Ross Stores Inc. ( “>ROST ), the second largest off-price retailer of apparels and home accessories, recently marked the 12th consecutive quarter of positive comparable store sales trend, clocking 3.0% for the four-week period ended January 29, 2011. Ross also upgraded its outlook for the fourth quarter of fiscal 2010.
Regionally, Florida and Southwest acted as the catalyst for the increase in comparable store sales. Categories like Juniors and Dresses left a positive footprint on results.
Ross also surpassed the comparable store sales of its nearest competitor, The TJXCompanies Inc. (TJX), which reported a 2.0% growth in the month.
For the month under review, sales increased 7.0% to $441 million from $411.0 million in the year-ago quarter.
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 the 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
On the back of robust January sales, Ross increased its earnings per share expectation for the fourth quarter of 2010 to a range of $1.36 to $1.37 from $1.32 to $1.34 earlier. 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 2019.
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 January 29, 2011 the company operated 988 Ross Dress for Less (“Ross”) stores and 67 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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