Ross Stores reports Q1 beat, raises guidance; analysts bullish

Ross Stores (NASDAQ:) reported better-than-expected Q1 results and raised full-year guidance. Still, ROST shares trade about 1% lower in early Friday trading.

The company’s of $1.09 came in better than the consensus estimate of $1.06. Revenue grew 3.7% year-over-year to $4.49 billion, slightly above the consensus estimate of $4.48B. Comparable store sales were up 1% year-over-year.

“Despite continued inflationary pressures impacting our low-to-moderate income customers, first quarter sales were relatively in line with our expectations,” said CEO Barbara Rentler.

For Q2/24, the company expects EPS in the range of $1.07-$1.14, compared to the consensus of $1.25. For the full year, the company anticipates EPS of $4.77-$4.99, compared to the consensus estimate of $4.95.

Citi analysts said while Ross Stores raised annual EPS guidance by about the amount of the 1Q beat, the Q2 EPS guidance is below consensus.

“Mgmt is typically conservative, but 2Q will also be hurt by a greater incentive comp headwind than the other quarters. We continue to believe ROST will benefit from a trade-down customer as F23 progresses, and mgmt is focused on providing value to the consumer and driving the top line. The attractive buying environment and relatively easy comparisons set the company up well for F23,” they wrote in a note.

BofA analysts also remain bullish on ROST shares.

“We reiterate our Buy rating, as we think ROST’s sharp value proposition is appealing to a stretched consumer and see tangible opportunity to rebuild margins.”

Additional reporting by Senad Karaahmetovic