How strong were Ross Stores' fourth-quarter results compared with last year?

Very strong. Diluted EPS rose 39% to $1.82 from $1.31, net earnings increased to $610 million from $447 million, and sales grew about 16% to $6.0 billion. Comparable store sales rose 7%, and operating margin improved to 12.4% from 10.7%. Management noted the 53rd week added about $0.20 to EPS and 80 basis points to operating margin, so underlying growth was somewhat lower than the headline figures.

Why is fiscal 2024 EPS guidance only modestly higher than fiscal 2023?

Fiscal 2023 had 53 weeks, which contributed roughly $0.20 per share. Excluding that benefit, the guidance of $5.64 to $5.89 implies growth of about 5% to 10% over the comparable 52-week base of roughly $5.36. Management is also assuming comparable sales growth of only 2% to 3% because of macroeconomic uncertainty and pressure on low- and moderate-income shoppers.

What does the new stock repurchase program and dividend increase signal?

The Board approved a $2.1 billion two-year buyback for fiscal 2024 and 2025, up 11% from the prior program, and raised the quarterly dividend 10% to $0.3675. Management attributes these moves to a strong balance sheet and continued free cash generation after funding growth. Fiscal 2023 operating cash flow was $2.5 billion against $763 million of capital expenditures, which supports the capital return plan.

What are the main risks management highlighted for 2024?

Management pointed to ongoing macroeconomic and geopolitical uncertainty, including inflation, high interest rates, and conflicts in Russia-Ukraine and the Middle East. Elevated housing, food, and gasoline costs continue to constrain discretionary spending among lower- and moderate-income customers. The filing's forward-looking statements also list supply chain and ocean freight costs, tariff and trade policy changes, inventory management, cybersecurity, and the company's ability to find attractive new store sites as risks.

ROST 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed March 5, 2024. Cited figures are marked; the original filing is the authoritative source.

Ross Stores reported strong fourth-quarter and fiscal 2023 results, with results well ahead of management's expectations.

Q4 diluted EPS rose 39% to $1.82^a from $1.31, and net earnings climbed to $610 million from $447 million. Sales grew about 16% to $6.0 billion, driven by a 7% comparable store sales increase. Operating margin expanded 165 basis points to 12.4%, helped by stronger same-store sales and lower freight costs, partly offset by higher incentive compensation.

The 53rd week contributed $308 million^b in sales and roughly $0.20 per share of EPS in both the quarter and the full year. For fiscal 2023, EPS was $5.56 (up 27% from $4.38), and sales reached $20.4 billion (up 9%), with comparable store sales up 5%. Capital return was expanded.

The Board approved a new two-year, $2.1 billion^c repurchase authorization for fiscal 2024 and 2025, an 11% increase over the prior program, after the company completed its previous $1.9 billion program as planned. The quarterly dividend was raised 10% to $0.3675 per share. Management cited a strong balance sheet, with $4.87 billion in cash against roughly $2.46 billion of total debt at year-end.

Fiscal 2024 guidance is deliberately conservative. Management expects comparable store sales growth of 2% to 3% and EPS of $5.64 to $5.89^d, which compares with $5.56 in fiscal 2023 that included the roughly $0.20 extra-week benefit.

Management cited ongoing macroeconomic and geopolitical uncertainty and elevated housing, food, and gasoline costs that pressure lower- and moderate-income customers. For the first quarter of 2024, guidance calls for comparable store sales up 2% to 3% and EPS of $1.29 to $1.35, versus $1.09 a year earlier.

02—Key points

Key Highlights

Q4 FY2023 diluted EPS of $1.82, up 39% from $1.31; net earnings of $610M vs. $447M
Q4 comparable store sales up 7%; FY2023 comparable store sales up 5%; FY2023 sales of $20.4B (up 9%)
Q4 operating margin expanded 165 bps to 12.4%, aided by strong same-store sales and lower freight costs, partly offset by higher incentives
53rd week contributed $308M to sales and about $0.20 to EPS in both Q4 and full year, flattering year-over-year comparisons
New two-year $2.1B share repurchase authorization (fiscal 2024–2025), an 11% increase over the prior program; quarterly dividend raised 10% to $0.3675
FY2024 guidance: comparable store sales +2% to 3%, EPS of $5.64–$5.89, a conservative outlook that management frames as prudent given macro headwinds
Q1 FY2024 guidance: comparable store sales +2% to 3%, EPS of $1.29–$1.35 vs. $1.09 in the prior-year quarter; ended FY2023 with $4.87B in cash and 2,109 stores

03—Questions

Frequently Asked Questions

How strong were Ross Stores' fourth-quarter results compared with last year?
Very strong. Diluted EPS rose 39% to $1.82 from $1.31, net earnings increased to $610 million from $447 million, and sales grew about 16% to $6.0 billion. Comparable store sales rose 7%, and operating margin improved to 12.4% from 10.7%. Management noted the 53rd week added about $0.20 to EPS and 80 basis points to operating margin, so underlying growth was somewhat lower than the headline figures.
Why is fiscal 2024 EPS guidance only modestly higher than fiscal 2023?
Fiscal 2023 had 53 weeks, which contributed roughly $0.20 per share. Excluding that benefit, the guidance of $5.64 to $5.89 implies growth of about 5% to 10% over the comparable 52-week base of roughly $5.36. Management is also assuming comparable sales growth of only 2% to 3% because of macroeconomic uncertainty and pressure on low- and moderate-income shoppers.
What does the new stock repurchase program and dividend increase signal?
The Board approved a $2.1 billion two-year buyback for fiscal 2024 and 2025, up 11% from the prior program, and raised the quarterly dividend 10% to $0.3675. Management attributes these moves to a strong balance sheet and continued free cash generation after funding growth. Fiscal 2023 operating cash flow was $2.5 billion against $763 million of capital expenditures, which supports the capital return plan.
What are the main risks management highlighted for 2024?
Management pointed to ongoing macroeconomic and geopolitical uncertainty, including inflation, high interest rates, and conflicts in Russia-Ukraine and the Middle East. Elevated housing, food, and gasoline costs continue to constrain discretionary spending among lower- and moderate-income customers. The filing's forward-looking statements also list supply chain and ocean freight costs, tariff and trade policy changes, inventory management, cybersecurity, and the company's ability to find attractive new store sites as risks.

04—Continue

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