Ross Stores

Ross Stores, Inc. (ROST - Snapshot Report) recently announced September sales of $629 million, a 12% increase year-over-year. Same store sales jumped 8%. The company also hiked its third-quarter earnings guidance to a range of 75 to 77 cents per share. Analysts polled by Zacks are in agreement, boosting forecasts from last month’s 63 cents to 77.

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 October 3, 2009, it operated 939 Ross Dress for Less® ("Ross") stores and 53 dd's DISCOUNTS® locations, compared to 885 Ross and 57 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.

Stellar Sales

The company recently announced September sales of $629 million, a 12% increase year-over-year. Same store sales jumped 8%.

Management noted that shoes, home and dresses were the top merchandise categories during the month, while the Mid Atlantic, Southeast and Texas were the best-performing markets.

Bullish Forecasts

Ross Stores also hiked its third-quarter earnings guidance to a range of 75 to 77 cents per share.

Analysts polled by Zacks are in agreement, boosting forecasts from last month’s 63 cents to 77.

Third-quarter results are scheduled for release on November 18.

Vice Chairman, President and Chief Executive Officer Michael Balmuth said, "For the important holiday period, we continue to project a comparable store sales gain of 5% to 6% and earnings per share of $.88 to $.94 for the 13 weeks ending January 30, 2010. For the 2009 fiscal year ending January 30, 2010, earnings per share are now projected to be in the range of $3.18 to $3.26, a forecasted increase of 36% to 40% over $2.33 in fiscal 2008."

The Zacks Consensus Estimate for fiscal 2009 stands at $3.26 per share, up from last month’s $3.11.

Solid Fundamentals and Burgeoning Technicals

Ross’ return on equity (ROE) of 34% tops the industry average of 20%. The company’s net profit margin of 5% beats the industry average of 3%. Ross also offers an industry-leading dividend yield of 1%.

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

Record Second 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.

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