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 (comps) numbers for the five weeks ended
September 29, 2012.
Driven by strong consumer demand for its wide array of brands,
Ross Stores' comps for September increased 8% compared with 5% in
the prior-year period ended October 1, 2011 beating its own
guidance range of 2%-3%. Consequently, the company's total sales
for the five-week period surged 10% to $0.800 billion compared with
$0.726 billion in the year-ago period.
Further, Ross Stores reported eight months comps gain of 8%
versus a 5% increase registered in the year-ago period. Net sales
for the period jumped 13% to $6.245 billion from $5.549 billion in
the year-ago quarter.
Robust sales mainly reflect the company's relentless focus on
offering an exciting collection in its name-brand fashion for the
family and home, which appeals to its value-oriented customers.
Bolstered by solid top-line performance along with better
physical inventory level in September, management raised its
earnings guidance range for the third quarter of fiscal 2012. The
company now expects earnings in the range of 70-71 cents per share,
up from 63-66 cents projected earlier. However, the earnings
forecast for the fourth quarter ending February 2, 2013 remains
unchanged in between 99 cents and $1.04 per share.
Further, the company has provided its comps growth expectations
for the month of October. Ross Stores expects comps to grow in the
range of 3%- 4% in October, 2012.
One of Ross Store's competitors,
) registered a 6% increase in its September 2012 comps. Another
) - also reported positive comps of 5% for the month.
Ross Stores has implemented a micro-merchandising strategy,
through which it expects to enhance total sales and profitability
by expanding in its existing markets. Moreover, Ross remains
focused on new store growth, share buybacks and attractive dividend
payouts even when some other retailers are implementing dramatic
cutbacks. Moreover, the company has the financial strength to
continue on its course and build shareholder value.
Ross Stores' shares maintain a Zacks #2 Rank, which translates
into a short-term Buy rating. However, we remain slightly cautious
on the stock and uphold our long-term Neutral recommendation,
waiting to see further catalysts before becoming more positive on
Ross Stores and its subsidiaries operate two chains of off-price
retail apparel and home accessory 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
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