Ross Stores Remains Cautious As Its Price-Sensitive Customer Remain Exposed To Macro Challenges, Says Analyst

  • Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on the shares of Ross Stores Inc ROST with a price target of $120.
  • The analyst noted that over the past three years, Ross Stores has faced various unprecedented challenges, including the COVID pandemic, supply chain disruptions, and inflationary pressures.
  • The analyst added that those factors had impacted both the business and household budgets of ROST's core consumers.
  • As shoppers look for even greater value when visiting stores, the company's 900 merchants are fine-tuning assortments with an increased focus on delivering the most competitive values available while evolving the product mix per shifting consumer preference.
  • The company sees an opportunity to regain share from general merchandise retailers, department stores, and other big box retailers as they pull back on inventory investment.
  • The analyst thinks lower ocean freight rates look to benefit the merchandise margin in the first quarter and throughout 2023.
  • Ross Stores may also benefit from domestic freight expense in the second half of the year with technology advancements in stores and distribution centers, opined the analyst.
  • With lingering inflation and an uncertain macro environment, the company is being prudent in planning the business conservatively.
  • The analyst's Market Perform rating reflects inflationary pressures persisting into FY23 and the company's core lower-income, price-sensitive customers remaining more exposed to macro challenges.
  • Price Action: ROST shares are trading higher by 1.74% at $107.98 on the last check Monday.
  • Photo Via Company
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