8-K: Ross Stores Reports Flat Comparable Sales, Withdraws Full-Year Guidance Amid Tariff Uncertainty

Ross Stores announces first quarter earnings with flat comparable store sales and withdraws full-year guidance due to macroeconomic and geopolitical uncertainties, particularly related to tariffs.

Summary

• Ross Stores reported first quarter earnings per share of $1.47, slightly up from $1.46 last year.
• Net income decreased to $479 million from $488 million in the prior year.
• Sales for the first quarter reached $5.0 billion, but comparable store sales were flat.
• The company repurchased 2.0 million shares of common stock for $263 million during the quarter.
• Ross Stores is on track to repurchase $1.05 billion in common stock during fiscal 2025.
• Due to heightened macroeconomic and geopolitical uncertainty, the company withdrew its previously provided annual sales and earnings guidance.
• Second quarter comparable store sales are projected to be flat to up 3%.
• Second quarter earnings per share are projected to be in the range of $1.40 to $1.55, which includes an approximate $0.11 to $0.16 per share cost impact from announced tariffs.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative due to flat comparable sales, a decrease in net income, and the withdrawal of full-year guidance, offset by positive comments on sales performance and the share repurchase program.

Positives

• First quarter earnings per share slightly increased year-over-year.
• Sales and earnings performed at the high end of expectations for the first quarter.
• The company is on track with its share repurchase program.
• Monthly sales performance improved sharply throughout the first quarter.

Negatives

• Net income decreased from $488 million to $479 million year-over-year.
• Comparable store sales were flat in the first quarter.
• Full-year guidance was withdrawn due to macroeconomic and geopolitical uncertainty.
• Second quarter earnings per share are projected to be lower than the prior year period.

Risks

• Heightened macroeconomic and geopolitical uncertainty, including prolonged inflation and evolving trade policies, pose risks.
• Elevated tariff levels on goods imported from China may disrupt merchandise purchasing patterns and increase costs.
• Uncertainties arising from the macroeconomic environment may affect consumer confidence and spending behavior.
• The volatility of trade policies and their impact on the economy, the consumer, and the company's profitability is highly unpredictable.

Future Outlook

The company projects second quarter comparable store sales to be flat to up 3% and earnings per share to be in the range of $1.40 to $1.55, including an approximate $0.11 to $0.16 per share cost impact from announced tariffs. The company has withdrawn its full year guidance.

Management Comments

• Jim Conroy, Chief Executive Officer, commented, '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.'
• Mr. Conroy stated that first quarter sales and earnings performed at the high end of their expectations.
• Mr. Conroy noted heightened macroeconomic and geopolitical uncertainty, most notably prolonged inflation and evolving trade policies.
• Mr. Conroy concluded, 'The volatility of trade policies and the corresponding impact on the economy, the consumer, and our profitability is highly unpredictable.'

Industry Context

The announcement reflects the challenges retailers face amid ongoing macroeconomic uncertainties, particularly related to inflation, trade policies, and consumer spending. The withdrawal of full-year guidance is a cautious approach given the unpredictable nature of these factors.

Comparison to Industry Standards

• Competitors like TJX Companies (TJX) and Burlington Stores (BURL) also operate in the off-price retail sector and face similar macroeconomic challenges.
• TJX Companies, for example, has also emphasized managing inventory and costs in response to inflation and supply chain disruptions.
• The flat comparable store sales at Ross Stores are in line with some other retailers experiencing a slowdown in consumer spending, while others have managed to achieve modest growth.
• The impact of tariffs on profitability is a common concern across the retail industry, particularly for companies sourcing goods from China.

Stakeholder Impact

• Shareholders may be concerned about the withdrawn full-year guidance and the potential impact of tariffs on profitability.
• Employees may face uncertainty due to the company's cautious approach to managing the business.
• Customers may see changes in merchandise assortment and pricing due to tariff impacts.
• Suppliers may experience disruptions in purchasing patterns due to trade policy changes.

Next Steps

• The company will host a conference call on May 22, 2025, to provide additional details concerning its first quarter results and management's outlook for the second quarter.
• Management will focus on controlling costs and managing the business conservatively during these uncertain times.

Key Dates

Keywords

Ross Stores, earnings, sales, guidance, tariffs, share repurchase, retail, off-price