Why Ross Stores Shares Are Plummeting After Hours - Provides Dismal Outlook Like Other Retailers

Ross Stores, Inc. ROST reported a first-quarter sales decline of 4.1% year-over-year to $4.33 billion, missing the consensus of $4.53 billion.

Comparable store sales declined 7% compared to a robust 13% gain in 1Q21 versus 2019. EPS of $0.97, below the consensus of $1.

The operating margin was 10.8%, down from 14.2% in 1Q21, reflecting the deleveraging effect from the same-store sales decline combined with ongoing headwinds from higher freight and wage costs.

Ross Stores' cash used in operating activities for Q1 totaled $(416.27) million, compared to cash generated of $752.82 million a year ago. Its cash, cash equivalents, and restricted cash stood at $4.07 billion as of April 30, 2022.

"Following a stronger than-planned start early in the period, sales underperformed over the balance of the quarter. We knew fiscal 2022 would be a difficult year to predict, especially the first half when we were facing last year's record levels of government stimulus and significant customer pent-up demand as COVID restrictions eased. The external environment has also proven extremely challenging as the Russia-Ukraine conflict has exacerbated inflationary pressures on the consumer not seen in 40 years," commented Barbara Rentler, CEO.

2Q22 Outlook: Ross Stores expects the same-store sales to decrease 4% to 6%, and earnings per share of $0.99 to $1.07 vs. a consensus of $1.33.

FY22 Outlook: The company projects comparable store sales to decline 2% to 4%, and EPS of $4.34 to $4.58, vs. a consensus of $5.02.

Price Action: ROST shares are trading lower by 17.21% at $76.61 during the post-market session on Thursday.

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