Ross Stores Inc. (ROST), the second largest off-price retailer of apparel and home accessories, reported a more modest growth of 4% in comparable store sales for the four weeks ended May 28, 2011 following an increase of 10% for the four weeks ended April 30, 2011.
The recent results compare unfavorably with a gain of 5% in same-store sales in the prior-year month. April same-store sales however came in better than the company’s forecast of a 2% to 3% growth for the month.
For the month under review, sales increased 8.0% to $661 million from $614 million in the year-ago period. Regionally, Florida was the top performing market with categories like Dresses and Accessories leaving a positive influence on results.
For the 17 weeks ended May 28, 2011, comparable store sales increased 4% compared with 8% growth in the prior-year period. Total sales for the period rose 7% to $2,736 million.
Execution in both the month and 17-week period was helped by the company’s aptitude in providing attractive brand name bargains to customers who value quality and price.
Ross’ nearest competitor, The TJX Companies Inc. (TJX), also reported a 2.0% increase in same-store sales in the month.
Guidance
Ross expects same-store sales growth of 2% to 3% for both June and July.
We believe that Ross’ continuous effort to increase its store base coupled with the ability to deliver positive comparable same-store sales will augur well for top-line growth.
Ross’ shares maintain a Zacks #1 Rank, which translates into a short-term Strong Buy rating. Our long-term recommendation on the stock remains Outperform.
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