Ross Stores Inc. (ROST - Snapshot Report), one of the largest off-price apparel and home fashion chain retailers in the U.S., came up with stronger-than-expected sales and same-store sales numbers for the four weeks ended May 26, 2012, while retaining its comps guidance for the coming two months.

Driven by strong consumer demand for the company’s wide array of brands, Ross Stores’ comparable sales in May 2012 increased 8% versus a 4% growth registered in the prior-year period. Consequently, the company’s total sales for the four-week period surged 13% to $746 million compared with $661 million in the year-ago period.

Further, Ross Stores’ year-to-date sales also increased 13% to $3,103 million from $2,736 million in the year-ago quarter, primarily driven by strong comparable store sales growth. Comparable sales during the quarter reflected an 8% rise from the prior-year quarter.

The robust sales in the quarter mainly mirror the company’s relentless focus on offering exciting collection in its name brand fashion for the family and home, which has appealed to its value-oriented customers.

On the back of remarkable comps performance and the company’s commitment, management retained its comps guidance for the months of June and July at a 3% to 4% rise and an increase of 2% to 3%, respectively.

Peer Performance

One of Ross Store’s competitors, Gap Inc. (GPS - Analyst Report), registered a 2% rise in its May 2012 same-store sales. Meanwhile, another competitor, Nordstrom Inc. (JWN - Analyst Report), reported positive same-store sales of 5.3% for the month of May 2012.

Our Recommendation

Ross Stores and its subsidiaries operate two chains of off-price retail apparel and home accessories stores in the U.S. These stores offer branded apparel, shoes, and accessories for the entire family, as well as gift items, linens, and other home-related merchandise.

The company also offers small furniture and furniture accents, educational toys and games, luggage, gourmet food and cookware, watches, sporting goods and fine jewelry, which provide it with a competitive edge over its rivals.

Ross Stores has implemented a micro-merchandising tool, through which the company expects to enhance its total sales and profitability by targeting expansion in its existing markets. Moreover, Ross remains focused on new store growth, share buybacks, and attractive dividend payouts even as many other retailers are implementing dramatic cutbacks, and has the financial strength to continue its course and build shareholders' value.

Ross' shares maintain a Zacks #3 Rank, which translates into a short-term Hold rating. We have a long-term Outperform recommendation on the stock.