Ross Stores Inc (ROST)

“We believe the diligent execution of this plan will result in increased market share gains this year and in the future.”

“I think you'd expect about 100 stores a year, depending on how the dd's plays out beyond this. But I think we're comfortable with the 75 Ross stores annually.”

“Sure. First of all, our long-term store target hasn't changed, and that's 2,900 Ross Stores and 700 for dd's.”

“This fiscal year, we have a number of rollouts. And as Adam said earlier, that's fully offsetting the minimum wage increase.”

“Our guidance assumes that shrink is up a bit. So that's built into the guidance, but we'll continue to make investments there to keep it in line.”

“On the domestic side, that's what Michael was commenting on earlier because fuel prices are lower than where they were at least this time last year. And based on our contracted rates, we should see some slight benefit throughout the year on the domestic side.”

“So on the ocean freight side, we'll get a little bit of benefit in Q1, but kind of negligible over the course of the year.”

“Over the long term, we think we can get leverage in the 3% to 4% comp range.”

“I would say over the long term, we can -- we believe we can achieve gradual improvement in profitability.”

“We are expecting that our Apparel business as we move through the year will improve.”

“So from the merchandise strategy, we do expect it to accelerate as we go.”

“We expect EBIT margin flow-through of about 10 to 15 basis points for each additional point of above-plan sales.”

“Lorraine, then on just the other margin opportunities from a freight standpoint, from a domestic freight standpoint, we do expect to see some improvement for the full year, but to a lesser extent than we saw last year.”

“Until this work is completed, we believe it is wise over the near term to moderate dd's store growth in newer markets and focus new store openings, primarily in existing regions.”

“Our tax rate is expected to be approximately 24% to 25% and diluted shares are forecasted to be about $335 million.”

“Net interest income is estimated to be $44 million.”

“We plan to add 18 new stores consisting of 11 Ross and 7 dd's DISCOUNTS during the period.”

“The expected increase mainly reflects our forecast for lower incentives and freight costs that are partially offset by lower merchandise margin and higher wages.”

“We would then expect first quarter operating margin to be 11.1% to 11.4% compared to 10.1% last year.”

“The operating statement assumptions that support our first quarter guidance include the following: total sales are planned to be up 6% to 8% versus last year's first quarter.”

“If sales perform in line with this range, we expect earnings per share for the first quarter of 2024 to be $1.29 to $1.35 versus $1.09 last year.”

“We are planning comparable store sales for the 13 weeks ending May 4, 2024, to be up 2% to 3% versus a 1% gain in last year's first quarter.”

“In addition, capital expenditures for 2024 are planned to be approximately $840 million as we make further investments in our stores, supply chain and merchant processes to support our long-term growth and to increase efficiencies throughout the business.”

“The tax rate is projected to be about 24% to 25% and diluted shares outstanding are expected to be approximately $332 million.”

“Depreciation amortization expense inclusive of stock-based amortization is forecast to be about $610 million for the year.”

“Net interest income is estimated to be $143 million.”

“For 2024, we expect to open approximately 90 new locations, comprised of about 75 Ross and 15 dd's DISCOUNTS.”

“In addition, for fiscal 2024, we expect merchandise margins to be pressured as we plan to offer even more brands that are sharply priced to deliver the strong value proposition that our customers expect from us.”

“If same-store sales perform in line with our plan, operating margin for the full year is expected to be in the range of 11.2% to 11.5% compared to 11.3% last year, which benefited by 25 basis points from the 53rd week.”

“Total sales are planned to grow by 2% to 4% for the 52 weeks ending February 1, 2025, versus the 53 weeks ended February 3, 2024.”

“If sales perform in line with this plan, we expect earnings per share for 2024 to be in the range of $5.64 to $5.89 compared to $5.56 in fiscal 2023.”

“For the 52 weeks ending February 1, 2025, we are planning comparable store sales to increase 2% to 3% on top of a solid 5% gain in 2023.”

“We remain on track to buy back a total of $950 million in stock for the year.”

“I mean, generally speaking, wages have stabilized throughout the stores and the DCs and any increases we're seeing are really driven by minimum wages.”

“When we look at container rates now are very similar to where they were in 2019. So we think by the end of the year, we'll capture all that benefit.”

“On SG&A going forward, I think we'd expect that we'd be able to lever between the 3 and 4 comp as we have in the past.”

“We expect it to be a very promotional retail environment and now you have geopolitics into the mix, and it is our toughest compare for the year. So given everything going on externally, we think it's prudent to remain very conservative in running the business in the fourth quarter.”

