Ross Stores Inc (NASDAQ:ROST) stock fell 13.48% (As on May 23, 11:26:01 AM UTC-4, Source: Google Finance) after the company withdrew its fiscal 2025 forecasts and said tariffs could take a toll on its profitability this year. Macroeconomic uncertainty due to U.S. President Donald Trump’s tariff policy, along with still-high inflation, has forced many consumer-facing companies, particularly footwear, apparel and home goods, to trim or withdraw annual targets. Ross Stores said more than half the goods it sells are made in China, and it would consider raising some prices as inflationary pressures persist in the retail industry.
Moreover, the dd’s discount brand continued its strong momentum from 2024 with another quarter of solid sales and operating profits as the chain’s value and fashion offerings again resonated with shoppers. At quarter end, total consolidated inventories were up 8% versus last year mainly due to opportunistic buys during the period. Average store inventories were up 4% in line with their plan and packaway merchandise represented 41% of total inventory similar to last year. The company had opened 16 new Ross and 3 dd’s discount locations in the first quarter. The company continues to plan for approximately 90 new stores this year comprised of about 80 Ross and 10 dd’s.
ROST in the first quarter of FY25 has reported the adjusted earnings per share of $1.47, beating the analysts’ estimates for the adjusted earnings per share of $1.43, according to analysts surveyed by Zacks Investment Research. The company had reported the adjusted revenue growth of 35.9 percent to $4.98 billion in the first quarter of FY25, beating the analysts’ estimates for revenue of $4.97 billion.
Additionally, the company during the quarter has repurchased 2 million shares of common stock for an aggregate cost of $263 million under the company’s two-year $2.1 billion authorization. The company remain on track to buy back a total of $1.05 billion in stock during 2025 and complete the program as planned.
Ross Stores expects second-quarter earnings to be in the range of $1.40 to $1.55 per share, which includes a cost impact of $0.11 to $0.16 per share from announced tariffs. Analysts had expected second-quarter earnings per share of $1.65, according to data compiled by LSEG. Total sales are forecast to increase 2% to 6% versus the prior year. The operating margin for the second quarter is projected to be in the 10.7% to 11.4% range which includes a 90 to 120 basis point negative impact from announced tariffs, mostly in merchandise margin.