Ross Stores Beats and Raises Dividend

After the closing bell, Ross Stores (ROST) reported fiscal Q4 earnings (ending January 28) of 77 cents per share. The deep discounter had said to expect Q4 earnings between 72 and 75 cents per share. Wall Street pegged Q4 at 75 cents per share.

Quarterly sales rose 8% to $3.5 billion, and comparable store sales were up 4%. For all of 2016, Ross made $2.83 per share. That’s up 13% over last year. Full-year sales rose 8% to $12.9 billion. Comp store sales were up 4%.

Barbara Rentler, Chief Executive Officer, commented, “We are very pleased with our better-than-expected sales and earnings results for the fourth quarter and fiscal year, especially given our strong multi-year comparisons and the highly competitive and promotional holiday season. Our results continued to benefit from our ability to offer customers great values on a wide assortment of gifts and fashions for the family and the home.”

Ms. Rentler continued, “Fourth quarter operating margin grew 90 basis points to 13.6% up from 12.7% in the prior year. This improvement was mainly driven by our above-plan sales along with a favorable comparison of packaway-related costs versus last year’s fourth quarter. For the 2016 fiscal year, operating margin increased 40 basis points to a new record of 14.0%.”

Those are some solid numbers. Ross also approved a new two-year $1.75 billion share buyback program. At the current price, that’s about 6% of their outstanding shares.

Ross also bumped up their quarterly dividend from 13.5 to 16 cents per share. That’s an increase of 19%. The new dividend is payable on March 31 to stockholders of record as of March 10.

Now for guidance. Bear in mind that Ross tends to be very conservative with their forecasts. Ross projects full-year 2017 earnings between $3.02 and $3.15 per share. That’s up 7% to 11% over 2016. However, the current fiscal year is 53 weeks long. The company estimates that the extra week adds eight cents per share. Ross sees same-store growth this year of 1% to 2%.

For Q1, Ross forecasts earnings of 76 to 79 cents per share and comp store sales growth of 1% to 2%. The strikes me as very conservative.

The CEO said, “There continues to be uncertainty in the political, macro-economic, and retail climates, and we also face our own challenging sales and earnings comparisons. Thus, while we hope to do better, we believe it is prudent to remain somewhat cautious in planning our business for the 2017 fiscal year.”

Posted by on February 28th, 2017 at 4:16 pm

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