Ross on Positive Comps Streak - Analyst Blog

Ross Stores Inc. (ROST), the second largest off-price retailer of apparels and home accessories, recently marked the 10^th consecutive quarter of positive comparable store sales trend, clocking 6.0% for the four-week period ended November 27, 2010. Ross also provided its outlook for the fourth quarter of fiscal 2010.

Regionally, Florida and Texas acted as the catalyst for the increase in comparable store sales. Categories like Juniors and Shoes left a positive footprint on results.

Ross also surpassed the comparable store sales of its nearest competitor, The TJX Companies Inc. (TJX), which reported a 3.0% growth in the month.

For the month under review, sales surged 10.0% to $696.0 million from $635.0 million in the year-ago quarter.

Year-to-date Sales and Comparable-Store Sales

Year to date, the company generated a top-line growth of 10.0% climbing to $6.417 billion from $5.839 billion recorded in the prior-year quarter. Comparable store sales for the period jumped 6.0%.

Ross anticipates a robust top-line growth coupled with an increase in gross margin leading to fourth-quarter earnings per share on the higher end or somewhat better than the previous guidance range of $1.15–$1.20. The Zacks Consensus Estimate of $1.19 is also at the top end of the guidance range. The company, however, expects comparable store sales to decline in the range of 1% to 2% in both December and January.

Ross operates 1,045 stores comprising 990 Ross Dress for Less (Ross) stores and 67 dd's DISCOUNTS stores.

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 ‘Outperform'.

 
ROSS STORES (ROST): Free Stock Analysis Report
 
TJX COS INC NEW (TJX): Free Stock Analysis Report
 
Zacks Investment Research