Dublin, Calif. – Although fourth quarter performance landed as expected, sales trends at Ross Stores Inc. began softening later in January and into February.
Jim Conroy, who officially became CEO on Feb. 2, attributed the weakness in traffic to a combination of harsh weather in some parts of the country as well as the broader macroeconomic environment.
“Given the lack of visibility we have on these external factors, we believe it is prudent to take a cautious approach in forecasting our business, especially as we start the year,” he said.
When it comes to dealing with the new Trump administration tariffs, the company expects to follow the same strategy it did when President Trump introduced his first volley of tariffs in 2018.
“How did we react? We negotiated costs. We mixed the business where we needed to differently. And in some cases, we did raise prices,” group president and COO Michael Hartshorn told investors, according to Seeking Alpha’s transcript of the Ross Q4 call. “And I think it will be a mix of all of those. But [it] will be partly dependent – especially on the price front – how the market responds.”
For the new fiscal year, Ross expects total sales to be up 1% to up 5% for the year and same-store sales to be down 1% compared to the 3% gain in 2024.
“While there are always opportunities for us to improve our execution, we believe the softness we are currently seeing is primarily due to macro pressures, impacting consumer confidence, resulting in a pullback in discretionary spending,” Conroy told investor.
Fourth quarter sales came in at the high end of retailer’s expectations, with sales down 1.8% to $5.9 billion. Comp rose 3% on top of a 7% increase in the prior-year quarter. Cosmetics and children’s were the best-performing categories.
Q4 earnings per share also hit the top end of guidance. Ross reported EPS for the 13 weeks ended Feb. 1 of $1.79, compared with $1.82 per share for the 14 weeks ended Feb. 3, 2024.
The company ended the quarter with 1,831 Ross stores and 355 dd’s Discount locations. It plans to open approximately 80 new Ross and 10 dd’s Discounts units this year. In addition, it expects to close or relocate about 10 to 15 older stores.
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