Ross Stores Delivers Strong Earnings but Weak Guidance
Last Thursday, Ross Stores (NASDAQ: ROST) followed top rival TJX Companies (NYSE: TJX) by reporting strong results for the second quarter. Sales and earnings both easily beat analysts' estimates. That said, the off-price retailer issued surprisingly weak guidance for the third quarter. Let's take a look.
In the first quarter, Ross Stores' comparable store sales jumped 13% compared to the first quarter of fiscal 2019, sailing well past management's guidance for a 1% to 5% decrease in comparable sales. The stellar sales performance drove a correspondingly large earnings beat.
Nevertheless, Ross Stores issued a conservative forecast for the second quarter. Management projected that comp sales would rise a modest 5% to 7% compared to fiscal 2019. Moreover, it predicted that wage increases, COVID-19 safety-related expenses, and escalating freight costs would cause Q2 earnings per share (EPS) to fall to a range of $0.80 to $0.89 from $1.14 two years earlier.
Source Fool.com
