Ross Stores Inc. (ROST), the second largest off-price retailer of apparel and home accessories, reported a growth of 5% in comparable store sales for the five weeks ended July 2, 2011.
The recent results were at par with a 5% gain in same-store sales in the prior-year month. June same-store sales however came in better than the company’s forecast of a 2% to 3% growth for the month.
For the month under review, sales increased 9.0% to $793 million from $725 million in the year-ago period. Regionally, Florida and Texas were the top performing markets with categories like Dresses and Accessories leaving a positive influence on results.
For the 22 weeks ended July 2, 2011, comparable store sales increased 4% compared with an 8% growth in the prior-year period. Total sales for the period rose 8% to $3,529 million.
Execution in both the month and 22-week period was helped by the company's aptitude in providing attractive brand name bargains to customers who value quality and price.
Ross’ nearest competitor, The TJX Companies Inc. (TJX), also reported a 5.0% increase in same-store sales in the month.
Guidance
Ross expects same-store sales growth of 2% to 3% for July. The company now expects earnings per share of $1.20–$1.22 for the second quarter of fiscal 2011, up from a prior range of $1.15–$1.20.
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.
ROSS STORES (ROST): Free Stock Analysis Report
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