We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Higher SG&A Expenses Mar Ross Stores' (ROST) Q2 Earnings?
Read MoreHide Full Article
Ross Stores, Inc. (ROST - Free Report) is scheduled to release its second-quarter fiscal 2023 results on Aug 17. The off-price apparel and home accessories retailer is likely to have witnessed revenue and earnings growth in the to-be-reported quarter.
The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $4.7 billion, indicating growth of 3% from the figure reported in the year-ago quarter. For fiscal second-quarter earnings, the consensus mark of $1.15 per share suggests growth of 3.6% from the year-ago quarter's reported number. The consensus mark for earnings has moved up by a penny in the past seven days.
In the last reported quarter, Ross Stores delivered an earnings surprise of 2.8%. In the trailing four quarters, it delivered an earnings beat of 11.5%, on average.
Ross Stores has been benefiting from robust customer demand and improved traffic trends in the retail industry. Sales in the fiscal second quarter are likely to have benefited from broad-based growth across merchandise categories and regions. Gains at the core business, driven by consumers' continued focus on value and the company’s ability to deliver value bargains to customers, bode well.
Our model predicts comparable store sales to be flat year over year, driven by strength across its namesake and dd's DISCOUNTS business formats.
On its last reported quarter’s earnings call, Ross Stores was optimistic about its second-quarter fiscal 2023 performance. The company expects comps to remain flat year over year for second-quarter fiscal 2023, while total sales are forecast to increase 1-4% year over year. The bottom line is envisioned to be $1.07-$1.14 per share for the fiscal second quarter.
Ross Stores has been consistent with the execution of its store expansion plans, which are likely to have aided the top line. The company's store expansion efforts have been focused on continually increasing penetration in existing and new markets. The second-quarter fiscal 2023 performance is anticipated to have gained from the company’s return to normal store opening targets. Gains from new stores are expected to get reflected in ROST’s sales for the fiscal second quarter.
However, Ross Stores has been witnessing the effects of the ongoing financial pressures on dd’s DISCOUNTS’ lower-income customer base and increased markdowns. The escalating inflationary pressures are likely to have affected dd's DISCOUNTS’ revenues and comps in the to-be-reported quarter.
Further, Ross Stores’ cost of goods sold is likely to have witnessed the continued impacts of lower merchandise margins, unfavorable timing of pack-away-related costs and increased markdowns. Unfavorable timing of pack-away-related expenses and deleverage from its new distribution center are expected to have led to higher distribution costs.
Additionally, increased incentive compensation expenses are likely to have led to higher SG&A expenses, affecting the operating margin performance in the to-be-reported quarter.
Our model predicts the cost of goods sold to increase 2.3% year over year to $3,476.8 million in the fiscal second quarter. As a percentage of sales, we expect SG&A expenses to increase 120 basis points to 15.8% in the fiscal second quarter. In dollar terms, SG&A expenses are expected to increase 11.5% year over year to $743.8 million.
Consequently, we estimate the operating margin to contract 120 bps to 10.1% in the to-be-reported quarter. On a dollar basis, operating profit is expected to decline 7.9% year over year in the fiscal second quarter.
Zacks Model
Our proven model does not conclusively predict an earnings beat for Ross Stores this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Ross Stores has an Earnings ESP of -0.87% and a Zacks Rank #2.
Stocks With Favorable Combination
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
The TJX Companies (TJX - Free Report) currently has an Earnings ESP of +2.63% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2023 results. The consensus mark for TJX’s quarterly revenues is pegged at $12.4 billion, which suggests growth of 4.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for TJX’s earnings has been unchanged at 76 cents per share in the past 30 days. The consensus estimate indicates 10.1% growth from the year-ago quarter’s reported figure.
Urban Outfitters (URBN - Free Report) currently has an Earnings ESP of +2.27% and a Zacks Rank #2. The company is likely to register growth in the top and bottom lines when it reports second-quarter fiscal 2023 numbers. The consensus mark for URBN’s quarterly earnings has moved up by a penny to 88 cents per share in the past seven days. The consensus estimate suggests 37.5% growth from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Urban Outfitters’ quarterly revenues is pegged at $1.24 billion, which suggests growth of 5.1% from the figure reported in the prior-year quarter.
Tapestry (TPR - Free Report) currently has an Earnings ESP of +1.71% and a Zacks Rank #3. The company is likely to register growth in the top and bottom lines when it reports second-quarter 2023 results. The consensus mark for TPR’s quarterly revenues is pegged at $1.7 billion, which suggests 2.3% growth from the figure reported in the prior-year quarter.
The consensus mark for TPR’s quarterly earnings has moved up by a penny in the past seven days to 96 cents per share. The consensus estimate suggests growth of 23.1% from the year-ago quarter.
Image: Bigstock
Will Higher SG&A Expenses Mar Ross Stores' (ROST) Q2 Earnings?