“So there'll be further benefit in fourth quarter, but not like we have seen in the first 3 quarters of the year. I would expect that really to be the main driver on merchandise margin. All other components should be pretty consistent with last year.”

“So ocean freight, which we benefited from all year, will still be a benefit in the fourth quarter. But as we said in the call comments, we'll moderate considerably.”

“Yes. On the latter part, no change in the flow through in the model, right? We still expect to lever on the 3% to 4% comp.”

“Our tax rate is expected to be approximately 23% to 24%, and weighted average diluted shares outstanding are projected to be about 335 million.”

“Net interest income is estimated to be about $45 million as we continue to benefit from higher interest rates on our cash balance.”

“In addition, lower domestic freight and distribution costs, partially due to favorable packaway timing are expected to benefit margin.”

“Krista, merchandise margin will continue to be primarily driven by ocean freight benefit. I mentioned earlier, we'll have a little bit of tailwind just from as we had elevated markdown levels, that will be helped to us.”

“Lorraine, this is Adam. So SG&A, we knew would be pressured due to incentive costs coming into this year, and it clearly was. But most of our SG&A deleverage in the second quarter was driven by incentive costs, although higher store wages played a part in that. Also I think your kind of longer-term leverage question, 4% comp is where we think we can clearly lever in SG&A, and that fundamentally hasn't changed for us.”

“So given the elevated levels last fall, should expect some benefit as we move through the second half, obviously, assuming we deliver our sales expectations.”

“We knew that would be a headwind coming into the year as we outperform this year and go up against an underperforming 2022. So that was a big moving part, and that will continue in the third quarter and fourth quarter, but would also comment the way we flowed incentive costs last year's second quarter was the most impactful quarter. So it'll still be a significant headwind, but in third quarter and fourth quarter, but not as significant as second quarter.”

“From a domestic freight standpoint, again, we commented in the call on 60 basis points of good news, assuming fuel costs stay the same, we'd expect that to continue through the balance of 2023.”

“But I'll remind you that in fourth quarter last year, we started to see the benefits of ocean freight. So it will moderate considerably in fourth quarter.”

“Third quarter, from an operating margin standpoint, the components will look similar to second quarter. So ocean freight was a significant tailwind for us will continue in third quarter.”

“The tax rate is projected to be about 25% and diluted shares outstanding are expected to be approximately 337 million.”

“Net interest income is estimated to be approximately $34 million versus $2.8 million last year as we continue to benefit from higher interest rates on our cash balance.”

“We remain on track to buyback a total of $950 million in stock for the year.”

“We remain on track to open a total of approximately 100 locations this year comprised of about 75 Ross and 25 dd's.”

“But I would say, it's not going to impact our 100 store opening plan for this year.”

“So we've guided to CapEx of $810 million.”

“but -- over the longer term, we believe we can achieve gradual improvement in profitability.”

“I would also say in the second quarter, when we look at it, will probably be the most impactful quarter for us from an incentive cost increase this year versus last year.”

“And assuming rates stay where they are, I expect that to continue as we move through the year.”

“Based on our first quarter results and guidance for the second quarter, comparable store sales for the 52 weeks ending January 27, 2024, are still planned to be relatively flat.”

“The tax rate is projected to be about 25%, and diluted shares outstanding are expected to be approximately 339 million.”

“We expect net interest income to be approximately $31 million.”

“But assuming those things stay stable, would continue to expect that to be a tailwind for us as we go forward.”

“Again, given all the volatility we've seen over time, don't want to get too far ahead of ourselves, but kind of what's embedded in the guidance is we'll continue to see that as a tailwind as we go through the balance of the year.”

“Probably not prudent to go that far ahead, but it clearly will be a tailwind on both sides for us in 2023.”

“And then we'd expect to grow our shareholder payouts as the business grows, as I said, deliberately over time, and we do that in a very deliberate and reliable manner over time.”

“We also plan to pay down COVID-related debt that begins to mature over the next few years in '24 and '25 as when those first tranches mature.”

“And then longer term, we think if we can grow the 3% to 4% comp as we did historically prior to COVID that we'll be able to leverage the P&L.”

“1 point of comp is approximately 10 to 15 basis points of EBIT margin expansion.”

“So all of those taken together, we believe we can grow our EBIT margins and profitability over time, but it will be very important to drive top line sales growth in that equation.”

“We also expect to see lower domestic freight rates this year, and that's embedded in our guidance.”

“We certainly, with ocean freights coming down, we'd expect to see a big benefit this year.”

