Off-price retailer Ross Stores Inc posted a 15 percent rise in quarterly profit that matched estimates and it raised its full-year earnings view as strong sales and merchandise margins boosted business.
Shares of the company rose 5 percent to $37.58 in early trade on Nasdaq.
Our business benefited...as we continue to take advantage of the substantial amount of close-out opportunities in the marketplace, Chief Executive Michael Balmuth said in a statement.
Ross, like other off-price chains, buys excess apparel, accessories and home goods in bulk from manufacturers at big discounts below wholesale prices.
Its chances of buying top-brand items cheaply have increased as department stores like Mervyn's and Goody's have gone bankrupt and as other chains tighten inventories to match consumer demand.
Net profit for the first quarter ended May 2 was $91.4 million, or 72 cents a share, compared with $79.5 million, or 60 cents a share in the previous year.
Revenue at the company, which saw strong demand for dresses and shoes, grew 9 percent to $1.69 billion, with comparable store sales up 3 percent.
Balmuth said operating margin for the quarter grew about 75 basis points to 8.9 percent, driven by a 90-basis-point improvement in gross margins.
The company said it remained on track to complete the remaining $223 million of its planned $300 million stock repurchase by the end of fiscal 2009.
Ross sees same-store sales for the second half of this year up 2 to 3 percent from its earlier view of relatively flat.
It raised its full-year earnings estimate to a range of $2.62 to $2.72 a share, from its previous forecast of $2.25 to $2.45 a share.
(Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Gopakumar Warrier)