Late Tax Refunds Affect Ross' Comps

Ross Stores Inc. (ROST - Snapshot Report) – one of the largest off-price apparel and home fashion chain retailers in the U.S. – reported weaker-than-expected same-store sales (comps) numbers for the 4 weeks ended Mar 2, 2013.

Ross Stores’ comps for February were down 1% compared with a 9% increase in the year-ago period ended Feb 25, 2012. The decline in comps mainly resulted from the delay in the income tax refunds of shoppers, which resulted in lower sales in early February. However, the company noted that sales numbers recovered in the later part of the month.

Ross Stores’ total sales for the 4-week period ended Mar 2, 2013 climbed 3% to $726 million compared with $707 million for the 4 weeks ended Mar 3, 2012.

With sales suffering in the first two weeks of February due to the delayed income tax refunds, the comps performance of most retailers suffered. However, retailers including Gap Inc. (GPS - Analyst Report), Limited Brands Inc. (LTD - Analyst Report) and Costco Wholesale Corporation (COST - Analyst Report) managed to register comps growth during the month. Costco witnessed a 6% rise in comps for Feb 2013, while Limited Brands and Gap registered a 3% increase.

Driven by improved sales towards the end of February, Ross Stores projects encouraging comps results for the upcoming two months. The company guides March comps to be down 1% – 2%, while comps for April are expected to increase 5% – 6%. The slightly weaker comps for March and robust growth in April are attributed to the shift in the Easter holiday season. Results will compare to the year-ago March and April comps gain of 10% and 7%, respectively.

Ross Stores is scheduled to report its fourth-quarter fiscal 2012 results on Mar 21, 2013. Earlier, the company stated that comps rose 5% for fourth-quarter fiscal 2012, while net sales rose 15% year over year to $2.761 billion. The company witnessed a 6% increase in comps for fiscal 2012, while net sales increased 13% year over year to $9.721 billion.

Ross Stores expects its fourth-quarter earnings per share to come between $1.06 and $1.07. Currently, the Zacks Consensus Estimate stands at $1.07 per share, which is at the higher end of the company’s guidance range.

For fiscal 2012, the company expects earnings to be between $3.52 and $3.53 per share. Currently, the Zacks Consensus Estimate stands at $3.56 per share, way above the company’s projected earnings range.

Headquartered in Pleasanton, Calif., Ross Stores operates through 1,091 ‘Ross Dress for Less’ stores in 33 states, the District of Columbia and Guam, as well as 115 dd's DISCOUNTS stores across 9 states. Currently, the company retains a Zacks Rank #3 (Hold).