“On the domestic side, because of wages -- elevated wages and still higher fuel cost than pre-pandemic, we'll harvest back some of the domestic freight, but not as tangible in 2023 as it will be on the ocean side.”

“While these costs will drop, they'll likely still be higher than pre-pandemic levels in the short term.”

“Our tax rate is expected to be approximately 24% to 25% and diluted shares are forecast to be about $341 million.”

“Net interest income is estimated to be $28 million.”

“In addition, capital expenditures for 2023 are planned to be approximately $810 million as we make further investments in our stores, supply chain and merchant processes to support our long-term growth and to increase efficiencies throughout the business.”

“The tax rate is projected to be about 24% to 25% and diluted shares outstanding are expected to be approximately $339 million.”

“Depreciation and amortization expense inclusive of stock-based amortization is forecast to be about $570 million for the year.”

“Net interest income is estimated to be $115 million.”

“For 2023, we expect to open approximately 100 new locations comprised of about 75 Ross and 25 dd's DISCOUNTS.”

“Certainly, ocean freight is going to be a tailwind for us going into 2023.”

“Marni, on the real estate front, we remain very confident in both chains and currently have no changes to our expansion plans.”

“I wouldn't predict where it's going to land other than any return would happen over a number of years and wouldn't happen overnight. We would expect it to have improved profitability over time is the way I'd answer that question.”

“I would say also, keep in mind, with lower incentive costs that had benefited our profitability this year, will reset the baseline next year. And thus, incentives will be a headwind in SG&A.”

“Ocean freight will probably be the most tangible tailwind for us.”

“Domestic freight, we see as slightly neutral, seeing some benefit in rate, but offset by still elevated fuel prices.”

“Markdowns will be higher than last year in fourth quarter, but not as impactful as in third quarter.”

“And weighted average diluted shares outstanding are projected to be about 342 million.”

“Our tax rate is expected to be approximately 23%.”

“Net interest income is estimated to be about $14 million.”

“This mainly reflects the anniversarying of significant cost pressures from ocean freight and lower incentives, partially offset by the deleveraging effect from lower same-store sales, unfavorable timing of packaway-related costs and higher markdowns.”

“Total sales are projected to be flat to up 3%.”

“That said, we face our easiest sales and earnings comparisons in the fourth quarter and are raising our guidance, given our third quarter sales momentum and improved holiday assortments.”

“We now expect to end the year with 1,693 Ross stores and 322 dd's DISCOUNTS locations for a net increase of 92 stores.”

“I would say domestic freight should be a tailwind as well, but that will be partly dependent on diesel fuel prices that are above $5 now. And so it will be partly dependent on what happens with fuel.”

“We remain on track to open a total of approximately 100 locations this year comprised of about 75 Ross and 25 dd.”

“Michael, it's really a function -- it's our biggest quarter. It bodes -- serves us well to be very cautious, especially after missing 2 quarters in a row on top line, so we are being cautious in the fourth quarter. And we do think it's going to be a very promotional environment, so that's what it's based on.”

“Marni, on real estate, no change. We expect to open 100 locations, and that's 41 stores over the balance of the year.”

“Domestic, at least for us, we expect domestic costs to be relatively neutral in the back half because we started seeing them rising in the back half of last year.”

“We're already starting to see some break in those costs here in the back half, especially on the import costs. So I think those will come down, which will be a benefit to us.”

“We also continue to return large amounts of cash to stockholders with a cumulative total of $1.4 billion expected to be paid out under our stock repurchase and dividend programs in 2022.”

“The tax rate is projected to be about 24% to 25% and diluted shares outstanding are expected to be approximately 345 million.”

“Interest expense is estimated to be approximately $400,000.”

“In addition, merchandise margin is forecast to be pressured by ongoing increases in ocean freight costs.”

“For the fourth quarter, same-store sales are planned to be down 4% to 7% versus a 9% increase in the last quarter of 2021.”

“As previously announced, we expect to buy back $950 million of common stock during fiscal 2022 under our 2-year $1.9 billion repurchase program that extends through fiscal 2023.”

“But I suspect over time, both of them will come down and maybe not to the levels that we saw pre-pandemic though.”

“and I think that probably will continue based on the amount of inventory that's in the country.”

“On the back half, that it does include our easiest compare in the fourth quarter. So fourth quarter would be the stronger comp.”

“As Barbara mentioned, this reflects our continued expectation for sales and profitability to improve as we move through the balance of the year.”

“The tax rate is projected to be about 25%, and diluted shares outstanding are expected to be approximately 348 million.”

“Net interest expense is expected to be approximately $15 million.”