Ross Stores

Ross Stores, Inc. (ROST - Snapshot Report) recently reported August sales of $557 million, an increase of 11% year-over-year. Same store sales climbed 6% from last year. Management noted that healthy back-to-school traffic helped deliver the better-than-expected sales gains.

Company Description

Ross Stores is the second largest off-price retailer with fiscal 2008 revenues of $6.5 billion. The company noted that, as of May 30, 2009, it operated 922 Ross Dress for Less® ("Ross") stores and 52 dd's DISCOUNTS® locations, compared to 863 Ross and 54 dd's DISCOUNTS locations at the end of the same period last year.

Ross Dress for Less offers in-season, name brand and designer apparel, accessories, footwear and home fashions for the entire family at everyday savings of 20% to 60%.

dd's DISCOUNTS features a more moderately-priced assortment of in-season, name brand and fashion apparel, accessories and footwear for the entire family at everyday savings of 20% to 70% as well as similar savings on a wide assortment of merchandise for the home.

Solid Sales

The company recently reported August sales of $557 million, an increase of 11% year-over-year. Same store sales climbed 6% from last year. Management noted that healthy back-to-school traffic helped deliver the better-than-expected sales gains.

A Record Quarter

Ross Stores announced second-quarter earnings of 82 cents per share, eclipsing the previous year’s 54 cents and matching the Zacks Consensus Estimate.

Sales jumped 8% year-over-year, while comparable store sales improved by 3%.

Management said the company’s ability to deliver compelling bargains, while operating on much lower inventories, remains the primary driver of the strong results, adding that the best performing merchandise categories during the second quarter and year to date periods were Dresses and Shoes, while the strongest regions were the Mid-Atlantic and Southeast.

ROST has been outperforming the market, soaring past the S&P 500 by more than 40% over the past year.

The Zacks Consensus Estimate Jumps on Strong Results

Ross hiked its earnings guidance and Zacks analysts followed suit. Ross sees full-year earnings ranging between $3.00 to $3.12 per share.

The full-year Zacks Consensus Estimate of $3.11 per share is up 9 cents over the past 60 days.

For the following year, analysts polled by Zacks are calling for earnings of $3.43 per share, an increase of 35 cents over the past 60 days.

Favorable Industry Comparisons

Ross’ return on equity (ROE) of 34% more than doubles the industry average of 16%. The company’s net profit margin of 5% beats the industry average of 3%. Ross also offers an industry-leading dividend yield of 1%.

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