Ross Stores Inc (NASDAQ:ROST) stock rose 0.79% (As on August 23, 11:21:22 AM UTC-4, Source: Google Finance) after the company raised its fiscal 2024 profit forecast and posted second-quarter results above Wall Street estimates, benefiting from demand for its discounted apparel and easing freight costs. Higher discounts, however, led to an 80 basis point decline in merchandise margin. The company expects the margin pressure to further increase in the second half. The company has seen greater productivity from automation and employee retention, and it will look to find more ways to save on operational costs to offset the impact of discounts on gross margins. Operating margin increased 115 basis points to 12.5% compared to the prior year period. The 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. Delivering the great values that the off-price customers have come to expect from the company is more important than ever, especially given the continued pressures they face from the high costs on necessities. Thus, to maximize the prospects for ongoing market share gains, the company will stay laser-focused on providing the shoppers the most quality branded bargains available in the marketplace
ROST in the second quarter of FY 24 has reported the adjusted earnings per share of $1.59, beating the analysts’ estimates for the adjusted earnings per share of $1.50. The company had reported the adjusted revenue growth of 7 percent to $5.29 billion in the second quarter of FY 24, beating the analysts’ estimates for revenue of $5.25 billion, according to LSEG data.
Additionally, during the second quarter of fiscal 2024, a total of 1.8 million shares of common stock were repurchased for an aggregate price of $262 million. As a result, the Company remains on track to buy back a total of $1.05 billion in common stock during fiscal 2024 under the Company’s two-year $2.1 billion authorization approved by its Board of Directors in March of this year.
Annual earnings per share is expected in the range of $6.00 to $6.13, up from its prior forecast of $5.79 to $5.98. The company kept unchanged its comparable sales growth forecast of 2% to 3% in the second half of the year.
If the second half of 2024 performs in line with these sales projections, earnings per share for the third quarter are projected to be $1.35 to $1.41 versus $1.33 last year and $1.60 to $1.67 for the fourth quarter, compared to $1.82 in 2023.