Opinions
Jenny Harrington, CEO, Gilman Hill Asset Management
Ross Stores Inc.
ROST-Q
SELL
Feb 13, 2023
N/A
Stock price when the opinion was issued
clothing stores
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HOLD
She also owns American Eagle Outfitters and Foot Locker in the retail space. Ross is actually up only 1% year to date, but up 40% in the past month. AEO is -40% YTD, up 50% in the last month, and Foot Locker is 15% YTD and 15% past month. The theme for all these--and why should bought them--was that the street punished these stocks so severely, expecting them to lay down and DIE and customers will never spend money again. Well, American consumers are very resilient and continue to spend. Ross is actually not going that great: margin contraction, and 5% lower same-store sales, BUT those were so much better than expected. Yes, you should be in discount retailing, but this share has already shot up this month. The low-hanging fruit, the time to buy, was last summer--and people missed it. Forget 40% moves, but there will be some movement. AEO cut their dividend last quarter, so she exited. She's holding onto Ross and Foot Locker, because there's still upside. Ross is expensive at 20x earnings, so use it as a source of funds. Foot Locker remains cheap and still buying back shares. Do your homework in the retail space. Problem is that all the retail ships have risen in recent weeks and we won't see those gains again.
clothing stores
BUY
BUY
Helped by buying goods where the tariff has already been paid by someone else. Key metric is same-store sales: +1% in 2025, and last quarter sales were a little light. Are showing strength in cosmetics, though. They just reiterated ther full-year focast to the upper end of Wall Street's consensus. Numbers were in-line last quarter. Second-best among the discount apparel retailers. Trades at only 22x 2026 PE, lower than peers. PEG ratio is 2.2. They buyback 2% of shares annually.
clothing stores
Just sold it. Share are up 21% in last three months off the lows and trades at 22x earnings, but peers like Ralph Lauren are up only 12-13%. Ross is higher because of the notion that 2022's inventory surplus will be good for 2023, so share ran up in anticipation of that.