Ross' January Comps Rise

Ross Stores Inc. ( ROST - Snapshot Report ) – one of the largest off-price apparel and home fashion chain retailers in the U.S. – reported better-than-expected same-store sales (comps) numbers for the four weeks ended Jan 26, 2013.

Ross Stores’ comps for January increased 4% compared with 5% in the year-ago period ended Jan 28, 2012, ahead of the company’s guidance of a 1% – 2% increase. The company’s January comps were also well ahead of the estimates. The company’s total sales for the five-week period ended Feb 2, 2013 climbed 39% to $672 million compared with $483 million for the four-week ended Jan 28, 2012.

With consumers regaining confidence, Jan 2013 was strong for most retailers, including Gap Inc. ( GPS - Analyst Report ) , The TJX Companies, Inc. ( TJX - Analyst Report ) and Costco Wholesale Corporation ( COST - Analyst Report ) which registered comps growth of 8%, 3% and 4%, respectively.

For the 13-week period ended Jan 28, 2013, comps of this Zacks Rank #2 (Buy) company rose 5% on top of 7% increase registered in the comparable year-ago period. Net sales for the 14-week period ended Feb 2, 2013 surged 15% to $2.761 billion compared with $2.398 billion in the 13-week period ended Jan 28, 2012.

Further, Ross Stores reported 12 months comps gain of 6% versus 5% rise in the year-ago period. Net sales for the 53-week ended Feb 2, 2013 jumped 13% to $9.721 billion from $8.608 billion in the 52-week period ended Jan 28, 2012.

Robust sales mainly reflect the company’s relentless focus on offering an exciting collection in its name-brand fashion for the family and home, which appeals to its value-oriented customers.

Bolstered by solid top-line performance in January as well as robust margin trends in the quarter, the company raised its fourth-quarter earnings per share guidance range. Ross now expects its fourth-quarter EPS to come between $1.06 and $1.07, versus the previously forecasted range of $1.05 – $1.06. Currently, the Zacks Consensus Estimate stands at $1.06 per share, which could witness a revision in coming days following the company’s guidance.

For fiscal 2012, the company now expects earnings to be between $3.52 and $3.53 per share. Currently, the Zacks Consensus Estimate stands at $3.52 per share, which could witness a change in coming days following the company’s guidance.

Fiscal 2013 Guidance

Along with the sales results, the company announced its earnings forecasts for the first quarter and fiscal 2013. Ross is expecting earnings for the first quarter of fiscal 2013 to come between $1.00 and $1.04 per share and comps to increase in the range of 1%–2%. Currently, the Zacks Consensus Estimate is pegged at the higher-end of the company’s guidance range.

For fiscal 2013, the company projects earnings to be in the range of $3.65–$3.80 per share with an expectation of 1%–2% increase in comps. Currently, the Zacks Consensus Estimate stands at $3.92 per share, which could witness a revision in coming days following this guidance update.

Dividend and Share Repurchase Program

On the back of strong sales trends and upbeat guidance, the company raised its quarterly cash dividend by 21% to 17 cents per share. Dividend will be payable on Mar 29, 2013 to the shareholders of record date as of Feb 22, 2013.

Apart from this, the company’s board of directors has authorized a new $1.1 billion share repurchase program to be completed in the next 2 years, i.e. by the end of fiscal 2014.