ROST’s Low Inventory And Strong Traffic Support Margin Increment

Analysts at Piper Jaffray reiterate their "overweight" rating on Ross Stores Inc ROST, while raising their estimates for the company. The target price for ROST has been reduced from $62 to $61. ROST was delivering a 10% comp rate on “significantly less per store inventory.” The analysts say, “We continue to believe a combination of lower inventory levels and strong traffic will support operating margin expansion well beyond prior peak levels…We are mindful that the "easy" share gains have been achieved and the next 10%-15% of topline growth will be a function of retaining new customers, driving frequency and basket size, and growing the DD's Discount concept…..With costs of receipts inching higher (industry inflation), management indicated they would maintain their value advantage to full price stores, which could slow the pace of share and margin gains.” Piper Jaffray has raised its EPS estimates for FY11 by $0.20 to $0.25. More Analyst Ratings here