Off-price retailer Ross Stores Inc. (NASDAQ: ROST) said that its profit rose 13 percent in its first quarter on strong sales, but gave a weak second-quarter outlook.
On Wednesday, the firm reported that net earnings in the quarter ending May 5 were $67.0 million, or 48 cents per share, compared to $59.2 million, or 41 cents in the first quarter of 2006. Sales for the 13 week period were $1.4 billion, up 9 percent versus the first quarter in fiscal 2006.
The average profit estimate of analysts polled by Thomson Financial was 48 cents per share on revenue of $1.4 billion.
Increased profits were attributed to strong performance of its west coast stores, and Home and Dresses departments outperforming other merchandise. Operating margin also increased to 7.7 percent.
These results were mainly due to higher merchandise gross margin and reductions as a percent of sales in distribution and buying costs, commented Michael Balmuth, Ross Chairman and CEO, regarding margins.
Comparable stores open over a year saw flat sales growth, slightly below the firm's estimate of 1 percent to 2 percent sales growth. It attributed slow growth to unseasonable weather during the first two weeks of April.
For the second quarter ending August 4, 2007, Ross forecasts same store sales gains of 1 percent to 2 percent and earnings per share in the range of 35 cents to 37 cents.
Balmuth also expects same-store sales for the second half of the year to grow between 3 percent and 4 percent, partially due to new merchandising opportunities during the fall season.
Shares of Ross rose 2 cents, or less than one percent, to $13.13 in mid-day trading on the Nasdaq Stock Market.