By  on March 18, 2010

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.)

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