Ross Stores, Inc. reported sales for the fiscal fourth quarter ended February 3 grew to $6.0 billion, with comparable store sales for the 13-week period ended January 27, up a “robust” 7 percent over the corresponding period last year.
Net income for the 14-week Q4 period rose to $610 million versus $447 million in the prior-year 13-week Q4 period.
Ross posted EPS of $1.82 per share for the 14-week fourth quarter ended February 3, up from $1.31 per share for the 13-week Q4 period ended January 28, 2023.
Fiscal 2023 EPS for the 53-week full-year period ended February 3 grew to $5.56 per share, up from $4.38 per share in the 52-week fiscal 2022 year ended January 28, 2023. Net earnings for fiscal 2023 were $1.9 billion on sales of $20.4 billion, up from net earnings of $1.5 billion in fiscal 2022 on sales of $18.7 billion. Comparable store sales for the 52 weeks ended January 27, 2024, grew a solid 5 percent.
The sales results for both the 2023 fourth quarter and fiscal year included a $308 million benefit from the 53rd week. Earnings per share for both periods also benefited from the extra week by approximately 20 cents per share.
Barbara Rentler, CEO of Ross Stores, Inc., commented, “We are pleased with our fourth quarter sales and earnings results that were well ahead of our expectations. Our above-plan sales were driven by customers’ positive response to our improved assortments of quality branded bargains throughout our stores.”
Rentler continued, “Fourth quarter operating margin grew 165 basis points to 12.4 percent, up from 10.7 percent in the prior year. This improvement was mainly due to the strong gains in same-store sales and lower freight costs that were partially offset by higher incentives. The 53rd week also benefited operating margin by 80 basis points.”
Board Approves New Two-Year Stock Repurchase Authorization and Increase in Quarterly Dividend
During the recently completed fourth quarter, 1.9 million shares were repurchased for a total price of $247 million. For fiscal 2023, a total of 8.2 million shares of common stock were repurchased for an aggregate purchase price of $950 million, completing the two-year stock repurchase program as planned.
The company’s Board of Directors recently approved a new two-year $2.1 billion stock repurchase authorization for fiscal 2024 and 2025. This new program represents an 11 percent increase over the recently completed repurchase of $1.9 billion of common stock during 2022 and 2023 combined. The Board also authorized a 10 percent increase in the company’s quarterly cash dividend to $0.3675 per share. This higher quarterly dividend amount is payable on March 29, 2024 to stockholders of record as of March 15, 2024.
Rentler noted, “The increases to our stock repurchase and dividend programs reflect our continued commitment to enhancing stockholder value and returns given the strength of our balance sheet and our ongoing ability to generate significant amounts of cash after funding growth and other capital needs of the business.”
Fiscal 2024 Guidance
Looking ahead, Rentler said, “While we are encouraged by the sustained sales momentum that began in the second quarter of 2023 and continued through the holiday season, there remains ongoing uncertainty in the macroeconomic and geopolitical environments. In addition, while inflation has moderated, housing, food, and gasoline costs remain elevated and continue to pressure our low-to-moderate-income customers’ discretionary spend. As a result, while we hope to do better, we believe it is prudent to continue to take a conservative approach to forecasting our business in 2024.”
For the 52 weeks ending February 1, 2025, the company is planning same-store sales to grow 2 percent to 3 percent on top of a solid 5 percent gain in 2023. Based on these assumptions, fiscal 2024 earnings per share are projected to be $5.64 to $5.89 compared to $5.56 for the fiscal year ended February 3, 2024. Again, last year’s results included an estimated per share benefit of 20 cents from the 53rd week.
For the 13 weeks ending May 4, 2024, comparable store sales are forecast to be up 2 percent to 3 percent with earnings per share projected to be $1.29 to $1.35, up from $1.09 in the first quarter ended April 29, 2023.
Rentler concluded, “As we move through the coming year, we remain focused on delivering a wide assortment of quality branded bargains for our customers. We believe this will be the most important driver of our ability to gain market share over both the short and long term.”
Image courtesy Ross Stores
