Sales at Ross Stores slid as the first fiscal quarter progressed leading to a comp decline and earnings shortfall.
First-quarter net earnings were $338.4 million, or 97 cents per diluted share, versus $476.5 million, or $1.34 per diluted share, in the period a year earlier.
Ross came up short of MarketBeat analyst consensus estimates for earnings, at $1, and sales, at $4.54 billion.
Comparable sales decreased 7% in the quarter, the company reported.
Net sales were $4.33 billion versus $4.52 billion in the quarter a year before.
Barbara Rentler, Ross CEO, said, in a company conference call, that the performance at the company’s DD’s Discount stores trailed results at Ross stores as the impact of last year’s stimulus and current higher inflation had an outsized effect on lower-income consumers. Adam Orvos, executive vp and CFO, added that the lower comp occurred as a decline in transactions offset average basket growth.
In announcing the financial results, Rentler said, “We are disappointed with our lower-than-expected first-quarter results. Following a stronger-than-planned start early in the period, sales underperformed over the balance of the quarter. We knew fiscal 2022 would be a difficult year to predict, especially the first half when we were facing last year’s record levels of government stimulus and significant customer pent-up demand as COVID restrictions eased. The external environment has also proven extremely challenging as the Russia-Ukraine conflict has exacerbated inflationary pressures on the consumer not seen in 40 years. First-quarter operating margin of 10.8% was down from 14.2% in 2021, reflecting the deleveraging effect from the same-store sales decline combined with ongoing headwinds from higher freight and wage costs that began rising in the second half of 2021.”