Ross Stores Q1 Profit Jumps 15%, Raises Guidance (ROST)

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Discount retail chain Ross Stores, Inc. (ROST) said Thursday that its first quarter profit rose substantially year-over-year, as cost-conscious consumers hunted for bargains amid the economic recession.

The Pleasanton, California-based company reported first quarter net income of $91.4 million, or 72 cents per share, compared with $79.5 million, or 60 cents per share, in the year-ago period. Overall revenue jumped 9% to $1.69 billion from $1.56 billion in the same period last year.

On average, Wall Street analysts expected matching profits of 72 cents per share, on lower revenue of $1.66 billion.

Ross said that same-store sales rose 3% during the most recent quarter. Same-store sales are considered a key indicator of a retailer’s health, since they measure the performance of stores open at least one year.

In response to the positive quarter, Ross raised its full-year 2009 guidance, saying it now expects a profit between $2.62 and $2.72 per share, compared with a lower previous forecast of $2.25 to $2.45. Analysts currently expect lower earnings of $2.54 per share.

As for the upcoming second quarter, the company said it sees earnings of 60 to 63 cents per share, with same-store sales to be flat or down 1%. Full-year same store sales could register a gain of up to 3%.

Ross Stores shares rose $2.26, or +6.3%, in late morning trading Thursday.

The Bottom Line
We removed shares of ROST from our “Recommended” list back on Oct.2, when shares were trading at $36.49. The company has a dividend yield of 1.23%, based on last night’s closing stock price of $35.81. The stock has near-term technical support in the $31-32 price area. If the shares can continue today’s pop higher, we see overhead resistance around the $40-41 price levels. We like the company, but will remain on the sidelines for now.

Ross Stores, Inc. (ROST) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 out of 5 stars.

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