Ross Stores are still growing — even if shoppers aren’t buying women’s clothing there.
The off-pricer announced first-quarter earnings for fiscal year 2019 Thursday after the bell, improving on both top and bottom lines.
Revenues grew 6 percent during the quarter to $3.79 billion, up from $3.58 billion during 2018’s first quarter. Net income was also up to $421 million, compared with $418 million last year.
In addition, same-store comps improved for the chain store, which operates more than 1,500 stores Ross Stores and 243 dd’s Discounts stores. The company said it was planning on opening approximately 28 new stores, including 22 Ross Store locations and six dd’s Discounts in the near term.
But investors weren’t impressed. A combination of disappointing sales in ladies apparel and slightly lower-than-expected earnings per share expectations for the second quarter caused shares to fall by more than 3 percent during after-hours trading.
“For the first quarter, we delivered sales gains at the high end of our guidance as well as better-than-expected earnings-per-share growth despite continued underperformance in ladies apparel,” Barbara Rentler, chief executive officer of Ross, said in a statement.
Rentler then told analysts during the company’s conference call that the miss in women’s apparel was driven by internal issues.
“They’re execution issues,” she said. “Our execution was below our standards. Our assortment was out of balance. And the value proposition wasn’t where we wanted it to be.”
Rentler didn’t specify what the exact execution errors were, but did clarify that “out of balance” likely meant something like “too many jeans or too many shorts,” and not enough of other items. She also said the decline in women’s apparel sales also negatively affected store traffic.
“We’re working diligently to improve this,” she said. “We believe we’ll see improved performance throughout the year. But because of our size, it will take some time.”
Meanwhile, the Midwest continued to be the company’s strongest market and men’s apparel and beauty outperformed across the board in the most recent quarter.
Ross also repurchased 3.4 million shares of common stock for $320 million last quarter, part of the company’s plan to buy back a total of $1.2 billion worth of common stock during the fiscal year.