On August 22, 2024, Ross Stores Inc (ROST, Financial) released its 8-K filing reporting earnings per share (EPS) of $1.59 for the second quarter ended August 3, 2024, surpassing the analyst estimate of $1.49. The company also reported net income of $527 million, up from $446 million in the same period last year. Total sales for the quarter increased by 7% to $5.3 billion, exceeding the estimated revenue of $5.24 billion.
Company Overview
Ross Stores Inc (ROST, Financial) operates as an off-price apparel and accessories retailer, primarily through its Ross Dress for Less banner. The company procures excess brand-name merchandise at significant discounts, creating a treasure hunt shopping experience for its customers. With over 1,750 Ross Dress for Less stores and nearly 350 DD's Discounts chains, Ross Stores serves middle and lower-income consumers across densely populated suburban communities.
Q2 Performance and Challenges
Ross Stores Inc (ROST, Financial) reported a notable increase in both earnings and sales for the second quarter of 2024. The company's EPS of $1.59 and net income of $527 million reflect a significant improvement from the previous year's EPS of $1.32 and net income of $446 million. Total sales rose to $5.3 billion, a 7% increase from $4.9 billion in Q2 2023, with comparable store sales up 4%.
Despite these positive results, the company faces challenges as its low-to-moderate income customers continue to grapple with high costs on necessities, impacting their discretionary spending. Additionally, Ross Stores anticipates more challenging sales comparisons in the second half of the year due to an uncertain and volatile external environment.
Financial Achievements
Ross Stores Inc (ROST, Financial) achieved several financial milestones in Q2 2024. The company's operating margin increased by 115 basis points to 12.5%, driven by higher sales and lower distribution and incentive costs, partially offset by lower merchandise margins. The company also repurchased 1.8 million shares of common stock for $262 million, remaining on track to buy back a total of $1.05 billion in common stock during fiscal 2024.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Sales | $5.3 billion | $4.9 billion |
| Net Income | $527 million | $446 million |
| EPS | $1.59 | $1.32 |
| Operating Margin | 12.5% | 11.35% |
Income Statement Highlights
For the six months ended August 3, 2024, Ross Stores Inc (ROST, Financial) reported earnings per share of $3.05 on net income of $1.0 billion, compared to EPS of $2.41 on net earnings of $818 million in the first half of 2023. Sales for the first half of 2024 grew to $10.1 billion, up from $9.4 billion in the prior year, with comparable store sales up 3%.
Balance Sheet and Cash Flow
As of August 3, 2024, Ross Stores Inc (ROST, Financial) reported total assets of $14.68 billion, up from $13.99 billion in the previous year. The company's cash and cash equivalents stood at $4.67 billion, with total current assets amounting to $7.59 billion. Total liabilities were reported at $9.55 billion, with stockholders' equity at $5.13 billion.
Net cash provided by operating activities for the first six months of 2024 was $961 million, compared to $1.12 billion in the same period last year. The company used $334 million in investing activities and $830 million in financing activities during the first half of 2024.
Updated Fiscal 2024 Guidance
Looking ahead, Ross Stores Inc (ROST, Financial) has updated its fiscal 2024 guidance. The company projects comparable sales growth of 2% to 3% for both the third and fourth quarters. Earnings per share for Q3 are expected to be between $1.35 and $1.41, while Q4 EPS is projected to range from $1.60 to $1.67. For the full fiscal year ending February 1, 2025, EPS is now planned to be in the range of $6.00 to $6.13.
Barbara Rentler, Chief Executive Officer, commented, “Second quarter sales and earnings were above our expectations as our stronger value offerings resonated with our customers. Operating margin increased 115 basis points to 12.5% compared to the prior year period. Our improved profitability relative to last year benefited from higher sales, and lower distribution and incentive costs that were partially offset, as expected, by lower merchandise margins.”
For more detailed information, readers can access the full 8-K filing.
Explore the complete 8-K earnings release (here) from Ross Stores Inc for further details.
