Similar to TJX Companies last week, Ross Stores reported strong Q4 2023 sales (comparable-store sales growth of +7%), margin expansion, and profits (+36%). The results reflect consumers’ celebrating the holiday and choosing treasure hunt value, “the improved assortments of quality branded bargains” according to CEO Barbara Rentler, and strong retail execution. These are reflected in traffic gains (+3.5% versus 0% last quarter, which aligns with our visitation data below), an improvement in conversion rate, and higher merchandise margin.
The callouts for categories of outperformance were cosmetics, home, and children’s. The children’s category callout is interesting given that we noted it as a weak category for the specialty channel (Carter's and Children’s Place) and department stores. Similar to Target and TJX, Ross Stores was more constructive on theft-shrink for 2024. One should expect Ross to pick up vendors and market share from Macy’s closure of 150 locations, although management had little to share on the topic.
