Ross Stores shares tank 25% on Q1 results

Ross Stores Inc (NASDAQ: ROST) shares tanked nearly 25% in extended trading after the American chain of discount department stores reported disappointing results for its fiscal first quarter.

Ross Stores Q1 financial highlights

• Net income came in at $388 million versus the year-ago figure of $476 million.
• Per-share earnings of 97 cents were much worse than $1.34 in Q1 of previous year.
• Quarterly revenue slipped 5.0% to $4.3 billion on a year-over-year basis.
• FactSet consensus was for $1.0 of EPS on $4.53 billion in revenue.
• Same-store sales were down 7.0% and operating margin dropped to 10.8%.

CEO Barbara Rentler blamed higher freight and wage costs for the weakness in Q1. In the earnings press release, she said:

Future outlook and quarterly cash dividend

For fiscal 2022, Ross Stores forecasts its per-share earnings to fall between $4.34 and $4.58, well below the analysts’ call for $5.0. A day earlier, the California-based company announced a quarterly per-share cash dividend of 31 cents.

The retailer warns of 2.0% to 4.0% hit to same-store sales this year. The chief executive added:

The stock is now down more than 35% for the year.