Ross Comps Rise, Ups Outlook - Analyst Blog

Ross Stores Inc.  (ROST), the second largest off-price retailer of apparels and home accessories, recently  marked the 9^th consecutive quarter of positive comparable store sales trend of  4.0%  for  the  four-week  period  ended  October 30, 2010. Ross also boosted its outlook for the third quarter of fiscal 2010.

Regionally, Florida acted as the catalyst for the increase in comparable store sales. Categories like dress and home accessories 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 flat growth in the month.

For the month under review, sales surged 8.0% to $600.0 million from $557.0 million in the year-ago quarter.

Third Quarter Sales and Comparable-Store Sales

As per preliminary reports, the company generated a top-line growth of 7.0% climbing to $1.874 billion in the third quarter of 2010 from $1.744 billion recorded in the prior-year quarter. Comparable store sales for the quarter jumped 3.0%.

Ross foresees that top-line growth coupled with an increase in gross margin should lead to third-quarter earnings per share in a range of $1.01-$1.02 compared with an earlier guidance of 94–96 cents a share. The Zacks Consensus Estimate of $1.02 lies at the high end of the guidance range.

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 going forward.

Ross's shares maintain a Zacks #2 Rank, which translates into a short-term Buy rating. Our long-term recommendation for the stock remains Neutral.