Ross Stores, a prominent retailer in the retail industry, is increasing its annual profit forecast for 2023 due to strong customer demand and easing freight costs.
Sticky inflation has prompted consumers to cut spending on higher-priced goods, resulting in a boost in sales for retailers like Ross Stores and Burlington.
In the first quarter, Ross Stores experienced a significant rise in merchandise margin, with an increase of 120 basis points, thanks to the reduction in ocean freight costs.
Other retailers like TJX Cos Inc and Target have also benefited from this trend.
Although Ross Stores shares fell slightly in extended trading, mainly due to a second-quarter profit forecast below estimates due to higher incentive compensations and wages, the company remains optimistic about its annual comparable sales, expecting them to be relatively flat.
CEO Barbara of Ross Stores has taken a conservative approach in the forecast, considering the cautious consumer sentiment, especially among lower-income customers.
Nevertheless, the company’s first-quarter profit per share of $1.09 exceeded analysts’ average estimate of $1.06 per share, as reported by IBES data from Refinitiv.
Additionally, same-store sales during the first quarter rose by 1%, surpassing estimates of a 0.4% increase.
With these positive developments, Ross Stores now expects a profit per share for 2023 ranging from $4.77 to $4.99, compared to its previous forecast of $4.65 to $4.95..
