Ross Stores Inc.
(
ROST
) - one of the largest off-price apparel and home fashion chain
retailers in the U.S. - reported better-than-expected same-store
sales (comps) numbers for the five weeks ended December 29, 2012.
Ross Stores' comps for December increased 6% compared with 9% in
the prior-year period ended December 31, 2011, ahead of the
company's guidance of a 2% - 3% increase. The company's December
comps were also well ahead of analyst estimates. The company's
total sales for the five-week period climbed 11% to $1,276
million compared with $1,149 million in the year-ago period.
Further, Ross Stores reported eleven months comps gain of 7%
versus a 5% increase registered in the year-ago period. Net sales
for the period jumped 11% to $9,049 million from $8,125 million
in the year-ago period.
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.
The company reiterated its comps expectation for January,
forecasting an increase of about 1% to 2%. Bolstered by solid
top-line performance in December, robust margin trends so far in
the quarter as well as strong comps expectations for January, the
company raised its fourth quarter earnings per share guidance to
range between $1.05 and $1.06, versus the previously forecasted
range of 99 cents - $1.04.
Peer Performance
One of Ross Stores' peers,
Gap Inc.
(
GPS
) registered a 5% increase in its December 2012 comps. The
company's net sales came in at $2.08 billion, up 5.0% compared
with the prior-year period.
Our Recommendation
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 amidst a situation in which other retailers are
implementing cutbacks. Moreover, the company has the financial
strength to continue on its course and build shareholders' value.
Ross Stores' shares maintain a Zacks #3 Rank, which translates
into a short-term Hold rating. We remain slightly cautious
regarding the stock due to the sluggish economic recovery and
intense competition from other players, and therefore maintain a
long-term Neutral recommendation on the stock.
GAP INC (GPS): Free Stock Analysis Report
ROSS STORES (ROST): Free Stock Analysis
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