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Wednesday, June 29, 2022

Why Ross Stores, Inc. (ROST) Is On The Fall Today?

Ross Stores, Inc. (NASDAQ: ROST) is down today after it provided the first quarter guidelines and reported earnings for the first 13 weeks of 2021 ended January 30, 2021.

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For the first 13 weeks, the company earned $238 million or $0.67 per share. The sales were 6% down from the last quarter due to the COVID-19 surge.

Earnings per share in the year 2020 were $0.24 per share. The company’s net income was $85 million. Total sales of 2020 Declined to $12.5 billion and a major factor for the decline in sales was the Covid-19 pandemic.

The Chief Executive Officer Barbara Rentler said that we had more sales than our expectation in the fourth quarter but due to the upsurge of the virus, traffic was low in some key areas such as California which is our largest state where we had strict rules and operating hour restriction, especially during the holiday season.

Current Ross Stock performance:

On March 2, 2021, Ross share closed at $117.64 per share which was down 2.43% from the previous day. In today, 3rd March, at the time of writing, it went more down by 4.84%

Reinstates Quarterly Cash Dividend

The company is going to pay the quarterly dividend of $0.285 per share on March 16, 2021, after the Board of Directors recently approved the reinstatement of the quarterly cash dividend. The CEO of the company MsRentler said that their recommencement of our dividend payout in 2021 reflects our strong cash position and confidence in the Company’s long-term prospects.

First Quarter Guidance and Fiscal 2021 Outlook

the company will compare its 2021 fiscal results with the 2019 financial results. According to the company, 2020 had a significant impact due to Coronavirus and 2019 is a more relevant basis for the comparison.

MsRentler said that there is limited visibility even in 2021 regarding the pandemic and we still do not know at what speed the economy will recover? Keeping all the factors in mind, the company is providing specific guidance only for the first quarter of 2021 and a general outlook for the year.

The CEO further explained that the Comparable store sales for the 13 weeks ending May 1, 2021, are projected to be down 1% to down 5% compared to the 13 weeks ended May 4, 2019. Earnings per share for the 2021 first quarter are forecast to be $0.74 to $0.86 which is due to the decline in store sales other factors such as higher wages, increased supply chain costs.

The CEO is hopeful that due to vaccine and by government financial package, consumer demand will go up and it will result in sales increase however she was not so hopeful about the increase in earnings due to more expenses during the pandemic and thus profitability will be well below recent historical high levels. But MsRentler is hopeful for the future and she is confident that the talented management team will navigate the company through this tough time.

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