Ross Stores: In-Line Earnings, Missed Revenue Guidance

Ross Stores (NASDAQ: ROST) reported its fourth-quarter and full-year 2024 earnings on March 4, 2025, with earnings per share (EPS) of $1.79 and $6.32, respectively. While EPS was in line with expectations, the company missed its quarterly revenue guidance, reporting sales of $5.9 billion compared to the expected $5.95 billion. Here's a closer look at Ross Stores' performance and what investors can expect in the coming quarters.



Q4 and Full-Year 2024 Results

Ross Stores' Q4 EPS of $1.79 was in line with analysts' expectations, while full-year EPS of $6.32 represented a 13.7% increase from the previous year. Net earnings for the quarter and full year rose to $587 million and $2.1 billion, respectively. Comparable store sales grew by 3% for the quarter and 3% for the full year, driven by strong holiday sales and a robust 7% gain in the same period last year.



Missed Revenue Guidance

Ross Stores' Q4 revenue of $5.9 billion missed analysts' expectations by $50 million, or 1.3%. The company attributed this shortfall to unseasonable weather and heightened macroeconomic volatility, which negatively impacted customer traffic. Additionally, planned declines in merchandise margin and unfavorable timing of packaway-related costs offset the benefit from the packaway facility sale, resulting in a flat operating margin of 12.4%.

Fiscal 2025 Guidance

Looking ahead, Ross Stores expects comparable store sales to be down 3% to flat for the first quarter ending May 3, 2025, and down 1% to up 2% for the full year. EPS is projected to be $1.33 to $1.47 for the first quarter and $5.95 to $6.55 for the full year. The company's cautious outlook reflects the lack of visibility on external factors, such as unseasonable weather and macroeconomic headwinds.



Strategic Initiatives and Operational Improvements

To drive revenue growth and meet analyst expectations in the coming quarters, Ross Stores can consider the following strategic initiatives and operational improvements:

1. Improve Merchandising Initiatives: Enhance the quality and variety of branded bargains, optimize inventory management, and improve visual merchandising and store layout to create a more appealing shopping environment.
2. Strengthen Customer Loyalty Programs: Offer more personalized rewards and discounts based on customer purchase history, implement a tiered loyalty program, and leverage data analytics to better understand customer preferences and tailor marketing efforts.
3. Expand E-commerce Presence: Launch an online platform, integrate online and offline shopping experiences through services like buy online, pick up in-store (BOPIS) and ship-from-store, and leverage data and analytics to optimize the online shopping experience.
4. Optimize Store Footprint: Close underperforming stores, relocate them to more profitable locations, expand into new markets with strong growth potential, and adapt store formats to better suit local customer preferences and demographics.
5. Diversify Product Offerings: Expand into new categories, introduce private label brands, and partner with popular brands or designers to create exclusive product lines.
6. Invest in Technology and Data Analytics: Implement advanced analytics tools, leverage AI and machine learning for inventory management and pricing strategies, and enhance in-store technology to improve the customer experience.

In conclusion, Ross Stores' Q4 earnings were in line with expectations, but the company missed its quarterly revenue guidance. The company's cautious outlook for fiscal 2025 reflects the lack of visibility on external factors, such as unseasonable weather and macroeconomic headwinds. To drive revenue growth and meet analyst expectations in the coming quarters, Ross Stores can consider strategic initiatives and operational improvements focused on merchandising, customer loyalty, e-commerce, store footprint optimization, product diversification, and technology investment.