Ross Stores Inc. (ROST), the second largest off-price retailer of apparel and home accessories, reported a growth of 4% in comparable store sales for the four weeks ended August 27, 2011.
The recent results were below the 5% gain in same-store sales in the prior-year month. However, August same-store sales came in better than the company's forecast of a 2% to 3% increase for the month.
For the month under review, sales increased 8% to $659 million from $608 million in the year-ago period. Regionally, Florida was the top performing market with categories like Dresses and Shoes positively influencing results.
For the seven months ended August 27, 2011, comparable store sales increased 4% compared with a 7% increase in the prior-year period. Total sales for the period rose 8% to $4,823 million from $4,455 million.
Execution during the month and the seven-month period was driven 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), reported an increase of 1% in same-store sales for the month.
Guidance
The company expects comparable store sales to be in the range of 1% to 2% for the months of September and October.
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 its top-line growth.
Ross' shares maintain a Zacks #3 Rank, which translates into a short-term 'Hold' rating. Our long-term recommendation on the stock remains 'Neutral'.
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