Ross Stores rolled through the second quarter, growing both sales and earnings. The off-price retailer also updated its earnings guidance with a cautious eye on the new tariffs on goods sourced from China.
Net earnings grew to $413 million, compared to $389 million in the prior year. Earnings per share for the second quarter ended August 3, 2019 came in at $1.14, up from $1.04 last year. Sales rose 6% to $4 billion, with comparable store sales up 3% on top of last year’s strongest quarterly comparison of 5%.
Barbara Rentler, CEO, Ross Stores, said, “We delivered respectable gains in both sales and earnings for the second quarter. While our ladies business continued to trail the chain, trends in this important area showed some improvement during the period. Operating margin of 13.7% was better than expected, mainly due to favorable timing of expenses that are expected to reverse in the second half.”
Looking ahead, Rentler said, “Our sales outlook remains unchanged. We continue to forecast same store sales gains of 1% to 2% for both the third and fourth quarters. However, given the recent announcement of 10% tariffs on goods sourced from China, including apparel and footwear, we have updated our earnings guidance for the balance of the year.”
Rentler added, “If sales perform in line with this guidance, including a slight impact from the recently announced tariffs, earnings per share for the third quarter ending November 2, 2019 are forecasted to be $.92 to $.96, compared to $.91 a year ago. For the fourth quarter ending February 1, 2020, earnings per share are projected to be $1.20 to $1.25 versus $1.20 in the prior year. As a reminder, last year’s fourth quarter included a one-time per share benefit of $.07 related to the favorable resolution of a tax matter. Based on our first half results and second half guidance, earnings per share for fiscal year 2019 are now planned to be in the range of $4.41 to $4.50.”