Ross Stores Stock Slides Pre-Earnings
TJX's main rival, Ross Stores, is set to report Q4 results today, and the market is nervous. The stock slid 1.6% ahead of the release, with analysts watching closely for signs of margin pressure or inventory challenges in the off-price sector.
The fourth-quarter announcement follows a fiscal year where Ross Stores generated over $21.1 billion in sales across its 2,100+ locations. Analysts are projecting quarterly earnings per share of around $1.89 on revenue of approximately $6.44 billion. This report comes after rival TJX Companies posted strong fourth-quarter results, with a 5% increase in consolidated comparable store sales and a 13% rise in net sales to $16.4 billion. For its full fiscal year, TJX surpassed $50 billion in sales for the first time. The off-price retail sector as a whole is experiencing robust growth, with the global market valued at over $317 billion in 2024 and projected to reach nearly $679 billion by 2034. This expansion is fueled by a "trade-down phenomenon" as consumers seek value amid economic uncertainty. Despite the sector's growth, Ross has forecasted a cautious start to the year, projecting a potential comparable sales decline of up to 3% for the first quarter. For the full 2025 fiscal year, the company anticipates earnings per share to be in the range of $5.95 to $6.55. While apparel and footwear remain the dominant categories in off-price retail, accounting for over 57% of sales, non-apparel has been a source of strength for Ross. Cosmetics was recently highlighted as a standout performing category for the retailer. Operationally, Ross maintained a 12.4% operating margin in the fourth quarter, which was flat compared to the previous year. The company's results included a one-time benefit from the sale of a packaway facility, equivalent to about $0.14 per share. In terms of market position, TJX holds the largest share of the U.S. off-price market, while Ross is second. TJX operates a more diversified and global portfolio of stores, whereas Ross's operations are concentrated in the United States. Looking at shareholder returns, Ross repurchased 1.7 million shares for $262 million in the fourth quarter and plans to buy back another $1.05 billion in stock during fiscal 2025. The company also recently increased its quarterly dividend by 10%.
