Ross Stores reported a sales decline and a net loss in its fiscal 2020 first quarter. Both sales and earnings reflect the closure of all Ross Dress for Less and DD’s Discounts locations starting on March 20 through the quarter end due to the ongoing spread of COVID-19 throughout the U.S.
On May 14, the company said it began a phased process of reopening stores on a market by market basis. This followed a careful review of current guidance from health officials and advisors, as well as federal, state, and local governments. Approximately 700 stores have reopened since, with the remaining stores expected to be reopened over the coming weeks.
For the first quarter ended May 2, 2020, the company reported a loss per share of $0.87, versus earnings per share of $1.15 for the prior year period. The net loss for the 2020 first quarter was $306 million, compared to net income of $421 million last year. Total first quarter sales were $1.8 billion, down from $3.8 billion in the prior year. Given that stores were open for less than seven weeks of the 13-week period, the company is not reporting comparable store sales.
First quarter 2020 results also include a one-time, non-cash inventory valuation charge of $313 million or $0.58 per share resulting from the extended period of store closures.
Barbara Rentler, CEO, Ross Stores, said, “Our first quarter results reflect the unprecedented impact the COVID-19 pandemic has had on our business, which led to the closure of all stores and our first quarterly operating loss in more than 30 years. Operating margin for the period was negatively affected by the significant revenue decline from stores being closed for approximately half of the quarter and the aforementioned one-time, non-cash inventory valuation charge.”
Rentler added, “In response to the economic disruption created by this global health crisis, we quickly took decisive actions to increase our liquidity and financial flexibility. These included drawing down $800 million under our revolving credit facility, completing a $2 billion public bond offering, suspending our stock repurchase program, and aggressively cutting costs throughout the company, including ongoing expenses and capital expenditures. Today we are announcing several additional actions, which include the suspension of our quarterly dividend program and reduced new store openings for the year.”
Looking ahead, Rentler said, “We have a deep bench of proven and experienced leaders throughout the business as well as a very strong financial foundation with over $3 billion in liquidity, which in addition to our cash balances includes a new $500 million revolving credit facility. All of this makes us confident in our ability to successfully navigate through these challenging times. We look forward to gradually reopening all of our stores fairly soon when we can return to our mission of providing compelling bargains in a safe environment for our associates and customers.”