Ross Stores Inc. (ROST), the second largest off-price retailer of apparels and home accessories, recently marked the 13th consecutive quarter of positive comparable store sales trend, clocking 3.0% for the four weeks ended February 26, 2011. February same-store sales comfortably outpaced the company’s forecast for flat to up 1% for the month.

Regionally, Mid-Atlantic and Florida acted as the catalyst for the increase in comparable store sales. Categories like Juniors and Dresses left a positive influence on results.   

Ross’ nearest competitor, The TJX Companies Inc. (TJX), also reported a 3.0% growth in the month.

For the month under review, sales increased 3.0% to $1.5 billion from $1.4 billion in the year-ago period.

For the fourth quarter of fiscal 2010, the company generated a top-line growth of 8.0% climbing to $2,145 million from $1,980 million recorded in the prior-year quarter. Comparable store sales for the period jumped 4.0%.

For fiscal 2010, the company registered a sales growth of 9.0% to $7,866 million from $7,184 million in fiscal 2010. Comparable store sales for the period jumped 5% compared to a 6% increase in the prior year.

Guidance

Ross expects earnings per share for the fourth quarter of 2010 to be in the range of $1.36 to $1.37. The guided range reflects an increase of 17% to 18% from $1.16 reported in the fourth quarter of fiscal 2009. For fiscal 2010, the company expects to earn in the range of $4.62 to $4.63, which represents a sharp 31% increase from $3.54 reported in fiscal 2009.

Stock Repurchase and Dividend

Ross announced that it expects to repurchase $900 million of its common stock over the next two years through fiscal 2012.

The company also hiked the quarterly cash dividend by 38% year over year to 22 cents a share. The dividend is payable on March 31, 2011 to stockholders of record as of February 18, 2011. 

As of February 26, 2011, the company operated 988 Ross Dress for Less (“Ross”) stores and 70 dd’s DISCOUNTS locations.

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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