Ross Stores Inc. saw year-over-year declines in net earnings, sales, and same-store sales in a challenging first quarter of fiscal 2022.
The off-price retailer reported earnings per share (EPS) for the 13 weeks ended April 30, 2022, of $0.97 on net earnings of $338 million. The EPS includes an approximate benefit of $0.06 per share from favorable timing of expenses that are expected to reverse in subsequent quarters.
These results compare to $1.34 per share on net income of $476 million for the 13 weeks ended May 1, 2021. Net income declined approximately 29% year-over-year.
Sales for the first quarter of 2022 were $4.3 billion, down 4% from $4.5 billion in the prior-year period. Same-store sales declined 7%, on top of a 13% gain in the first quarter of 2021 compared to the same quarter in 2019.
“We are disappointed with our lower-than-expected first-quarter results. Following a stronger-than-planned start early in the period, sales underperformed over the balance of the quarter,” said Barbara Rentler, CEO, Ross Stores. “We knew fiscal 2022 would be a difficult year to predict, especially the first half when we were facing last year’s record levels of government stimulus and significant customer pent-up demand as COVID restrictions eased. The external environment has also proven extremely challenging as the Russia-Ukraine conflict has exacerbated inflationary pressures on the consumer not seen in 40 years.”
Looking ahead, based on first quarter results and the current uncertain macro-economic and geopolitical environment, Ross Stores is adopting a more conservative fiscal outlook for the balance of the year. The company is now forecasting same-store sales for the second quarter of fiscal 2022 to decrease 4% to 6% on top of a 15% gain in the prior-year period, with earnings per share projected to be $0.99 to $1.07, compared to $1.39 in the previous year’s second quarter.
For the full year ending January 28, 2023, Ross Stores now forecasts same-store sales to decline 2% to 4%, compared to a 13% gain in fiscal 2021. Earnings per share for fiscal 2022 are projected to be $4.34 to $4.58, compared to $4.87 in the prior fiscal year.
“While the landscape in early 2022 has been tougher than expected and the year may prove to be more difficult than initially anticipated, we remain confident in our ability to successfully navigate through this period.,” said Rentler. “We have shown in the past that our value-focused business model has served us well in both healthy and more uncertain external climates and believe the current challenging conditions will be no different.”
Ross Stores to open 100 new stores in 2022 Ross Stores still appears to be on track with plans to open 100 new stores this fiscal year. The off-price retailer opened 22 Ross stores and eight dd's Discounts stores in 15 different states and Guam in February and March 2022.
As of March 2022, Ross operates a combined total of 1,952 Ross and dd's Discounts locations (1,649 Ross stores, 303 dd Discounts stores) in 40 states, the District of Columbia, and Guam. Headquartered in Dublin, Calif., Ross had fiscal 2021 revenues of $18.9 billion.