Ross Stores, Inc. (NASDAQ:ROST) topline falls

Ross Stores, Inc. (NASDAQ:ROST) stock plunges 22.18% (As on May 20, 11:06:41 AM UTC-4, Source: Google Finance) after the company posted first-quarter revenue that was below analyst expectations. Comparable store sales declined 7% compared to a robust 13% gain in 1Q21 versus 2019. The operating margin was 10.8%, down from 14.2% in 1Q21, reflecting the deleveraging effect from the same-store sales decline combined with ongoing headwinds from higher freight and wage costs. Ross Stores’ cash used in operating activities for Q1 totaled $(416.27) million, compared to cash generated of $752.82 million a year ago. Its cash, cash equivalents, and restricted cash stood at $4.07 billion as of April 30, 2022. For the company fiscal 2022 would be a difficult year to predict, especially the first half when they were facing last year’s record levels of government stimulus and significant customer pent-up demand as COVID restrictions eased. The external environment has also proven extremely challenging as the Russia-Ukraine conflict has exacerbated inflationary pressures on the consumer not seen in 40 years.

ROST in the first quarter of FY 22 has reported the adjusted earnings per share of 97 cents, missing the analysts’ estimates for the adjusted earnings per share of $1. The company had reported 4.1 percent decline in the adjusted revenue to $4.33 billion in the first quarter of FY 22, missing the analysts’ estimates for revenue of $4.53 billion.

For the second quarter, due to increasingly uncertain macroeconomic and geopolitical environment, the company expects same store sales for the 13 weeks ending July 30, 2022 to decrease 4 percent to 6 percent, with earnings per share projected to be 99 cents to 1.07 dollars versus 1.39 dollars in last year’s second quarter. The analysts currently expect earnings of $1.33 per share for the quarter.

For the 52 weeks ending January 28, 2023, the company now expects comparable store sales to decline 2 percent to 4 percent versus a 13 percent gain in fiscal 2021. Earnings per share for fiscal 2022 are projected to be 4.34 dollars to 4.58 dollars compared to 4.87 dollars in the prior year vs. a consensus of $5.02, according to analysts polled by Thomson Reuters. Previously, the company expected comparable store sales to be flat to up 3% and earnings of $4.71 to $5.12 per share.

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