Ross Stores to open 90 new stores in 2024
Ross Stores easily topped expectations for its fourth quarter, but warned that housing, food and gasoline costs continue to put pressure on its customers.
In a statement, CEO Barbara Rentler cited the “sustained” sales momentum that began in its second quarter and continued through the holiday season, but cautioned there remains “ongoing uncertainty in the macroeconomic and geopolitical environments.”
“While inflation has moderated, housing, food, and gasoline costs remain elevated and continue to pressure our low-to-moderate income customers’ discretionary spend,” she said. “As a result, while we hope to do better, we believe it is prudent to continue to take a conservative approach to forecasting our business in 2024.”
Ross, which has set a long-term target of at least 2,900 Ross Dress for Less and 700 DDs Discounts, will continue its store growth in 2024. It expects to open about 90 new locations, including 75 Ross stores and 15 DD’s stores. By comparison, Ross opened 71 Ross stores and 23 DD’s in 2023.
On the earnings call, Rentler called DD’s top-line fiscal 2023 results “respectable,” but said the company was disappointed with the brand’s performance in newer markets. It is conducting an analysis to better understand the needs of DD’s diverse customer base as it expands into new market.
“Until this work is completed, we believe it is wise over the near term to moderate DD’s store growth in newer markets and focus new store openings primarily in existing regions,” Rentler told analysts.
Ross reported income of $610 million, or $1.82 a share, in the quarter ended Feb. 3, up from $447 million, or $1.31 a share, in the year-ago period. Analysts had expected earnings of $1.66 a share.
Sales rose to $6 billion from $5.2 billion, topping estimates of $5.8 billion. Comparable-store sales increased 7%.
“Our above-plan sales were driven by customers’ positive response to our improved assortments of quality branded bargains throughout our stores,” stated Rentler. “Fourth quarter operating margin grew 165 basis points to 12.4%, up from 10.7% in the prior year. This improvement was mainly due to the strong gains in same store sales and lower freight costs that were partially offset by higher incentives. “
Ross expects 2024 same-store sales to grow 2% to 3%, on top of a 5% gain in 2023. Earnings per share are expected to be between $5.64 and $5.89.
Ross operates 1,764 namesake locations in 43 states, the District of Columbia, and Guam, along with 345 DD’s Discounts stores in 22 states.