Ross Stores Inc. (ROST), the second largest off-price retailer of apparels and home accessories, after reporting fourteen consecutive quarters of positive comparable store sales, breaks the trend by posting a decline of 1.0% for the five weeks ended April 2, 2011.
This compares unfavorably with a solid gain of 14% in same store sales in the prior-year month. However, March same-store sales came in better than the company’s forecast of a 2% to 3% decline for the month. A shift in pre-holiday sales to April led to the fall in same-store sales in March.
Regionally, Florida to some extent helped to mitigate the fall in comparable store sales in the month with the Home category leaving a positive influence on results.
Ross’ nearest competitor, The TJX Companies Inc. (TJX), also reported a 1.0% decline in same-store sales in the month.
For the month under review, sales increased 2.0% to $ 828 million from $ 811 million in the year-ago period.
For the nine weeks ended April 2, 2011, the company generated a top-line growth of 4.0% climbing to $ 1,423 million from $ 1,365 million recorded in the prior-year comparable period. Comparable store sales for the period jumped 1.0%.
Guidance
Ross expects earnings per share for the first quarter of 2011 to be at the high end of the guided range of $ 1.27 to $ 1.32. For April 2011, the company expects same store sales to increase in the range of 4% to 5%.
We believe that Ross’ continuous effort to increase its store base coupled with the ability to deliver positive comparable same-store sales will augur well for top-line growth.
Ross’ shares maintain a Zacks #2 Rank, which translates into a short-term Buy rating. Our long-term recommendation on the stock remains Neutral.
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