results and guidance throughout fiscal 2021 will be compared against fiscal 2019 due to the extended COVID-related store closings in 2020. Ross posted a loss of $305.8 million in the first quarter of 2020)
Sales more than doubled to $4.52 billion, compared with $1.84 billion in the first quarter of 2019, and beating estimates for $3.87 billion. Comparable store sales were up 13% versus the same quarter in 2019.
Ross cited a combination of government stimulus payments, ongoing vaccine rollouts the easing of COVID restrictions and pent-up consumer demand for its sales increase.
“In addition, customers responded enthusiastically to the broad assortment of great bargains we offered throughout our stores,” said CEO Barbara Rentler. “Operating margin of 14.2% 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.”
Earlier this year, Ross said it planned to open 40 Ross Dress for Less and 20 dd’s Discounts locations in fiscal 2021. Looking ahead, Rentler was largely optimistic.
“Our results and the clear improvement in the macroeconomic environment make us optimistic about our prospects for the balance of the year,” she said.
“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 the large number of retail store closures and bankruptcies in recent years,” she said. “This, along with consumers’ heightened focus on value and convenience, bodes well for our ability to achieve solid results into the future.”
She added a cautious note.
“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,” Rentler said.
The company currently operates 1,589 Ross Dress for Less locations in 40 states, the District of Columbia, and Guam. It also operates 277 dd’s Discounts stores.
For its full fiscal year, which ends on Jan. 29, 2022, Ross is forecasting comparable sales will grow between 7% and 9% compared with 2019 levels.