Ross Stores Inc. stock traded higher by more than 2 percent to $57.50 in after-hours trading after the retailer reported a solid fiscal fourth-quarter but guided investors lower for the current quarter.
Net income for the quarter rose 6 percent to $264 million, or 66 cents a diluted share, up from $248 million, or 60 cents, a year ago. Adjusted earnings per share totaled 66 cents and was 2 cents above the 64 cents estimated by FactSet.
Sales for the three months ending Jan. 30 increased 7 percent to $3.25 billion from $3.03 billion a year earlier. This was slightly better than FactSet’s estimate for sales of $3.21 billion.
For the full fiscal year, the company’s net earnings rose 10 percent to $1.02 billion on an 8 percent rise in sales to $11.94 billion.
“Misses sportswear was the best-performing merchandise category for Ross for the fourth quarter, while the Midwest was the strongest region,” said Ross Stores chief executive officer Barbara Rentler on the company’s earnings conference call.
This year, the company is looking for same store sales to grow 1 to 2 percent and EPS of $2.59 to $2.71. Ross Stores forecast for the current quarter is lower than what investors had been expecting. The company said that for the first quarter ending April 30, EPS is projected to be flat to up 4 percent and in the range of 69 to 72 cents. The FactSet estimate for the first quarter was 76 cents.
“As we enter 2016, we continue to face our own challenging multiyear comparisons in an increasingly uncertain and volatile macroeconomic and retail environment. As a result, while we hope to do better, we believe it is prudent to maintain a somewhat cautious outlook when forecasting sales and earnings for the coming year,” Rentler said.
Ross reported that the fourth-quarter operating margin was 12.7 percent compared to 13.1 percent in the previous year, but for the fiscal year, operating margins rose 10 basis points to 13.6 percent.
The company’s board approved a 15 percent dividend increase and will now pay $0.135 per share beginning with the March dividend. Ross Stores also spent $700 million buying back shares during 2015 and plans on doing the same in 2016.