Ross Stores ((ROST)) has held its Q4 earnings call. Read on for the main highlights of the call.
Ross Stores’ recent earnings call painted a picture of solid performance in fiscal 2024, marked by robust sales growth and strategic expansion initiatives. However, the company expressed caution moving forward due to softening sales trends and external macroeconomic pressures. Despite being well-positioned with a strong cash reserve and ongoing store expansion, the outlook for fiscal 2025 remains cautious.
Strong Fourth Quarter Sales Performance
Sales for the fourth quarter of 2024 reached $5.9 billion, with a comparable store sales gain of 3%, building on a 7% gain from the same period last year. This performance underscores the company’s ability to maintain growth momentum in a challenging retail environment.
Fiscal Year 2024 Revenue and Earnings Growth
Ross Stores reported earnings per share of $6.32 for fiscal 2024, up from $5.56 the previous year. Net income increased to $2.1 billion compared to $1.9 billion last year, with total sales rising to $21.1 billion from $20.4 billion, reflecting the company’s strong operational execution.
Store Expansion and Share Repurchase Program
The company expanded its footprint by adding 75 new Ross Dress for Less stores and 14 dd’s DISCOUNTS stores, ending the year with 2,186 locations. Additionally, Ross Stores repurchased 7.3 million shares for $1.05 billion, demonstrating its commitment to returning value to shareholders.
Increased Dividends
The Board approved a 10% increase in the quarterly cash dividend, raising it to $0.405 per share, further enhancing shareholder returns.
Slight Decline in Fourth Quarter Earnings Per Share
Despite strong sales, earnings per share for the fourth quarter slightly declined to $1.79 from $1.82 the previous year, with net income decreasing from $610 million to $587 million.
Cautious Outlook for Fiscal 2025
Ross Stores anticipates comparable store sales for the first quarter of fiscal 2025 to range from a 3% decline to flat, with earnings per share projected between $1.33 and $1.47, compared to $1.46 last year, reflecting a cautious stance amid uncertain market conditions.
Softening Sales Trends
Sales trends began to soften later in January and into February, attributed to unseasonable weather and macroeconomic factors affecting customer traffic, posing challenges for the upcoming fiscal year.
Flat Operating Margin
The fourth quarter operating margin remained flat at 12.4% compared to last year, indicating stable cost management despite external pressures.
Forward-Looking Guidance
For fiscal 2025, Ross Stores projects earnings per share to range from $5.95 to $6.55, with comparable store sales fluctuating between a 1% decrease and a 2% increase. Total sales are expected to rise by 1% to 5%, with plans to open approximately 90 new locations. The operating margin is projected to be between 11.5% and 12.2%, slightly down from 2024. Capital expenditures are estimated at $855 million, and the company plans to complete its $2.1 billion share repurchase program.
In summary, Ross Stores’ earnings call highlighted a strong fiscal 2024 performance with significant sales growth and strategic expansion. However, the company remains cautious about fiscal 2025 due to softening sales trends and macroeconomic uncertainties. Investors will be keenly watching how the company navigates these challenges while continuing to expand its store base and enhance shareholder value.