MW Ross Stores warns of 'heightened volatility,' but says it's too early to gauge impact of this Trump policy

By Bill Peters

CEO says winter weather, volatile economic environment hurt customer traffic last quarter

Discount retailer Ross Stores Inc. on Tuesday forecast the possibility of falling sales this fiscal year, and cited slowing trends over recent weeks as harsh weather kept people indoors and worries about the economy persisted.

Ross Stores $(ROST)$ said it expects same-store sales for its fiscal 2025, which ends on Jan. 31, 2026, to be within a range of down 1% to up 2%, worse than FactSet expectations for a 3% gain. The chain said it expects earnings per share of $5.95 to $6.55, compared with FactSet forecasts for $6.67.

Shares were up 0.7% after hours. As of Tuesday's close, the stock was down 8.8% over the past 12 months.

The chain offered up that outlook after results from retailers such as Target Corp. $(TGT)$ and Nordstrom Inc. $(JWN)$ failed to inspire investors earlier in the day, and as some data so far this year points to more consumer hesitation, as prices stay high and President Donald Trump steps up tariffs and tries to shrink the U.S. government.

During Ross Stores' earnings call, executives also faced questions about the potential sales impact from Trump's stance on immigration, which calls for a large deportation effort.

Chief Operating Officer Michael Hartshorn said on the call that "we over-index to the Hispanic customer versus the general population."

"We'll have to wait and see how the macroeconomic environment, and as you say, the immigration policy, [is] impacting this important customer for us longer term." He added that the company believed "the initial shock value of the recent policy actions could dissipate over time."

As for tariffs, executives noted that the company had been through them during Trump's first stay in the White House, and that they had negotiated costs and, at times, raised prices. It said its exposure to Mexico and Canada - which the U.S. on Tuesday hit with a 25% tariff on imports - was small.

Economists have worried that tariffs could raise prices for consumers, after higher prices over the past three years have weighed on demand for things like clothing and home goods. But Ross Stores' executives said that disruptions like tariffs could ultimately benefit them, as the company snaps up items that other retailers can't sell and, in turn, sells those items at a discount.

For the fourth quarter, Ross Stores earned $1.79 a share, with revenue of $5.9 billion and a 3% same-store sales increase.

Analysts polled by FactSet expected fourth-quarter earnings per share of $1.66, on revenue of $5.94 billion and a 2.6% same-store sales gain.

Chief Executive Jim Conroy said in Ross Stores' earnings release that it was wise to stay cautious on financial forecasts, given recent trends.

"While we were pleased with our 2024 results, including the holiday selling period, sales trends began softening later in January and into February," he said. "We believe a combination of unseasonable weather and heightened volatility in the macroeconomic and geopolitical environments has negatively impacted customer traffic."

He added that some of the recent difficulties could be "transitory in nature." During the call, management said that business in areas that were hit hard by winter weather got better through last month.

Conroy became Ross Stores' became chief executive in February, succeeding Barbara Rentler. He said on the call that he felt there were opportunities to make the store environment and shopping experience better at Ross, and said marketing was the chain's "least developed muscle."

But he said that "as I think about ongoing changes, they'll be more sort of evolutionary in nature, and nothing sort of abrupt or a hard left turn or hard right turn."

-Bill Peters

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March 04, 2025 18:34 ET (23:34 GMT)

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