A Ross storefront.

Investors weren’t happy with the lowered guidance from Ross Stores Inc. on Thursday, which came after the equity markets closed for the day.

Shares of Ross Stores initially closed the day’s trading session up 0.4 percent to $82.96, but then fell 5.0 percent to $78.79 in early after-hours trading after the company lowered estimates for the second quarter and the full year.

For the three months ended May 5, net income was up 30.3 percent to $418.3 million, or $1.11 a diluted share, from $321 million, or 82 cents, a year ago.  Sales gained 8.5 percent to $3.59 billion from $3.31 billion, as comparable-store sales rose 3 percent in the quarter.

The retailer bested Wall Street’s estimates of EPS of $1.07 on sales of $3.54 billion.

Barbara Rentler, chief executive officer, said, “Despite unfavorable weather throughout the period, we achieved above-plan growth in both sales and earnings in the first quarter.”

The ceo said operating margin for the period was 15.1 percent, down slightly from a year ago as “improvement in merchandise gross margin and the favorable timing of pack away-related expenses were offset by higher freight costs and wage-related investments.”

She said that for the second quarter ending Aug. 4, the company is expecting comps to be up 1 to 2 percent, with EPS guided to between 95 cents to 99 cents. Further EPS for the full year ending Feb. 2 was forecasted in the range of $3.92 to $4.05.

Guidance for both periods were just below analysts’ expectations, which included EPS of $1.03 for the second quarter and $4.06 for the full year.

In a conference call to Wall Street analysts, she said the strongest merchandise category in the quarter at Ross was men’s.

Separately, Michael J. Hartshorn, executive vice president, chief financial officer and principal accounting officer, said the company repurchased 3.3 million shares of common stock for a total purchase price of $255 million. “We remain on track to buy back a total of $1.075 billion in stock for the year,” he said.

The cfo also said the company plans to open 30 new stores in the second quarter, or 22 under the Ross nameplate and 8 DD’s Discounts locations.



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