Mar 18, 2011
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Ross Stores sales up, says profits sustainable

Mar 18, 2011

March 17 - Ross Stores Inc reported a higher profit for the holiday quarter, helped by shoppers still looking for designer brands at affordable prices, and said its profitability level was sustainable.

Ross Stores
Ross "Dress for Less" clothing store in Tanasbourne Town Center, Oregon (photo by Steve Morgan)

Sales at Ross stores open at least a year rose 4 percent during the fourth quarter that ended Jan. 29 and included the Thanksgiving-to-Christmas period, while overall sales rose 8.4 percent to $2.15 billion.

Ross and larger rival TJX Cos Inc buy excess inventory returned to vendors and sell the brand-name goods at prices as much as 60 percent lower than department stores.

These "off-price" chains were among the biggest winners during the recession. Ross reported same-store sales gains of 10 percent for the year-earlier quarter.

In a statement, Chief Executive Officer Michael Balmuth said Ross's current level of operating profitability was "sustainable." He said the company was maintaining lower levels of inventory, which has boosted margins and allowed Ross to more quickly stock items shoppers want.

Ross and TJX, which operates the T.J. Maxx and Marshalls chains, have faced increased competition as shoppers trade back up. They are still forecasting sales gains, saying shoppers remain price-conscious, but at a more modest pace.

Earlier this month, Ross said same-store sales gains had continued in February and forecast they would rise again in the rest of the current quarter, though more quickly in April because of Easter's timing this year.

Ross's net income in the fourth quarter rose to $161.8 million, or $1.37 per share, from $142.8 million, or $1.16 per share, a year earlier. The results were in line with Wall Street estimates.

Ross's board voted to raie the quarterly dividend 38 percent to 22 cents per quarter.

The Pleasanton, California-based company operates 1,055 stores in the United States.

Ross shares were down 3 cents at $69.12 in morning Nasdaq trading.

(Reporting by Phil Wahba, editing by Gerald E. McCormick and Lisa Von Ahn)

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