Off-price retail chain Ross Stores, Inc. (ROST) on Thursday reported a 12% increase in sales for the month of September helped by its core strategy of delivering fresh and exciting name brand bargains. Same store sales for the month increased 8%. The company also boosted its its earnings outlook for the third quarter and fiscal 2009.
The Pleasanton, California headquartered company said sales for the month of September increased 12% to $629 million from $561 million a year earlier. Comparable store sales grew 8% and exceeded the company's expectations for a 6% to 7% increase.
According to the retailer, Shoes, Home and Dresses were the best-performing merchandise categories during September, while the Mid Atlantic, Southeast and Texas markets fared well. Merchandise and geographic trends remained relatively broad-based.
For the eight months ended October 3, 2009, sales grew by 9% to $4.647 billion from $4.262 billion in the same period last year. Comparable store sales for the eight months ended October 3, 2009 increased 4% on top of a 3% gain in the prior year period.
The company attributed the performance for both the month and year-to-date periods to its core strategy of delivering fresh and exciting name brand bargains.
Looking ahead, the company lifted its earnings outlook for the third quarter to $0.75 - $0.77 per share from its prior guidance of $0.57 - $0.63 per share.
On average, 15 analysts polled by Thomson Reuters currently expect the company to report earnings of $0.63 per share for the quarter. Analysts' estimates typically exclude special items.
Ross Stores ascribed the upside revision to stronger-than-planned sales and merchandise margins and maintained its continued expectation for a 5% to 6% same store sales gain in October.
Michael Balmuth, President and Chief Executive Officer said, "We believe our projected shrink for the year, which is now expected to be much lower than originally forecast, is benefiting from continued investments in our shortage control initiatives as well as the reductions we have made in selling store inventories."
For the fourth quarter, the company continues to project earnings in a range of $0.88 to $0.94 per share with comparable store sales gain of 5% to 6%. Street analysts currently expect the company to report earnings of $0.94 per share for the quarter.
For fiscal 2009, earnings are now projected to be in the range of $3.18 to $3.26 per share, up from $3.00 to $3.12 per share projected while announcing the financial results for the second quarter. The upward revision represents a forecasted increase of 36% to 40% over $2.33 per share reported in fiscal 2008. Presently, analysts expect the company to earn $3.11 per share for fiscal 2009.
Ross Stores will announce October 2009 sales results on November 5.
ROST is currently up $0.30 or 0.62% and trades at $48.57.
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