Ross Stores (ROST) shares plummeted 14.58% in pre-market trading on Friday, following the company's decision to withdraw its full-year guidance due to growing concerns over tariffs and their potential impact on profitability. The discount retailer's cautious outlook and unexpected withdrawal of annual forecasts have sent shockwaves through the market, signaling potential challenges ahead in the face of ongoing trade tensions.

In its latest earnings report, Ross Stores revealed that while it directly imports only a small portion of its merchandise, more than half of the goods it sells originate from China. This significant exposure to Chinese imports has raised alarm bells among investors, as the company now expects pressure on its profitability if tariffs remain at elevated levels. CEO Jim Conroy cited "heightened macroeconomic and geopolitical uncertainty" as the primary reason for withdrawing the annual guidance, specifically pointing to "prolonged inflation and evolving trade policies" as key concerns.

The company now projects second-quarter earnings per share between $1.40 and $1.55, well below the consensus estimate of $1.65, factoring in an anticipated cost impact of $0.11 to $0.16 per share due to announced tariffs. This cautious stance and withdrawal of full-year guidance signal potential challenges ahead as Ross Stores navigates an uncertain trade environment and persistent inflationary pressures. The market's sharp reaction reflects growing investor concerns about the broader implications of trade tensions on retailers heavily reliant on Chinese imports.