Aug 20, 2008
Ross Stores posts higher profit, raises outlook
Aug 20, 2008
NEW YORK (Reuters) - Ross Stores Inc on Wednesday said quarterly profit rose 40 percent as cash-strapped customers shifted to the off-price retailer from department stores, and it raised its outlook for the rest of the year.
Net income rose to $71.3 million, or 54 cents per share, in the second quarter that ended Aug. 2, from $50.9 million, or 37 cents per share, a year earlier.
Analysts on average expected earnings of 54 cents per share, according to Reuters Estimates.
Ross' shares fell 2.4 percent to $37.44 in early New York Stock Exchange trading.
Like other off-price retailers such as TJX Cos Inc , Ross buys excess apparel, accessories and home goods in bulk from manufacturers at below-wholesale prices. It has succeeded in luring consumers pressured by higher gas and food prices and the troubled housing market.
But Ross warned that with the benefit of U.S. tax rebate checks drying up after consumers spent much of those funds in the second quarter, it remains cautious about its performance going into the back half of the year. Ross said it still expects comparable store sales to rise 2 percent to 3 percent for both the third and fourth quarters.
"Looking ahead to the important back-to-school and holiday periods, we believe it is prudent to remain defensively positioned based on the uncertain macro economic and retail environments," Chief Executive Michael Balmuth said in a statement.
Ross said the rebate checks and favorable weather helped drive second-quarter sales, which were up 14 percent at $1.64 billion, slightly above analysts' expectations of $1.636 billion, with comparable store sales up 6 percent over the prior year.
Dresses, accessories and shoes posted strong sales, with the best-performing markets in Texas and the Mid-Atlantic, Ross said.
Ross said it expects a third-quarter profit of 42 cents to 44 cents per share, and 78 cents to 81 cents per share for the fourth quarter, leading to a full-year outlook of $2.33 to $2.38 per share. In May Ross said it expected a full-year profit of $2.19 to $2.29 per share.
Analysts on average are looking for $2.35 per share for the year, with a third-quarter profit forecast of 43 cents per share and 80 cents for the fourth quarter.
(Reporting by Sarah Coffey, editing by Maureen Bavdek)
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