Q2 2024 Ross Stores Inc Earnings Call Transcript
Key Points
- Second-quarter sales and earnings exceeded expectations, with total sales growing 7% to $5.3 billion and comparable store sales up 4%.
- Operating margin improved by 115 basis points to 12.5%, driven by higher sales and lower distribution and incentive costs.
- Earnings per share increased to $1.59 from $1.32 in the previous year's second quarter, reflecting strong profitability.
- Ross Stores Inc (ROST) opened 21 new Ross and three dd's DISCOUNTS locations in the second quarter, with plans to open approximately 90 new locations this year.
- The company repurchased 1.8 million shares of common stock for $262 million, remaining on track to buy back a total of $1.05 billion in stock for the year.
- Despite improved trends, Ross Stores Inc (ROST) remains cautious due to the uncertain external environment and high costs for necessities faced by low to moderate-income customers.
- Merchandise margin decreased by 80 basis points, and this pressure is expected to increase in the second half of the year.
- The company faces challenges in newer markets, requiring adjustments to assortments to address a more diverse customer base.
- Shrinkage remains a concern in a difficult retail theft environment, with expectations of some deterioration from last year.
- The company anticipates continued pressure on discretionary spending due to high costs for necessities, impacting future sales growth.
Good afternoon and welcome to the Ross Stores second-quarter 2024 earnings release conference call. The call will begin with prepared comments by management followed by a question-and-answer session. (Operator Instructions)
Before we get started, on behalf of Ross Stores, I would like to note that the comments made on this call will contain forward-looking statements regarding expectations about future growth and financial results, including sales and earnings forecasts, new store openings, and other matters that are based on the company's current forecast of aspects of its future business.
These forward-looking statements are subject to risks and uncertainties that cause actual results to differ materially from historical performance or current expectations. Risk factors are included in today's press release and in the company's fiscal 2023 Form 10-K and fiscal 2024 Form 10-Q and 8-K on file with the SEC.
And now I'd like to turn the call over to Barbara Rentler, Chief Executive Officer.
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