Ross Stores Inc (ROST) Q2 2024 Earnings Report

Ross Stores delivered a solid QQ2 2024 performance, underscoring the resilience of its off-price value model in a higher-cost consumer environment. Revenue rose 7% year over year to approximately $5.29 billion, with comparable-store sales up 4% and operating margin expanding 115 basis points to about 12.5% versus the prior year. The strength was broad-based across merchandise categories, with Cosmetics and Children's leading the top line, while dd's DISCOUNTS also improved in tandem with Ross. Management attributed the improvement to a stronger value proposition and higher sell-through of branded bargains, supported by ongoing supply-chain and logistical efficiency initiatives. However, management signaled continued pressure on merchandise margins (approximately 80 bps in Q2) from ramped brand penetration, even as distribution, buying costs and freight costs contributed modestly to margin expansion. The company issued updated full-year guidance, projecting EPS of $6.00–$6.13 for FY2024, with Q3 and Q4 comparable sales growth forecast at roughly 2–3% each and Q3–Q4 earnings per share guidance of $1.35–$1.41 and $1.60–$1.67, respectively. Ross also reiterated its emphasis on market-share gains through value leadership and an expanded brand mix, while planning roughly 90 new stores in 2024 (about 75 Ross and 15 dd's). Net debt remained manageable, underpinned by strong operating cash flow and a healthy balance sheet, enabling a buyback program of about $1.05 billion for the year. In sum, Ross is navigating near-term margin pressure from its strategic brand investments while leveraging efficiency gains and a compelling value proposition to support profitable growth and shareholder value in 2H24 and beyond.