USA - 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

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.

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