Ross Stores Inc. felt inflation’s impact in the second quarter fiscal 2022.
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The off-price retailer reported sales for the The second quarter 2022’s revenues were $4.6 billion, a decrease of 4% over the previous year period ($4.8 billion). Comparable store sales declined 7% in the second quarter 2021, on top of a robust 15% increase in the first quarter of 2021. This was the strongest period in the previous year.
Earnings per share were $1.11 compared to $1.39 for the second quarter fiscal 2022. Net earnings were $494 million, 22% lower than $385 million.
Second Half and updated fiscal guidance 2022
Given the retailer’s first half results, as well as what it sees as an increasingly challenging and unpredictable macro-economic landscape and more promotional retail environment, Ross Stores is adopting a more conservative outlook for the balance of the year.
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[Read more: Ross Stores scales back forecast after tough Q1]
The retailer now expects third-quarter same store sales to fall 7% to 9.9%, compared with a 14% increase in the third quarter fiscal 2021. The fourth quarter’s same-store sales are expected to drop 4% to 7%, compared to a 9% increase in the same period last year.
The third quarter earnings per share are expected to be $0.72- $0.83, compared with $1.09 in fiscal 2022’s third quarter and $1.04-1.21 for the fourth quarter. This is compared to $1.04 in prior year period. Based on fiscal year 2022’s first half results, and second half guidance, earnings for fiscal year 2022 will be in the $3.84-$4.12 range, compared to $4.87 per share for fiscal 2021.
“We are disappointed with our sales results, which were impacted by the mounting inflationary pressures our customers faced as well as an increasingly promotional retail environment,” said Barbara Rentler, CEO, Ross Stores. “Earnings came in above our guidance range primarily due to lower incentive costs resulting from the below plan topline performance.
“We are facing a very difficult and uncertain macro-economic environment that we expect will continue to strain our customers’ discretionary spending,”Rentler. “Though 2022 will likely remain a challenging year for our company, we believe our value-focused business model and our strong financial position will enable us to manage through these economic pressures and rebound over time.”
Ross Stores expands into new markets
Ross Stores has been busy opening new locations in new areas despite a difficult market. The retailer opened 21 Ross Dress for Less and eight dd’s Discounts stores across 12 different states in June and July. The openings included locations in the company’s largest markets of California, Florida, and Texas, along with newer states, including North Carolina for dd’s and Ohio for Ross.
As of July 2022, Ross was holding firm to its plans to open 100 new locations – 75 Ross and 25 dd’s Discounts stores – during fiscal 2022 as part of its larger long-term growth target.
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