Ross Stores Inc. proved it’s a good time to be an off-pricer, on Wednesday posting double-digit earnings and sales growth in the second quarter while boosting expectations for the year.
Net income for the quarter shot up 40.2 percent to $71.3 million, or 54 cents a diluted share, compared with $50.9 million, or 37 cents, a year ago. Sales advanced 13.6 percent to $1.64 billion from $1.44 billion as comparable-store sales rose 6 percent.
For the six months, earnings jumped 27.9 percent to $150.8 million, or $1.13 a diluted share, on a 12 percent rise in sales to $3.2 billion.
Ross managed to push comps up 4 percent in California and Florida, two of the markets hit hardest by the fallout in the housing market.
Dresses, accessories and shoes were the strongest sellers at the chain, which said it benefited from the $600 tax rebate checks sent to consumers and the favorable weather during the quarter.
A down economy can be a boon for off-pricers. Not only do they sell branded goods at a discount, but they pick up better deals when their full-price competitors are trying to thin inventories. The TJX Cos., an off-price competitor, also posted strong second-quarter results last week, with earnings up 239 percent.
“During these times, we benefit from the increased supply of great brands at significant discounts like we continue to see today,” said Michael Balmuth, vice chairman, president and chief executive officer, on a conference call with analysts.
Despite the strong results so far this year, the retailer, which operates 817 Ross and 45 dd’s Discounts stores, said it is taking a cautious approach and maintaining plans for a 2 to 3 percent comp-sales gain in the back half given uncertainty in the economy. The Pleasanton, Calif.-based Ross is looking for earnings of $2.33 to $2.38 a share for the full year, up from previous projections of $2.19 to $2.29. Last year, Ross had profits of $1.90 a share.