Ross Stores Inc. (ROST), the second largest off-price retailer of apparel and home accessories, reported a growth of 7% in comparable store sales for the four-week period ended July 30, 2011.
The recent results were above the 2% gain in same-store sales in the prior-year month. However, July same-store sales came in better than the company’s forecast of a 2% to 3% growth for the month.
For the month under review, sales increased 11% to $635 million from $573 million in the year-ago period. Regionally, Florida and Texas were the top performing markets with categories like Dresses and Shoes positively influencing results.
For the thirteen-week period ended July 30, 2011, comparable store sales increased 5% compared with a 4% increase in the prior-year period. Total sales for the period rose 9% to $2,089 million from $1,912 million. However, comparable store sales for the twenty-six months ended on July 30, 2011 reported a year-over-year growth of 4%. While total sales for the period climbed up 8% to $4,164 million from $3,847 million.
Execution during the month and twenty-six week period was driven 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 an increase of 4% in same-store sales for the month.
Guidance
Bolstered by better-than-expected sales in July 2011, the company now expects earnings per share of $1.27-$1.28 for the second quarter of fiscal 2011, up from the prior range of $1.20-$1.22.
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 its top-line growth.
Ross’ shares maintain a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Our long-term recommendation on the stock remains ‘Neutral’.
