Ross Stores Inc.
), one of the largest off-price apparel and home fashion chain
retailers in the U.S., came up with stronger-than-expected sales
and same-store sales numbers for the four weeks and first quarter
ended April 28, 2012, prompting management to raise its
first-quarter earnings guidance.
Driven by strong consumer demand for the company's wide array of
discounted brands, Ross Stores' comparable sales in April 2012
increased 7% on top of 10% growth registered in the prior-year
period, beating its own guidance range of positive 1%-2% growth.
Consequently, the company's total sales for the four-week period
surged 11% to $725 million compared with $651 million in the
Further, Ross Stores' first-quarter sales increased 14% to
$2,357 million from $2,075 million in the year-ago quarter,
primarily driven by strong comparable store sales growth.
Currently, the Zacks Consensus Estimate for the quarter is $2,324
million. Comparable sales during the quarter grew 9% from the
We believe robust sales in the quarter were mainly driven by
favorable weather condition across the markets, where the company
operates and its continued focus on value, which boosted the
company's merchandise and geographic sales.
On the back of the remarkable comps performance, management
raised its earnings forecast for the first quarter of 2012. The
company now expects earnings per share in the range of 92 cents to
93 cents compared with its prior guidance of 89 cents to 91 cents,
reflecting a 24% to 26% increase from the year-ago quarter's
earnings of 74 cents per share. Currently, the Zacks Consensus
Estimate for the quarter is 93 cents per share.
One of Ross Store's competitors,
) registered a decline of 2% in its April 2012 same-store sales.
Meanwhile, another competitor,
), reported positive same store sales of 7.1% for the month of
Ross Stores and its subsidiaries operate two chains of off-price
retail apparel and home accessories stores in the U.S. These stores
offer branded apparel, shoes, and accessories for the entire
family, as well as gift items, linens, and other home-related
The company also offers small furniture and furniture accents,
educational toys and games, luggage, gourmet food and cookware,
watches, sporting goods and fine jewelry, which provide it with a
competitive edge over its rivals.
Ross Stores has implemented a micro-merchandising tool, through
which the company expects to enhance its total sales and
profitability by targeting expansion in its existing markets.
Moreover, Ross remains focused on new store growth, share buybacks,
and attractive dividend payouts even as many other retailers are
implementing dramatic cutbacks, and has the financial strength to
continue its course and build shareholders' value.
Ross' shares maintain a Zacks #2 Rank, which translates into a
short-term Buy rating. We have a long-term Outperform
recommendation on the stock.
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