Pleasanton, CA—Ross Stores Inc. lifted its full year earnings forecast after posting last Thursday first quarter earnings that met analysts’ estimates and sales that beat forecasts.
For the quarter ended May 4, the off-price retailer reported net earnings of $234.6 million, or $1.07 a share, compared to $208.6 million or 93 cents a share, in the same quarter last year. That was in line with analysts’ consensus for earnings of $1.07 a share.
Net Sales rose 8% to $2.54 billion, beating analysts’’ sales estimate of $2.52 billion.
Comparable store sales increased 3% on top of 9% growth in first quarter 2012. Best performing categories included accessories and juniors while Pacific Northwest, the Southwest and California registered strong regional growth.
For the quarter, gross margin was 29.2%, 40 basis points better than the prior-year quarter. Operating margin was 14.9%, 50 basis points better than the prior-year quarter. Net margin was 9.2%, 30 basis points better than the prior-year quarter.
Profit Driven by High Merchandise Gross Margin
Michael Balmuth, vice chairman/ceo, said: “We are pleased with the slightly better-than-expected sales and earnings we delivered in the first quarter, especially considering this growth was achieved on top of strong prior year gains. These results continued to be driven by our ongoing ability to offer terrific bargains to today’s value-oriented consumers.”
Balmuth added that “operating margin for the period grew to a record 14.9%, up from 14.4% in the prior year. This increased level of profitability was mainly driven by higher merchandise gross margin and also benefited from favorable timing of expenses.”
Looking ahead, the company projected that its second quarter earnings would be in the range of 89 cents to 93 cents a share with comp sales growing 1% to 2%. Analysts’ estimate expects 91 cents.
For its full year, Ross Stores raises its forecast to $3.70 to $3.81 a share, up from $3.65 to $3.80 a share. Analysts’ estimate expects $3.88 a share.
Balmuth also reported that the company bought back 2.3 million shares for $138 million. Looking ahead, the company plans to repurchase stock worth $550 million in fiscal 2013, under its 2-year $1.1 billion authorization approved in January.