Here’s why Ross Stores shares fell 5.0% in after-hours trading

Ross Stores Inc. (NASDAQ: ROST) reported its financial results for the second quarter on Thursday that beat Wall Street estimates as easing COVID-19 restrictions saw people returning to the discount store for shopping.

Shares of the company, however, fell more than 5.0% in after-hours trading as it warned higher costs related to the supply chain and the delta variant could weigh on performance in the current quarter.

Financial performance

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Ross Stores said its net income in the second quarter came in at $494 million that translates to $1.39 per share. In the same quarter last year, its net income was capped at a sharply lower $22 million or 6 cents a share.  

The California-based company valued its sales in the recent quarter at $4.8 billion versus the year-ago figure of $2.7 billion. Before the pandemic in Q2 of 2019, Ross Stores had posted $4.0 billion in sales and $413 million of net income.

In comparison, analysts had called for $1.0 of EPS on $4.56 billion in sales. The earnings report comes a day after peer TJX Companies also reported market-beating quarterly results.

Future guidance and dividend

For the fiscal third quarter, Ross Stores now forecast its per-share earnings to fall between 61 cents and 69 cents on an up to 7.0% annualised growth in same-store sales. The discount store company expects $4.20 to $4.38 of EPS on an up to 11% growth in comparable sales this year.

As per CEO Barbara Rentler, Ross Stores bought back $176 million worth of its own shares in Q2. Its target for the year is to repurchase $650 million of its stock. The earnings report comes a day after its board declared 28.5 cents per share of a quarterly cash dividend.