Ross Stores Inc.
(
ROST
), 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 ended May 26, 2012,
while retaining its comps guidance for the coming two months.
Driven by strong consumer demand for the company's wide array of
brands, Ross Stores' comparable sales in May 2012 increased 8%
versus a 4% growth registered in the prior-year period.
Consequently, the company's total sales for the four-week period
surged 13% to $746 million compared with $661 million in the
year-ago period.
Further, Ross Stores' year-to-date sales also increased 13% to
$3,103 million from $2,736 million in the year-ago quarter,
primarily driven by strong comparable store sales growth.
Comparable sales during the quarter reflected an 8% rise from the
prior-year quarter.
The robust sales in the quarter mainly mirror the company's
relentless focus on offering exciting collection in its name brand
fashion for the family and home, which has appealed to its
value-oriented customers.
On the back of remarkable comps performance and the company's
commitment, management retained its comps guidance for the months
of June and July at a 3% to 4% rise and an increase of 2% to 3%,
respectively.
Peer Performance
One of Ross Store's competitors,
Gap Inc.
(
GPS
), registered a 2% rise in its May 2012 same-store sales.
Meanwhile, another competitor,
Nordstrom Inc.
(
JWN
), reported positive same-store sales of 5.3% for the month of May
2012.
Our Recommendation
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
merchandise.
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 #3 Rank, which translates into a
short-term Hold rating. We have a long-term Outperform
recommendation on the stock.
GAP INC (GPS): Free Stock Analysis Report
NORDSTROM INC (JWN): Free Stock Analysis Report
ROSS STORES (ROST): Free Stock Analysis Report
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