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Home furnishings a leader for off-pricer Ross

Pleasanton, Calif. – Even as it reduced its earnings projections for the year, off-price retailer Ross Stores today highlighted home merchandise as a bright spot.

“Dresses and home were the best-performing merchandise categories,” said Michael Balmuth, vice chairman, president and ceo, speaking to analysts. Discussing comp gain by department, Balmuth noted that home departments had “high single digit percentage increases.”

Responding to a question about opportunities in home categories, said, “The opportunities we’ve isolated are really in the gift-giving part of home.”

At No. 14 on the HTT Top 50 Retailing Giants, Ross Stores had 2006 home textiles sales of $320.0 million, according to HTT research.

Ross, now operating 817 Ross Dress for Less and 45 dd’s Discounts units, reported second quarter (ended August 4) net earnings of $50.9 million, up 16% from $45.4 million in the same period one year ago. Sales of $1.4 billion were up 10% from last year. Comp sales climbed 2%. Year-to-date comps are up 1%.

The company is seeking to build an overall apparel and home assortment that is “younger, fresher” and that emphasizes brands throughout the store, Balmuth added.

Ross offered a conservative forecast on sales and gross margins. The retailer reduced its third-quarter comp sales gain projection from 3% - 4% to 1% - 3%, and forecast 9% -11% total sales growth compared to the year-ago period.

The retailer projected 10% - 17% earnings growth for the year, or $1.80 to $1.90 per share, off from its original 2007 guidance of $1.85 to $1.95.

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