TJX TJX Companies Inc

The largest off-price apparel and home fashion chain in U.S., Ross Stores Inc. (ROST) came up with stronger-than-expected sales and same-store sales numbers for the five weeks ended December 31, 2011.

Ross Stores’ same-store sales in December grew 9% compared to growth rates of 4% and 12% recorded in 2010 and 2009, respectively. For the eleven-month period, same-store sales increased 5% versus a 5% growth in 2010 and a 6% growth seen in 2009.

Ross Stores’ sales in December 2011 jumped 14% from the year-ago comparable period (five weeks ended January 1, 2011). Net sales in December 2011 reached $1.149 billion versus $1.008 billion reported last year.

For the eleven-month period, the company’s sales summed to $8.125 billion, an increase of 9% from $7.425 billion in the same period last year.

Among the merchandise categories, the company’s juniors and Shoes categories showed remarkable performances in December, driving the sales and same-store sales results for the month.

The company continued to gain in the holiday season, from the favorable response of customers looking at bargains to suit their budgets, conditioned by the uncertain economy and high unemployment.

Having witnessed a remarkable comps performance thus far in this quarter, management retained its same-store sales forecast of 1% to 2% for January.

Based on the better-than-expected sales and encouraging margin trends the company raised its earnings forecast for the fourth quarter of 2011 to 82 cents - 83 cents per share, reflecting a 19%-20% increase from 69 cents reported in the fourth quarter of 2010. The guidance compares to the previous earnings guidance of 77 cents to 80 cents per share.

Ross' shares maintain a Zacks #1 Rank, which translates into a short-term Strong Buy rating. Our long-term recommendation on the stock remains Outperform. The company primarily competes with the likes of Kohl's Corp. (KSS), The TJX Companies Inc. (TJX) and Wal-Mart Stores Inc. (WMT).

 
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