Ross Stores, Inc. reported earnings rose 21.9 percent in the fourth quarter ended January 28 as both earnings and sales topped guidance.

The off-pricer reported earnings per share for the fourth quarter ended January 28 of $1.31 a share on net income of $447 million.  These results compare to EPS of $1.04 a share on net earnings of $367 million for the 13 weeks ended January 29, 2022.

Sales for the fourth quarter of 2022 were $5.2 billion, with comparable store sales up 1 percent on top of a 9 percent increase for the comparable period in 2021.

Ross’ guidance had called for fourth-quarter same-store sales to be flat to down 2 percent. EPS was expected to be in the range of $1.13 to $1.26.

For the 2022 fiscal year ended January 28, earnings per share were $4.38 on net income of $1.5 billion, compared to $4.87 per share on net earnings of $1.7 billion in 2021. Sales for 2022 were $18.7 billion, versus $18.9 billion in fiscal 2021, with comparable store sales down 4 percent, versus a robust 13 percent increase in the prior year.

Barbara Rentler, chief executive officer, commented, “During a very competitive holiday season, fourth-quarter sales and earnings exceeded our guidance due to customers’ positive response to our improved assortments and stronger value offerings.”

She continued, “Fourth quarter operating margin was 10.7 percent compared to 9.8 percent in 2021. This improvement was mainly driven by lower freight and incentive costs that were partially offset by unfavorable timing of pack away-related expenses.”

Fiscal 2023 Outlook
Looking ahead, Rentler noted, “As we enter 2023, the macroeconomic and geopolitical environments remain highly uncertain. As a result, we believe it is prudent to remain conservative when planning our business.”

She continued, “While we hope to do better, for the 52 weeks ending January 27, 2024, we are planning comparable store sales to be relatively flat versus a 4 percent decline and a 13 percent gain in fiscal 2022 and 2021, respectively. If sales perform in line with this plan, we expect earnings per share for the 53 weeks ending February 3, 2024 to be $4.65 to $4.95 compared to $4.38 in fiscal 2022. Incorporated in this guidance range is an estimated benefit to earnings per share of approximately $0.15 from the 53rd week in fiscal 2023.”

Rentler added, “With elevated inflation continuing to impact our low-to-moderate income customer, we are also planning comparable store sales to be relatively flat for the 13 weeks ending April 29, 2023. This compares to a 7 percent decrease and a 13 percent gain in the first quarters of 2022 and 2021, respectively. If sales perform within this range, we expect earnings per share for the first quarter of 2023 to be 99 cents to $1.05 versus 97 cents a share last year.”

Rentler concluded, “Looking ahead, we will continue strengthening our merchandise assortments by delivering great branded bargains to the consumer while also strictly controlling expenses throughout the company. This will allow us to maximize sales and profitability in 2023 and beyond.”