Ross Sales Increase 16%, But Shares Fall On Soft Guidance

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Ross Stores on Tuesday reported fourth quarter total sales grew 16% year over year to $4.1 billion. During the quarter same-store sales rose 5%, on top of a 4% increase in the prior year, with sales trends “fairly broad-based” across all major categories but with children’s performing best. The results beat the Wall Street estimate cited by Cowen & Co. for a 3.1% rise and Ross’s own guidance for the quarter of between 2% and 3%, and the top-line figure handily beat FactSet’s estimate cited by Marketwatch for sales of $3.96 billion. The retailer’s operating margin in the quarter grew 95 basis points to 14.6%, up from 13.6% in the prior year, driven by a combination of strong merchandise margin, expense leverage from solid gains in same-store sales and the impact of an extra 53rd week. For the 2017 fiscal year, operating margin increased 50 basis points to a record 14.5%, executives told analysts on a conference call Tuesday. But shares fell late in the day because of the off-price retailer’s muted guidance for 2018 same-store sales of 1% to 2%, compared to 4% gains in each of the past three years, and well below the FactSet analyst estimate cited by Marketwatch for 3.5%. (It’s worth noting that, as analysts have pointed out, Ross has a history of underselling on its guidance.) Read more at Retail Dive.

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