Ross Stores, Inc. (ROST - Free Report) is scheduled to release its second-quarter fiscal 2023 results on Aug 17. The off-price apparel and home accessories retailer is likely to have witnessed revenue and earnings growth in the to-be-reported quarter.
The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $4.7 billion, indicating growth of 3% from the figure reported in the year-ago quarter. For fiscal second-quarter earnings, the consensus mark of $1.15 per share suggests growth of 3.6% from the year-ago quarter's reported number. The consensus mark for earnings has moved up by a penny in the past seven days.
In the last reported quarter, Ross Stores delivered an earnings surprise of 2.8%. In the trailing four quarters, it delivered an earnings beat of 11.5%, on average.
Ross Stores, Inc. Price and EPS Surprise
Ross Stores, Inc. price-eps-surprise | Ross Stores, Inc. Quote
Key Factors to Note
Ross Stores has been benefiting from robust customer demand and improved traffic trends in the retail industry. Sales in the fiscal second quarter are likely to have benefited from broad-based growth across merchandise categories and regions. Gains at the core business, driven by consumers' continued focus on value and the company’s ability to deliver value bargains to customers, bode well.
Our model predicts comparable store sales to be flat year over year, driven by strength across its namesake and dd's DISCOUNTS business formats.
On its last reported quarter’s earnings call, Ross Stores was optimistic about its second-quarter fiscal 2023 performance. The company expects comps to remain flat year over year for second-quarter fiscal 2023, while total sales are forecast to increase 1-4% year over year. The bottom line is envisioned to be $1.07-$1.14 per share for the fiscal second quarter.
Ross Stores has been consistent with the execution of its store expansion plans, which are likely to have aided the top line. The company's store expansion efforts have been focused on continually increasing penetration in existing and new markets. The second-quarter fiscal 2023 performance is anticipated to have gained from the company’s return to normal store opening targets. Gains from new stores are expected to get reflected in ROST’s sales for the fiscal second quarter.
However, Ross Stores has been witnessing the effects of the ongoing financial pressures on dd’s DISCOUNTS’ lower-income customer base and increased markdowns. The escalating inflationary pressures are likely to have affected dd's DISCOUNTS’ revenues and comps in the to-be-reported quarter.
Further, Ross Stores’ cost of goods sold is likely to have witnessed the continued impacts of lower merchandise margins, unfavorable timing of pack-away-related costs and increased markdowns. Unfavorable timing of pack-away-related expenses and deleverage from its new distribution center are expected to have led to higher distribution costs.
Additionally, increased incentive compensation expenses are likely to have led to higher SG&A expenses, affecting the operating margin performance in the to-be-reported quarter.
Our model predicts the cost of goods sold to increase 2.3% year over year to $3,476.8 million in the fiscal second quarter. As a percentage of sales, we expect SG&A expenses to increase 120 basis points to 15.8% in the fiscal second quarter. In dollar terms, SG&A expenses are expected to increase 11.5% year over year to $743.8 million.
Consequently, we estimate the operating margin to contract 120 bps to 10.1% in the to-be-reported quarter. On a dollar basis, operating profit is expected to decline 7.9% year over year in the fiscal second quarter.
Zacks Model
Our proven model does not conclusively predict an earnings beat for Ross Stores this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Ross Stores has an Earnings ESP of -0.87% and a Zacks Rank #2.
Stocks With Favorable Combination
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
The TJX Companies (TJX - Free Report) currently has an Earnings ESP of +2.63% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2023 results. The consensus mark for TJX’s quarterly revenues is pegged at $12.4 billion, which suggests growth of 4.7% from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TJX’s earnings has been unchanged at 76 cents per share in the past 30 days. The consensus estimate indicates 10.1% growth from the year-ago quarter’s reported figure.
Urban Outfitters (URBN - Free Report) currently has an Earnings ESP of +2.27% and a Zacks Rank #2. The company is likely to register growth in the top and bottom lines when it reports second-quarter fiscal 2023 numbers. The consensus mark for URBN’s quarterly earnings has moved up by a penny to 88 cents per share in the past seven days. The consensus estimate suggests 37.5% growth from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Urban Outfitters’ quarterly revenues is pegged at $1.24 billion, which suggests growth of 5.1% from the figure reported in the prior-year quarter.
Tapestry (TPR - Free Report) currently has an Earnings ESP of +1.71% and a Zacks Rank #3. The company is likely to register growth in the top and bottom lines when it reports second-quarter 2023 results. The consensus mark for TPR’s quarterly revenues is pegged at $1.7 billion, which suggests 2.3% growth from the figure reported in the prior-year quarter.
The consensus mark for TPR’s quarterly earnings has moved up by a penny in the past seven days to 96 cents per share. The consensus estimate suggests growth of 23.1% from the year-ago quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.