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Ross Stores to Open 28 Locations in Q1

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Ross

Ross Stores reported fourth-quarter results on Wednesday that reiterated the message delivered by its off-price rivals: America loves a discount.

The Dublin, California-based company said sales in the three months ended Jan. 30 rose 7 percent to $3.25 billion, with a 4 percent increase in comparable store sales versus a 6 percent gain in the year-ago period.

Commenting on the outcome during a conference call with analysts, CEO Barbara Rentler said, “We are pleased with our sales and earnings results for the fourth quarter, which exceeded our expectations despite the highly promotional holiday selling environment and our most challenging sales comparisons from the prior year. These results were driven by the competitive values we offered on a wide assortment of name-brand bargains and gifts throughout our stores.”

Rentler noted that misses’ sportswear was the best performing merchandise category at Ross Dress for Less stores during the fourth quarter, but that business was difficult in apparel as a whole as well as in home. The Midwest was the strongest region.

She continued, “Fourth quarter operating margin was 12.7% compared to 13.1% in the prior year, as higher merchandise margin and tight expense control were more than offset by the timing of packaway-related costs.”

For the full fiscal year 2015, sales grew 8 percent to reach $11.94 billion and comps rose 4 percent. Earnings per share (EPS) were $2.51, a 14 percent gain on top of “strong multi-year increases,” while net earnings increased 10 percent to $1.02 billion and operating margin rose 10 basis points to a record 13.6%.

Looking ahead to the first quarter of fiscal 2016, the company plans to open 22 Ross Dress for Less locations and six DD’s Discounts, as it continues its quest to reach 2,500 stores. At fiscal 2015’s year-end, the company operated 1,346 off-price and home fashion stores in 34 states, the Distrcit of Columbia and Guam.

Though Rentler said she expects the off-price segment will remain a strong performing sector of retail, given consumers’ ongoing focus on value, she issued a careful outlook for the year.

“As we enter 2016, we continue to face our own challenging multi-year comparisons in an increasingly uncertain and volatile macro-economic and retail environment,” she said. “As a result, while we hope to do better, we believe it is prudent to maintain a somewhat cautious outlook when forecasting sales and earnings for the coming year.”

For the 52-week year ending Jan. 28, 2017, Ross Stores is projecting same-store sales to grow 1-2 percent and EPS to be in the range of $2.59 and $2.71, a 3-8 percent rise compared with fiscal 2015. For the three months ending Apr. 30, comps are expected to increase 1-2 percent, with EPS projected to be flat to up 4 percent to between $0.69 and $0.72.

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