Ross Stores Shares Off as Discount Retailer Swings to Loss

Ross Stores' shares were lower after the discount retailer swung to a fiscal-first-quarter loss amid the coronavirus pandemic.
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Shares of Ross Stores  (ROST) - Get Report shares fell, after the discount retailer’s earnings sagged in the latest quarter amid the raging coronavirus pandemic.

The company also suspended its dividend and decided to reduce new-store openings this year.

In the fiscal first quarter ended May 2, the Dublin, Calif., company swung to a net loss of $306 million, or 87 cents a share, from a profit of $421 million, or $1.15 a share, in the year-earlier quarter.

Analysts polled by FactSet predicted a profit of 13 cents a share for the latest quarter.

Revenue dropped 53% in the first quarter, to $1.8 billion from $3.8 billion a year earlier. Analysts had forecast sales of $2.2 billion for the latest quarter.

Ross closed its 1,566 stores starting in March and began reopening them May 14.

“Our first-quarter results reflect the unprecedented impact the covid-19 pandemic has had on our business, which led to the closure of all stores and our first quarterly operating loss in more than 30 years,” Ross Chief Executive Barbara Rentler said in a statement.

“Operating margin for the period was negatively affected by the significant revenue decline from stores being closed for approximately half of the quarter and the one-time, non-cash inventory valuation charge.”

Morningstar analyst Zain Akbari expressed mixed views about Ross in a commentary after the earnings report.

Its “solid initial reopening performance, with its stores outperforming year-ago results … leads us to be somewhat more optimistic about Ross’ near-term prospects,” he wrote. 

Still, the analyst said, he was "somewhat skeptical that initial performance will extend through the year.”

Ross shares recently traded at $93.24, down 3.8%.