Ross Stores reported it exceeded Wall Street expectations in the first quarter while revising sales and earnings guidance citing the impact of tariffs and ongoing inflation.
Net income was $479.2 million or $1.47 per diluted share, versus $488 million, or $1.46 per diluted share, in the year-earlier quarter.
An analyst consensus estimate from Zacks Investment Research pegged first quarter earnings per diluted share at $1.43 and revenue at $4.97 billion.
Comparable sales were flat year over year, the company noted. Sales were $4.98 billion versus $4.86 billion in the year-before quarter. Operating income was $606.5 million versus $591.1 million in the year-previous period.
Ross CEWO Jim Conroy said mounting macroeconomic and geopolitical challenges in the marketplace, notably prolonged inflation and evolving tariff activity, have created uncertainty in the market.
“While we directly import only a small portion of our merchandise, more than half of the goods we sell originate from China,” Conroy noted. “As such, we expect pressure on our profitability if tariffs remain at elevated levels. Given the varying nature of tariff announcements, we are only providing an outlook for the second quarter at this time and are withdrawing our previously provided annual sales and earnings guidance.”
In that outlook, Conroy said, “comparable store sales are now projected to be flat to up 3% on top of a 4% gain in the second quarter of last year. Earnings per share for the second quarter are now projected to be in the range of $1.40 to $1.55, versus earnings per share of $1.59 for the prior-year period ended August 3, 2024. This earnings guidance range includes an approximate 11 cent to 16 cent per share cost impact from announced tariffs.”
Conroy, in commenting about the first quarter results, said, “Despite the slower start to the spring selling season in February, our monthly sales performance improved sharply, month after month, for the balance of the quarter. For the first quarter, sales and earnings performed at the high end of our expectations while operating margin of 12.2% was flat year-over-year.”
Conroy added, “The volatility of trade policies and the corresponding impact on the economy, the consumer, and our profitability is highly unpredictable. During these uncertain times, we will focus on what we can control and manage the business conservatively. We have a seasoned executive team, a flexible offprice business model and a strong financial foundation that should enable us to navigate through this uncertain environment.”
