Ross Stores Inc. delivered a surprise profit in the second quarter even as its stores remained shuttered for a portion of the three-month period.
The Dublin, Calif.-based company logged an income of $22 million, or earnings of $0.06 per share, compared with last year’s income of $413 million, or EPS of $1.14. Wall Street had forecasted a loss of 26 cents. Revenues, on the other hand, were $2.7 billion — down from $4 billion in the prior year but above analysts’ expectations of $2.47 billion in sales.
According to the company, both earnings and revenues for the 13 weeks ended Aug. 1 reflected the coronavirus-related temporarily closures of its entire brick-and-mortar fleet of Ross Dress for Less and dd’s Discounts locations, which were shut down on March 20 and continued through the first month of the second quarter. The chain began a phased reopening process in mid-May, and the “vast majority” of its units were back in business by the end of June.
For those reopened outposts, same-store sales were down 12%. “Comparable stores sales during the quarter were impacted by a number of factors: During the initial reopenings, sales were ahead of our conservative plans as we benefitted from pent-up demand and aggressive markdowns to clear aged inventory,” CEO Barbara Rentler said in a statement. “In the weeks thereafter, trends were negatively impacted from depleted store inventory levels, while we were ramping up our buying and distribution capabilities.”
The executive chief added that these trends “have not materially changed” as Ross moves into the third quarter. For the first two-and-a-half weeks of the period, the retailer reported that comps were “trending down mid-teens” versus the previous year.
“There remains significant uncertainty on how the pandemic will continue to evolve and affect consumer demand and the economy, and the potential exists for additional government mandated shutdowns if COVID-19 cases remain elevated or further increase,” Rentler explained. “Given these risks, we will continue to plan and manage our business very cautiously.”
Like many nationwide retail businesses, Ross opted against providing an outlook for the next quarter and the 2020 fiscal year due to the unknown impact of the health crisis. At the beginning of May, it had roughly $3.8 million in cash and equivalents.