Off-price retail chain Ross Stores, Inc. (ROST) reported Thursday a 47% year-over-year increase in profit for the fourth quarter, boosted by higher margins and a 14% quarterly sales growth. Comparable store sales were up 10%. Earnings per share surged 53% and came in line with analysts' expectations. The company projects strong cash flows from additional increases in both comparable store sales and earnings per share during fiscal 2010 and beyond.
In a statement, vice chairman, president and chief executive officer, Michael Balmuth said, "We are exceptionally pleased with our outstanding sales and earnings results for the fourth quarter and full year. During one of the most challenging economic and retail environments, we not only generated stronger-than-planned revenues, but did so with record merchandise gross margins that drove double digit operating profits as a percent of sales."
The company added that the best performing merchandise categories during the fourth quarter and the full year were dresses, shoes and home products, with all regions posting healthy comparable store sales gains.
Fourth Quarter Results
The Pleasanton, California-based apparel and home accessories retailer posted net earnings of $142.88 million or $1.16 per share, higher than $97.39 million or $0.76 per share in the prior-year quarter.
On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $1.16 per share for the fourth quarter. Analysts' estimates typically exclude special items. Earlier in February, Ross Stores had updated its fourth quarter earnings forecast to a range of $1.15 to $1.16 per share from the prior outlook of $1.14 to $1.16 per share.
Sales for the quarter increased 14% to $1.98 billion from $1.73 billion in the same quarter last year, and topped thirteen Wall Street analysts' consensus estimate of $1.96 billion. Comparable store sales were up 10% on top of a 1% decline in the year-ago quarter.
For the month of February, Ross Stores reported a 11% rise in its same store sales and total company sales growth of 16% to $554 million. For January, the company's same store sales increased 8% and total sales increased 13% to $411 million. For December, Ross Store's same store sales grew 12% and total sales rose 16% to $934 million.
Peer Performance
Among Ross Stores' peer's, Framingham, Massachusetts-based off-price retailer TJX Cos. Inc. (TJX) reported last month that profit for the fourth quarter surged 58% to $395.00 million from last year, helped by a 10% increase in sales to $5.94 billion, driven by a consolidated comparable store sales increase of 12%, as well cost reduction programs, opening of more new stores, and increased customer traffic.
Another peer, Menomonee Falls, Wisconsin-based moderate-price retailer Kohl's Corp. (KSS) reported in February a 28% year-over-year increase in profit for the fourth quarter to $431 million, impelled by increasing sales and strong inventory management. Quarterly net sales grew 8.5% to $5.68 billion from last year. Comparable store sales were up 4.5%.
Other Metrics
Profits before taxes for the fourth quarter increased about 260 basis points to 11.7%, driven by a 230 basis point improvement in cost of goods and a 30 basis point decline in selling, general and administrative expenses. The profitability improvement was mainly due to substantial gains in merchandise gross margin and strong gains in same store sales across regions.
Total costs and expenses for the quarter rose to $1.75 billion from $1.58 billion in the year-ago quarter. Expenses include selling, general and administrative expenses of $286.11 million, higher than $255.31 million in the prior-year quarter. Selling, general and administrative expenses decreased 30 basis points from last year.
The company ended the fourth quarter with cash and cash equivalents of $768.34 million, compared to $321.36 million at end of the prior-year quarter.
In early-February, Ross Stores announced that its board of directors have approved a new two-year $750 million stock repurchase program, and also boosted its quarterly cash dividend by 45% to $0.16 per common share, payable on March 31, to stockholders of record as of February 19, 2010.
Full-Year Highlights
For fiscal 2009, Ross Stores posted net earnings of $442.76 million or $3.54 per share, higher than $305.44 million or $2.33 per share a year ago. Analysts expected the company to report earnings of $3.54 per share for fiscal 2009.
Sales for the full year increased 11% to $7.18 billion from $6.49 billion in the previous year. The Street was looking for full-year 2009 revenues of $7.17 billion. Comparable store sales were up 6% on top of a 2% gain last year.
During the year, the company repurchased a total of 7.4 million shares of common stock for an aggregate of $300 million, and completed the two-year $600 million stock repurchase program announced in early 2008.
Looking Ahead...
"Our past results demonstrate that we can deliver consistent growth in both healthy and challenging economic climates if we execute our strategies well. This long-term record gives us the confidence to project strong cash flows from additional increases in both comparable store sales and earnings per share during 2010 and beyond," Balmuth added.
While reporting sales for February earlier this month, Ross Stores backed its guidance provided in early January for the first quarter and full-year 2010. The company expects earnings for the first quarter in a range of $0.92 to $0.95 per share, up from $0.72 per share in the first quarter of fiscal 2009. Analysts now expect earnings of $0.95 per share for the first quarter. Same store sales are projected to increase 2% to 3%.
For fiscal 2010, earnings are estimated between $3.80 and $3.95 per share, with analysts' currently projecting $3.89 per share. Same store sales are projected to grow 1% to 2% for the full-year 2010.
The company said earlier this month that it also expects a shift in all of its pre-Easter business into March as a result of the shifting of Easter to the first Sunday of April 2010 from the second Sunday in April last year. Consequently, the company reaffirmed its earlier forecast for same-store sales to be up 3% to 4% in March, and flat to up 1% in April.
On January 26, National Retail Federation released its retail industry sales projections for 2010, which expects retail sales to increase 2.5% from last year. According to its bi-monthly Retail Sales outlook, influential economic indicators such as the housing market and employment are beginning to show positive signs, which will bolster consumer confidence throughout the year.
Meanwhile, another NRF survey data released on March 2 showed that Americans are eager to enjoy tax refunds this year. According to the survey, 12.5% of people expecting a refund plan to treat themselves or their families to a major purchase.
"A little bit of 'free money' will go a long way for Americans this year," said Tracy Mullin, President and CEO, NRF. "Retailers planning special promotions over the next few months may find that shoppers are a bit more receptive to opening up their wallets than they have been for the past year."
Stock Quote
In Thursday's regular trading session, ROST is currently trading at $52.71, down $1.25 or 2.32% on a volume of 1.35 million shares. The stock has been trading in a range of $32.74 to $54.50 in the past 52 weeks.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.