Ross Stores, Inc.
CEO : Ms. Barbara Rentler
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2024 Q3 | 3.0% YoY | -327.3% | -329.9% | 2024-11-21 |
Barbara Rentler says,
Executive Leadership Transition
- Jim Conroy will join Ross Stores as CEO-elect next month, with the transition period ending on February 2, 2025, when he will assume the CEO role.
- The current CEO will transition to an advisory role at the beginning of fiscal 2025, supporting merchandising strategies through March 2027.
Third Quarter Financial Performance
- Total sales increased to $5.1 billion, up from $4.9 billion in the previous year.
- Comparable store sales saw a modest increase of one percent, despite challenges.
- Operating margin improved by 75 basis points to 11.9% from 11.2% last year due to lower freight and distribution costs.
Earnings and Net Income
- Earnings per share for the quarter rose to $1.48 from $1.33 in the prior year.
- Net income increased to $489 million, compared to $447 million in the previous year.
- For the year-to-date period, EPS reached $4.53, up from $3.74 last year.
Regional and Sector Performance
- Cosmetics, accessories, and children were the highest-performing merchandise categories.
- California and Texas were identified as the best-performing regions.
- DD’s Discounts outpaced Ross in terms of comparable store sales growth.
Inventory and Store Expansion
- Total consolidated inventories increased by nine percent, with average store inventories up by one percent.
- Packaway merchandise made up 38% of total inventory, down slightly from 39% last year.
- Ross Stores completed its 2024 expansion program, adding 43 new Ross stores and four DD’s Discount stores.
- Plans to close and/or relocate seven locations in Q4, aiming for a year-end total of 1,831 Ross and 354 DD’s Discount locations.
| Key Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Total Sales | $5.1 billion | $4.9 billion |
| Comparable Store Sales Growth | 1% | – |
| Operating Margin | 11.9% | 11.2% |
| Earnings Per Share | $1.48 | $1.33 |
| Net Income | $489 million | $447 million |
Adam Orvos says,
Q3 2024 Financial Performance
- Comparable store sales rose by one percent in the third quarter.
- Operating margin improved by 75 basis points, reaching 11.9%.
- Cost of goods sold decreased by 70 basis points.
- Buying efficiency improved by 65 basis points due to reduced incentives.
- Distribution and domestic freight costs fell by 50 and 40 basis points respectively.
- Occupancy costs increased by 25 basis points, and merchandise margin decreased by 60 basis points.
- SG&A costs improved by five basis points, driven by lower incentive costs.
Share Repurchase Activity
- 1.8 million shares repurchased in the third quarter for $262 million.
- On track for $1.05 billion in total stock repurchase for the fiscal year.
Q4 2024 Guidance
- Projected comparable store sales increase of two to three percent.
- Earnings per share (EPS) forecasted between $1.57 and $1.64, compared to $1.82 in the previous year’s fourth quarter.
- Guidance includes an approximately $0.03 per share unfavorable impact due to timing of packaway-related expenses.
Full-Year 2024 Outlook
| Metrics | 2024 Estimate | 2023 Actual |
|---|---|---|
| Earnings Per Share | $6.10 to $6.17 | $5.56 |
| Total Sales Decline | 1% to 3% | N/A |
| Operating Margin | 11.2% to 11.5% | 12.4% |
| Net Interest Income | $24 million | N/A |
| Weighted Average Diluted Shares Outstanding | 329 million | N/A |
Impact of Previous Year’s Extra Week
- The fourth quarter of 2023 and full-year results included an extra week, which boosted earnings by approximately $0.20.
- Last year’s extra week contributed $308 million to sales, impacting the comparability of year-over-year results.
Q & A sessions,
Assortment and Brand Strategy Adjustments
- Identified execution issues in certain business segments and are actively working on corrections.
- Missed volume opportunities due to delayed response to product perspective shifts.
- Emphasizing iterative improvements and customer feedback in brand strategy.
- Focus on strengthening gifting, cosmetics, and accessories during the holiday season.
Third Quarter Financial Performance
- Total sales increased to $5.1 billion from $4.9 billion in the prior year, with comparable store sales up 1%.
- Operating margin improved by 75 basis points to 11.9% from 11.2% last year.
- Earnings per share increased to $1.48 from $1.33 last year.
- Net income rose to $489 million compared to $447 million in the prior year period.
Fourth Quarter Guidance and Expectations
- Projected comparable store sales growth of 2% to 3%.
- Earnings per share expected to range between $1.57 and $1.64, compared to $1.82 in Q4 2023.
- Anticipated full-year earnings per share in the range of $6.10 to $6.17 versus $5.56 last year.
- Total sales are projected to decline by 1% to 3% due to last year’s extra week contribution.
Operational Adjustments and Challenges
- Weather impacts, such as Hurricane Lane and Hilton, affected Q3 comps by about 1%.
- Continuing efforts to fine-tune the mix of brands and value offerings to meet customer preferences.
- Focus on improving merchandise margin despite pressure from increased branded merchandise penetration.
Leadership Transition
- Jim Conroy to join as CEO-elect next month and assume the CEO role on February 2, 2025.
- Current leadership to transition into advisory roles to support Jim through March 2027.
- Management emphasizes the importance of having the right leader to drive future strategies.
No bad stock 