Ross Stores Inc. continued to make the most of consumers’ flight to value.
The Pleasanton, Calif.-based off-pricer’s fourth-quarter profits shot up 46.7 percent to $142.9 million, or $1.16 a diluted share, from $97.4 million, or 76 cents, a year ago. Results were in line with the retailer’s projection last month. Sales for the three months ended Jan. 30 advanced 14.2 percent to $1.98 billion from $1.73 billion on a 10 percent rise in comparable-store sales. Gross margin ascended to 26.1 percent of sales from 23.8 percent a year earlier.
“Looking ahead, we believe that consumers’ increased focus on value will continue for the foreseeable future, which bodes well for our bargain-oriented merchandise strategy,” said Michael Balmuth, vice chairman and chief executive officer, on a conference call with analysts.
Ross’ earnings for the year increased 45 percent to $442.8 million, or $3.54 a diluted share, from $305.4 million, or $2.33 a share, in 2008. Sales rose 10.8 percent to $7.18 billion from $6.49 billion with a 6 percent comp gain.
Ross, the second-largest off-pricer behind The TJX Cos. Inc., expanded its footprint by 50 stores last year for a total of 1,007 retail outposts. It also had enough cash left over to buy back 7.4 million shares for $300 million.
“By exceeding our sales targets with leaner inventories, we realized significantly faster turns in 2009, which resulted in much fewer markdowns,” Balmuth said.
The firm is planning further reductions in in-store inventories, with are set to decline in the mid- to high-single-digit percentage range this year.
Overall, last year will be a tough act to follow for the off-pricer.
“We are up against a year of exceptional growth in both sales and earnings,” Balmuth said. “As a result, we have been prudent in setting our targets for 2010 with the hope that we can do better.”
The ceo said comp sales would rise 1 to 2 percent this year as earnings per share increase 7 to 12 percent to $3.80 to $3.95 a diluted share.
The guarded outlook contributed to a $1.81, or 3.4 percent, decline in Ross shares to $52.15 Thursday as the S&P Retail Index picked up less than 0.1 percent to 446.68. Meanwhile, the Dow Jones Industrial Average enjoyed an eighth straight day of gains, adding 0.4 percent to close at 10,779.17.
Among other retailers reporting fourth-quarter results on Thursday, both Stein Mart Inc. and New York & Company Inc. moved into the black against year-ago losses, and Cato Corp. rode higher net and same-store sales to an 89.1 percent increase in profitability. Like Ross, all three reported gross margin improvement in the final quarter of the just concluded fiscal year, aided by expense and inventory discipline and a less promotional environment.
Jacksonville, Fla.-based Stein Mart earned $2.7 million, or 6 cents a diluted share, against a loss of $56.2 million, or $1.35 a share, in the year-ago quarter. Excluding one-time charges in both quarters for store closings and impairment, EPS would have been 19 cents versus a loss of 57 cents in the fourth quarter of 2008. Sales fell 6.1 percent to $341.8 million from $363.9 million, while same-store sales fell 3.8 percent as gross margin grew to 25.9 percent of sales from 15.1 percent a year ago.
David H. Stovall Jr., president and ceo, said on a conference call, “We’re pleased to have ended the year a much stronger company than we began it.” Among the accomplishments he cited in the just concluded year were a return to profitability in all four quarters, new supply chain distribution and a fivefold increase in cash generated from operations.
Shares advanced 7 percent to close at $10.11.
Meanwhile, shares of New York & Co. also gained 7 percent, to close at $4.72, after net income rose to $2.5 million, or 4 cents a diluted share, from a year-ago net loss of $27.4 million, or 46 cents a share. Adjusted net income from continuing operations, excluding pretax charges of $19 million, met analysts’ estimates of 6 cents a share.
Quarterly revenue slid 8.3 percent to $298 million from $325.1 million, narrowly missing expectations of $301.7 million. Comparable-store sales fell 7.7 percent, as gross margin as a percentage of sales improved to 26.8 percent versus 18.8 percent a year ago.
At Cato, net income climbed to $7.3 million, or 25 cents a diluted share, from $3.9 million, or 13 cents a share, in the year-ago quarter. Overall revenues, which include financing income, gained 4.1 percent in the quarter to $220.9 million from $212.2 million. Standalone retail sales grew 4.1 percent as well to $217.7 million while same-store sales grew 2 percent.
Analysts polled by Yahoo Finance had expected EPS of 22 cents on revenues of $211.5 million, on average.
The company said it expects first-quarter EPS to be between 71 cents and 75 cents, above the consensus estimate of 70 cents.
Despite the stronger results, investors shied away from the firm’s stock Thursday, sending shares down 3.1 percent to $20.98.
(For more details on financial results, see WWD.com/business-news.)
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast