Q1 Reports: Ross, Stage, Hot Topic, Dollar Tree, Cato, Bon Ton, Buckle

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Ross Stores Q1 Profit Rises 22% on Better Margins, Lower Costs

Pleasanton, CA—Ross Stores, Inc. reported today a 22% in its first quarter profit, boosted by higher margins, lower expenses and sales growth.

For the quarter ended April 30, Ross posted profits of $172.97 million, or $1.48 a share, from $142.3 million in the prior year.

Sales increased 7% to $2.075 billion, with comparable store sales up 3% on top of a 10% increase in 2010.

Analysts’ average estimate had expected earnings of $1.47 a share on sales of $2.06 billion.

“These results were mainly driven by our ongoing ability to deliver a wide array of compelling name-brand bargains to today’s value-focused customers, while operating our businesson leaner in-store inventories,” said Michal Balmuth, vice chairman and ceo.

For the second quarter ending July 30, 2011, the company currently forecasts same-store sales to increase 2% to 3% and earnings per share of $1.15 to $1.20. year’s $1.07. “This represents 7% to 12% projected growth on top of 30% and 52% increases for the second quarters of 2010 and 2009, respectively,” Balmuth added. Analysts’ average estimate forecasts $1.26 a share earnings in the second quarter.

During the quarter, Ross Stores repurchased 1.6 million shares of common stock for $112 million and by the end is fiscal 2011 plans to complete approximately $450 million of a current two-year $900 million stock repurchase authorization.

Its board of directors declared a regular quarterly cash dividend of $.22 per common share, payable on June 30 to stockholders of record as of June 7.


Stage Stores Swings into Q1 Loss On Lower Margins, Promotions

Houston—Stage Stores reported today a loss in its first quarter profit, hurt by lower gross margins on the back of weak sales and increased promotions.

For the quarter ended April 30, Stage Stores reported a loss of $461,000, or 1 cent a share, from a year-earlier profit of $2.2 million, or 6 cents a share.

The company recently reported first-quarter sales rose 2.1% to $347 million, but were up 3.3% excluding a later-than-usual Easter. Same store sales edged up 0.2%. Gross margin dropped to 24.6% from 26.4%.

Analysts’ average estimate had expected a loss of 1 cent a share on sales of $348.14 million.

Andy Hall, president and ceo, said an unexpected decline in February sales led the company to increase promotions in March and April in an effort to make up the shortfall.

“The combination of our sales performance, delayed clearance selling caused by missing the February clearance window, and our stepped-up promotional activities, negatively impacted our merchandise margins and led to our one cent loss for the quarter,” Hall said.

However, Hall said he was optimistic about the rest of the year. “We believe our March and April combined comparable store sales results of 3.3% is a better indicator of our go forward run rate. In addition, we remain very pleased with the performance of our rebranded Goody’s stores and with the progress we have made with our e-commerce business.”

For the second quarter, Stage Stores expects earnings of 28 cents to 31 cents a share on revenue of $355 million to $362 million, while analysts’ average estimate expects forecast 33 cents a share on sales of $361 million.

For fiscal 2011, Stage Stores now forecasts earnings of $1.04 to $1.13 a share, compared with its prior guidance of $1.07 to $1.17 a share. Full-year sales are expected to between $1.512 billion and $1.535 billion, with comparable store sales rising 0.8% to 2.4%. Analysts’ average estimate expects earnings of $1.12 a share on revenues of $1.53 billion.

Stage Stores also plans to repurchase up to $100 million shares this year and to complete its $200 million program by the end of 2013. In the first quarter, the company had bought back about 922 thousands of common shares.


Hot Topic Q1 Loss Widens On Sales Decline, Costs

City of Industry, CA–Hot Topic Inc. reported Wednesday a widened first quarter losses due to falling sales and restructuring costs.

For the quarter ended April 30, Hot Topic’s loss was $7.7 million, or 17 cents a share, compared with a year-earlier loss of $1.8 million, or 4 cents a share. Excluding previously disclosed charges related to the company’s decision to discontinue its music-downloading site StockHound.com and write down other assets, the latest quarter would have posted a break-even bottom line.

In November the retailer said it would close up to 50 stores and axe 14% of its head office and field management jobs.

Net sales fell 0.8% to $161.3 million although same-store sales increased 0.2%. Gross margin narrowed to 31.3% from 33.5%. Inventory fell 20% to $62.6 million.

After the mall-based teen retailer reported weaker sales in recent quarters, the company announced its cost-reduction plan in November. The recently announced April same-store sales grew more than analysts expected, ending a two-year streak of declines. Also, Betsy McLaughlin, longtime ceo, and Amy Kocourek merchandising chief at Hot Topic both resigned.

Investment firm Janney Capital Markets recently reported that although the company’s turnaround is in the early stages, the management is on the right path and in-store merchandise looks “markedly better.”

Looking ahead, Hot Topic expects a second quarter adjusted loss of 9 cents to 11 cents a share and flat comparable store sales. Analysts’ average estimate expects a loss of 10 cents.

Hot Topic will also discontinue monthly sales reporting, effective in the third quarter.


Dollar Tree’s Q1 Jumps 59% On Increased Traffic

Chesapeake, VA—Dollar Tree Inc.’s fiscal first-quarter profit jumped 59%, exceeding retail analysts’ expectations for the quarter and raised its full year forecast again.

For the quarter ended April 30, Family Dollar reported today a profit of $101 million, or 82 cents a share, up from $63.6 million, or 49 cents a share, a year earlier. The year-earlier result included a $26.3 million non-cash charge related to a retail inventory accounting change.

Net sales climbed 14% to $1.55 billion. Same store sales increased 7.1%. Gross margin was 35%, compared with 35.2% a year earlier, or 33.3% including a non-cash inventory adjustment.

Analysts’ average estimate had expected earnings of 75 cents a share on sales of $1.51 billion.

Gaining Share at Walmart’s Expense?

The chain saw “outstanding” sales of seasonal goods from Valentine’s Day through Easter, Bob Sasser, ceo, said. Shoppers who came to Dollar Tree spent more when they visited. Traffic in stores was up 5%, and the average spending was up 2%, Sasser added in a conference call with analysts.

Dollar Tree and its rivals such as Dollar General Corp. and Family Dollar Stores Inc. have been reporting increased demand as they add stores, expand private label offerings and add branded merchandise. Moreover, the dollar stores have taken share from larger mass merchants, such as Walmart.

Britt Beemer’s America’s Research Group/UBS Consumer Mind Reader Survey recently found that 13.9% of shoppers who have gone to Walmart this year have done so less often. Of those shopping less often at Walmart, 40% said they were also shopping at dollar stores.

For the second quarter, Dollar Tree estimated a per-share profit of 68 cents to 75 cents on $1.51 billion to $1.55 billion in sales. Comparable store sales may increase in the low-to-mid single digits, the company said. Analysts’ average estimate forecast 73 cents a share.

Dollar Tree also again raised its full year forecast. The company now expects fiscal year earnings per share of $3.69 to $3.85, up from a range of $3.55 to $3.76 given in February. Sales are expected to increase to $6.5 billion to $6.63 billion this year, up from a February forecast of $6.43 billion to $6.6 billion.

Analysts’ average estimates were looking for $3.76 a share full year earnings.

The company still expects same store sales to rise in a low-to-mid single digit percentage range this year.

Dollar Tree finished its first quarter with 4,177 stores, up 7.8% from a year earlier.


Cato Q1 Profits Rise 22% On Lower Expenses, Sales Increases

Charlotte—Cato Corp. reported today a 22% jump in its first quarter profits from last year as it lowered expenses and saw sales increase.

Net income reached $30.52 million or $1.04 a share for the first quarter, up from $25.03 million or 85 cents a share in the prior-year quarter. The company noted that the prior-year results were restated.

Sales increased 5% to $270.9 million, compared with $259 million in the first quarter 2010. Same store sales increased 2%. Gross margin contracted 70 basis points to 41.5% from the year-ago period, primarily due to lower merchandise contribution and higher freight expense. Selling, general and administrative, as a percentage of sales, declined 290 basis points to 23.4% from last year.

“First quarter sales, including a strong February, were above expectations. Higher sales and a reduction in incentive compensation drove our record quarter,” John Cato, chairman, president and ceo, said.

Looking ahead to the second quarter, Cato forecasts earnings in a range of 57 cents to 59 cents a share on same store sales ranging between down 2% to remaining flat.

For fiscal 2011, Cato raised its earnings guidance to a range of $2.11 to $2.19 per share from the prior forecast range of $2.00 to $2.11 per share.


Bon Ton Q1 Loss Widens As Rainy Weather Hurt Sales

York, PA—Cold, rainy weather that plagued most of its Northern-based stores resulted in a widened first quarter loss for Bon-Ton Stores Inc.

The department store chain said today that its loss widened to $36 million or $2.01 a share, from $24 million, or $1.33 cents, a year ago. The loss was greater than analysts’ average estimate had expected at $1.42 a share. The loss included $9.5 million for fees for the voluntary prepayment of Bon-Ton’s second lien term loan.

Sales decreased by 1.7%, to $650 million, down from $661 million in first quarter 2010. Same store sales declined by 1.2% for the quarter.

Calling the quarter “a challenging period for us,” Bud Bergren, ceo, said “Our markets, which are located in northern states, experienced unseasonably cold and wet weather, which we believe negatively impacted sales of seasonal apparel. When we saw the seasonal apparel not selling at the projected rate, we responded by taking markdowns and making adjustments to our merchandise to better align with customer preferences.”

As the company slashed prices to move inventory, lower margins contributed to the loss. Bergren said however that sales have improved this month with warmer temperatures.

Bon-Ton has its financial headquarters in York, Pa., and merchandising office in Milwaukee. The company operates the Boston Store, Elder-Beerman, Herberger’s and Younkers chains in Wisconsin, and Bon-Ton, Bergner’s, Carson Pirie Scott and Parisian stores elsewhere in the upper Midwest and Northeast.

Buckle Inc. Q1 Income Rises As Sales Increase

Kearny, NE–Buckle Inc. posted today a quarterly profit as youth-oriented retailer continued to have strong sales growth despite the slow economic recovery.

The company earned $33.5 million, or 71 cents a share, compared with $30.1 million, or 64 cents a share last year.

Sales for the first quarter rose 11.8% to $240.1 million. Comparable stores increased 8.1% over the prior year quarter. Online sales increased 18.6% to $17.1 million, compared with net sales of $14.4 million for the prior year quarter.

Analysts’ average estimate had expected earnings of 73 cents a share, on revenue of $238.2 million.

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