Ross Stores takes ‘conservative approach’ to forecasting its business this year Ross Stores Inc. late Tuesday blew past expectations for its holiday quarter but spooked investors by saying that higher costs of living continue to pressure its customers.

While inflation has moderated, there is ongoing macroeconomic and geopolitical uncertainty, and “housing, food, and gasoline costs remain elevated and continue to pressure our low- to moderate-income customers’ discretionary spend,” the off-price retailer said.

“As a result, while we hope to do better, we believe it is prudent to continue to take a conservative approach to forecasting our business in 2024,” the company said.

Ross ROST, -0.53% earned $610 million, or $1.82 a share, in the fourth quarter, compared with $447 million, or $1.31 a share, in the year-ago period.

Sales rose to $6 billion from $5.2 billion a year ago, and comparable-store sales were up 7% over the same period last year.

Analysts polled by FactSet expected the retailer to report earnings of $1.66 a share on sales of $5.8 billion. Same-store sales were forecast to be up 3.4%.

“Our above-plan sales were driven by customers’ positive response to our improved assortments of quality branded bargains throughout our stores,” Ross Chief Executive Barbara Rentler said in a statement.

Ross said it expects 2024 same-store sales to grow 2% to 3%, which would come on top of a 5% gain in 2023. It projected 2024 EPS between $5.64 and $5.89. First-quarter EPS was projected to be between $1.29 and $1.35.

The FactSet consensus calls for 2024 EPS of $5.40 a share and first-quarter EPS of $1.26.

Target Corp. TGT, +12.02% earlier Tuesday beat Wall Street expectations for its fourth quarter but said that despite encouraging signs for the U.S. economy, some of its customers feel “stretched.”