Ross Stores rides expansion in 1Q
May 26, 2003,
Lifted entirely by rapid expansion, sales and profits both climbed higher at Ross Stores Inc., with earnings advancing by 3.4 percent, to $49.3 million from $47.7 million.
But the gain came from the chain's continued rapid rollout of new units, and same-store sales actually fell by 3 percent.
Still opening doors at a fast pace, the off-price retailer has expanded its store base by almost 13 percent over the past 12 months, to 530 stores from 470.
Acting as a prop to the bottom line, the retailer whittled its costs down by 50 basis points, or half a percentage point, to 16.5 percent of sales from 17.0 percent a year ago, partially offsetting margin erosion. Average gross margin weakened by 90 basis points, or nine-tenths of a percentage points, to 25.7 percent from 26.6 percent. But given a kick by the increase in sales, gross margin dollars still grew by 3.8 percent, to $226.0 million from $217.8 million.
In a lift to the bottom line, Ross Stores, the nation's 25th largest retailer of home fashions with $153 million in 2002 sales of home textiles, earned $70,000 in interest income, after paying $224,000 in interest expense the prior year.
Balmuth blamed the slide in same-store sales on "external issues, including unseasonable weather trends, the war in Iraq and the lackluster economic climate."
Fueling bottom-line growth, said Michael Balmuth, vice chairman and ceo, "Expense trends improved during the first quarter, due mainly to lower incentive plan costs, combined with better than planned store payroll and benefit expenses."
Going forward, said Balmuth, "Consistent with our plan for 12 percent annual unit growth, we expect to add about 62 stores in 2003. Twenty-three of these new locations opened during the first quarter, including our initial entry into Tennessee."
Ross Stores Inc.
|Qtr. 5/3 (x000)||2003||2002||% change|
|a-Second-quarter results include $70,000 in interest income, compared with $224,000 in interest expense during the prior-year period.
|Oper. income (EBIT)||80,897||78,499||3.1|
|Per share (diluted)||0.63||0.59||6.8|
|Average gross margin||25.7%||26.6%||—|