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Ross Stores Posts 18% Jump in Profit

The discount retailer is a bright spot during one of the weakest retail seasons in three decades.

March 20, 2003|Hanah Cho | Times Staff Writer

Less was definitely more for Ross Stores Inc. in its fiscal fourth quarter as the off-price retailer saw its profit jump 18%, thanks to budget-conscious consumers who sought bargains during the holiday shopping season.

The Newark, Calif.-based company, whose slogan proclaims "Dress for Less," said Wednesday that net income in the quarter ended Feb. 1 climbed to $58.7 million, or 74 cents a share, from $50 million, or 62 cents, in the year-earlier period.

Sales increased 14% to $965 million.

Ross said sales at stores opened at least a year -- a key indicator of a retailer's financial health -- rose 3%. Ross operates 507 outlets in 23 states, including 178 in California.

"In an environment where customers are more value-focused, we're a very attractive choice for customers," said Katie Loughnot, vice president of investor and media relations.

Many retailers registered disappointing holiday sales as consumers searched for rock-bottom prices in an uncertain economy. The result was one of the weakest holiday retail seasons in three decades.

Ross, however, was among the few bright spots, emerging with a same-store sales gain of 6% for December. For fiscal 2002, the company's sales rose 18% to $3.53 billion.

Ross' stock price hit a 52-week high of $47.77 on Jan. 13. But since then, it has been steadily slipping. Shares closed Wednesday at $36.18, down $1.17, on Nasdaq.

For this month, same-store sales were expected to be flat to 2% lower, Ross said, slightly worse than expected.

The decline follows sales dips in January and February, down 2% and 3%, respectively, because of bad weather in some states.

Also, Ross was "left without a lot of seasonal clearance items because department stores that didn't have a strong holiday season were selling their material at discounted prices," Loughnot said.

Sales may improve in April with the Easter selling season, which comes later this year, said David Yamamoto, an analyst at Wedbush Morgan Securities.

"It's still a difficult retailing environment with weaker consumer confidence," he said.

Nonetheless, Ross maintained its earnings outlook of $2.80 to $2.90 a share this year, up from $2.52 in fiscal 2002.

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