Ross Stores Inc. (ROST: 54.09 +0.06 +0.11%), the second largest off-price retailer of apparels and home accessories, recently marked the 6th consecutive quarter of positive comparable store sales (comps) trends, recording growth of 5.0% for the five-week period ended July 3, 2010. June comps exceeded the company’s expectation of a 3%-4% increase. Ross also boosted its outlook for the second quarter of fiscal 2010.Regionally, Florida and the Mid-Atlantic acted as the catalyst for the increase in same-store sales. Categories like dress, shoes and home accessories left a positive footprint on results. For June, sales surged marginally from $666.0 million in the year-ago quarter to $725.0 million, thereby increasing 9.0% year over year.
Ross guides a 2010 sales growth in the range of 4% to 5%, riding on the back of a 4% to 5% increase in the number of stores and a 1% to 2% rise in comps. Rost notes that a top-line growth coupled with increased gross margin should lead to earnings per share in the range of $1.00 to $1.02, north of the previous guidance range of 95 to 99 cents.
Ross also beat the comparable store sales of its nearest competitor, The TJX Companies, Inc. (TJX: 41.72 +0.19 +0.46%), which reported a growth of 3.0% in the month.
Ross operates 1,021 stores comprising 967 Ross Dress for Less (Ross) stores and 54 dd’s DISCOUNTS stores. Ross expects to accelerate its store growth from 4%−5% in 2010 to about 7% in 2011, fueled by incremental growth in new markets. Projected store growth includes about 35 Ross Dress for Less and 15 new dd’s DISCOUNTS locations in 2010. The accelerated growth for dd’s includes anticipated entry into a few new states in the latter part of 2010.
We believe that Ross’ continuous efforts to increase its store base, coupled with the ability to deliver positive comps, will boost its top-line growth.
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