Off-price retail store chain Ross Stores, Inc. (ROST) on Thursday reported a 21 percent increase in profit for the first quarter, driven by higher sales and margins. Earnings per share matched analysts' expectations.
Looking ahead, the Pleasanton, California-based company forecast higher earnings for the second quarter and raised its earnings outlook for fiscal 2012. However, the outlook for both the periods were below analysts' estimates.
Ross Stores also said it has increased its long-term projected store potential to 2,500 locations in the U.S.
Ross Store's comparable store sales for the first quarter grew 9 percent on top of a 3 percent gain in the year-ago period. Comparable-store sales or comps is a key retail industry performance metric to gauge activity at store locations that have been open for at least a year.
Michael Balmuth, Vice Chairman and Chief Executive Officer of Ross Stores, said, "Our robust sales and earnings were driven mainly by our ongoing ability to deliver a wide array of fresh and exciting name brand bargains to today's value-focused consumers. In addition, we believe that favorable weather across many of our markets also contributed to our above-plan performance."
Ross Stores' net earnings for the first quarter rose to $208.61 million or $0.93 per share from $172.97 million or $0.74 per share in the year-ago period.
On average, 26 analysts polled by Thomson Reuters expected the company to earn $0.93 per share for the quarter. Analysts' estimates typically exclude special items.
The company noted that all per share amounts have been adjusted for the two-for-one stock split effective December 15, 2011.
Ross Stores, which buys goods from department stores and sells at discounts, said sales for the quarter grew 14 percent to $2.36 billion from $2.07 billion in the prior-year period. Analysts had a consensus revenue estimate of $2.34 billion.
Looking ahead to the second quarter, Ross Stores forecasts same store sales to rise 3 percent to 4 percent and earnings per share of $0.72 to $0.75, up from last year's $0.64. Analysts expect earnings of $0.76 per share.
For fiscal 2012, Ross Stores raised its earnings per share guidance to a range of $3.26 to $3.37 from the prior range of $3.12 to $3.27. This compares to earnings of $2.86 per share in the prior year. Analysts expect the company to earn $3.38 per share.
Commenting on the company's future expansion plans, Balmuth said, "Our current research and proven ability to cluster stores closer together indicate that we can more fully saturate existing and new markets."
Balmuth added, "As a result, we now believe that Ross Dress for Less can grow to approximately 2,000 locations across the country, up from our prior target of 1,500. We continue to believe that dd's DISCOUNTS can become a chain of about 500 stores."
In Thursday's regular session, ROST is trading at $62.66, up $0.45 or 0.72 percent on a volume of 1.31 million shares.
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