Ross Stores Inc. (ROST), the second largest off-price retailer of apparels and home accessories, reported a neat growth of 10% in comparable store sales for the four weeks ended April 30, 2011 following a decline of 1.0% for the five weeks ended April 2, 2011.
The recent results compare favorably with a gain of 3% in same-store sales in the prior-year month. April same-store sales came in better than the company’s forecast of a 4% to 5% growth for the month.
For the month under review, sales increased 14.0% to $651 million from $570 million in the year-ago period. Regionally, Texas and Florida were the top performing markets in the month with Dresses and Shoes category leaving a positive influence on results.
For the first quarter of fiscal 2011, comparable store sales increased 3% compared with a 10% growth in the prior-year period. Total sales for the quarter rose 7% to $2,075 million.
Execution in both the month and the quarter 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 5.0% increase in same-store sales in the month.
Guidance
Ross expects earnings per share for the first quarter of 2011 to be in the guided range of $1.47 to $1.48 on the back of higher gross margin and lower expenses. This reflects a growth of 27% to 28% over last year.
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 #2 Rank, which translates into a short-term Buy rating. Our long-term recommendation on the stock remains Neutral.
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