Ross Stores Inc.
), one of the leading off-price retailers of apparels and home
accessories, came up with first-quarter fiscal 2013 earnings of
$1.07 per share, surging 15.1% from 93 cents earned in the
year-ago quarter, primarily attributable to its ability to
attract bargain hunters who value both quality and price.
However, quarterly earnings came in line with the Zacks Consensus
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Let's Dig Deep
Net sales for the 13-week period ended May 4, increased 8% to
$2,539.9 million from $2,356.8 million in the prior-year quarter.
This also surpassed the Zacks Consensus Estimate of $2,523.0
million. Comparable store sales for the 13-week period ended May
4 increased 3% versus 9% growth registered for the 13 weeks ended
Apr 28, 2012.
During the quarter, Juniors and Accessories were the
beat-performing categories, while Pacific Northwest, the
Southwest and Calif. registered strong growth on a regional
Gross profit, in dollar terms, increased 9.4% to $741.1 million
from $677.7 million in the year-ago quarter, while gross margin
improved 40 basis points (bps) to 29.2%. The year-over-year
expansion in gross margin was primarily due to lower cost of
goods sold as a percentage of sales.
Operating income for the quarter elevated 11.6% to $379.2 million
from the prior-year level of $339.9 million. Operating margin
expanded 50 bps to 14.9% benefiting from higher merchandise gross
margin and favorable timing of expenses.
Other Financial Aspects
Ross Stores ended the first quarter with cash and cash
equivalents of $714.2 million compared with $741.1 million at the
end of the prior-year quarter. During the quarter, Ross Stores
generated $352.9 million of cash from its operational activities.
This will enable the company to make capital investments, pay
dividends and repurchase shares.
As of May 4, 2013, the company possessed long-term debt of $150.0
million and shareholders' equity of $1,875.3 million.
During the quarter, the company bought back 2.3 million shares
for $138 million. Looking ahead, the company plans to repurchase
stock worth $550 million in fiscal 2013, under its 2-year $1.1
billion authorization approved in Jan 2013.
Based on the solid first-quarter results, Ross Stores initiated
its comps and earnings forecasts for the second quarter and
fiscal 2013. The company projects second-quarter comps to grow in
the range of 1% to 2%. Further, the company expects earnings per
share in the range of 89 cents - 93 cents, representing an
increase of 10% - 15% against growth of 27% registered in the
second quarter of 2012.
For fiscal 2013, the company now expects earnings per share of
about $3.70 - $3.81, versus its initial projection of $3.65 -
$3.80 and fiscal 2012 earnings of $3.53.
A Look at the Zacks Rank
Currently, Ross Stores carries a Zacks Rank #3 (Hold). Other
stocks worth considering in the retail-wholesale space are
Big 5 Sporting Goods Corp.
). All these stocks hold a Zacks Rank #1 (Strong Buy).