Ross' August Comps Ups 5% - Analyst Blog

Off-price retailer of apparels and home accessories, Ross Stores Inc.’s (ROST), comparable store sales (comps) for August increased 5% versus a 6% increase in the year-earlier period. The increase was attributable to attractive bargains on a variety of products for back-to-school customers. August comps also surpassed the company’s expectation of a 3% – 4% increase. Total sales for the four-week period ended August 28, 2010, surged 9% to $608 million from the year-go period.

Regionally, Florida played the catalyst with comps increasing in the high single digit, while dresses, home and shoes were the strongest merchandise categories in the month. Lean inventories also contributed to the robust performance in the month, which decreased 12% year over year on a per store basis.

Ross also beat the comparable store sales of its nearest competitor, The TJX Companies Inc. (TJX), which reported a growth of 2.0% in the month. It is worth mentioning that while Florida remains Ross’ best performing region, TJX cited Florida as its weakest region.

For the seven months ended August 28, 2010, total sales accelerated 11% to $4.455 billion from the year-ago period, and comparable store sales in the period improved 7% compared with a 3% increase in the year-earlier period.

The company also reaffirmed its comps forecast of up 1% to 2% for September, flat to up 1% for October. Ross also reiterated its third quarter earnings guidance in the range of 79 – 83 cents.

Ross has a total store count of 1036 comprising 979 Ross Dress for Less (“Ross”) stores and 57 dd’s DISCOUNTS locations. The company’s shares offer a solid long-term investment, based on solid financials and strong leadership. Moreover, the company’s lean and defensive inventories are reflective of its impressive management.