KSS Kohls Corporation

Ross Stores Inc. (ROST), one of the leading off-price retailers of apparels and home accessories in the United States, is scheduled to report its fourth-quarter and fiscal year 2011 financial results before the opening bell on March 15, 2012. The Zacks Consensus estimates for EPS and revenues for the quarter are currently 86 cents per share and $2,385 million, respectively. For fiscal 2011, the Zacks Consensus expectations for EPS and revenues are $2.88 and $8,590 million, respectively.

Third-Quarter 2011, a synopsis

Ross Stores' quarterly earnings of $1.26 a share jumped 23.5% from $1.02 in the prior-year quarter, but were in line with the Zacks Consensus Estimate. The increase was primarily attributable to the company's aptitude in providing attractive brand name bargains to customers, who value both quality and price.

Net sales for the quarter increased 9.2% to $2,046.4 million from $1,874.3 million in the prior-year quarter, beating the Zacks Consensus Estimate of $2,041 million. This robust increase in net sales was primarily driven by initiatives taken by the company to keep merchandise fresh by reducing the stock in stores while providing a wide range of fashion brands. Comparable store sales increased 5% during the period.

Management Guidance

The company now expects earnings to range between 82 cents and 83 cents per share in fourth-quarter 2011, up from its previous guided range of 77 cents to 80 cents. While for full fiscal 2011, Ross Stores is anticipating earnings in the range of $2.77 to $2.80 per share, up 19% to 21% from the prior fiscal earnings of $2.32. Comparable store sales for the quarter are expected to grow in the range of 2% to 3% compared with an increase of 4% in the prior-year period.

Zacks Consensus

The analyst covered by Zacks expects Ross Stores to post fourth-quarter 2011 earnings of 86 cents a share, higher than 69 cents delivered in the prior-year quarter. Currently, the Zacks Consensus Estimate ranges between earnings of 84 cents and $1.01 a share.

For fiscal 2011, the Zacks Consensus Estimate stood at $2.88 per share, higher than its previous fiscal earnings of $2.32. The current Zacks estimate ranges between $2.85 and $3.25 per share.

Agreement of Estimate

For the fourth quarter of fiscal 2011, of the 21 analysts covering the stock, 1 analyst revised its estimates upward, while none revised in the downward direction in the last 30 days. For full fiscal 2011, 2 analysts revised their estimates in positive direction, while none revised in the opposite direction, in the last 30 days.

In the last 7 days, no movement in estimates has been noticed either for fourth-quarter 2011 or fiscal 2011.

Magnitude of Estimate Revisions

With positive affect from earnings revisions by analysts in the last 30 days, the Zacks Consensus Estimates for fourth-quarter 2011 has increased by a penny to 86 cents per share while for fiscal 2011 it increased by 2 cents to $2.88 per share.

The company recorded robust comparable sales growth in all three months of the fourth quarter. Ross Stores’ comparable sales reported a year-over-year growth of 5%, 9% and 5% for the months of November 2011, December 2011 and January 2012, respectively. Considering the solid top-line performance, the company raised its outlook for the quarter. Subsequently, the analysts also raised their estimates for the quarter and fiscal year.

Our Take

Ross Stores and its subsidiaries operate two chains of off-price retail apparel and home accessories stores in the United States. These stores offer branded apparel, shoes, and accessories for the entire family, as well as gift items, linens, and other home-related merchandise.  The company also offers small furniture and furniture accents, educational toys and games, luggage, gourmet food and cookware, watches, sporting goods, and fine jewelry, which provide it with a competitive edge over its rivals.

Ross Stores has implemented a micro-merchandising tool, through which the company expects to enhance its total sales and profitability by targeting expansion in its existing markets. Moreover, Ross remains focused on new store growth, buying back stock, and paying an attractive dividend even as many other retailers make dramatic cutbacks, and has the financial strength to continue its course and build shareholders' value.

However, the company faces intense competition from other well-established players in the industry, such as Kohl's Corporation (KSS) and Wal-Mart Stores Inc. (WMT), which may dent its margins.

Currently, Ross Stores maintains a Zacks #2 Rank, which translates into a short-term 'Buy' rating. Moreover, we retain a long-term 'Outperform' recommendation on the stock.

 
KOHLS CORP (KSS): Free Stock Analysis Report
 
ROSS STORES (ROST): Free Stock Analysis Report
 
WAL-MART STORES (WMT): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research