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
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).
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