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Ross Stores Opens 42 Outlets for Q3, Completes FY19 Target

Zacks Equity Research

Ross Stores, Inc. ROST has been consistent with the execution of its store expansion plans over the years. In sync with this, the company opened 42 stores across 19 different states in September and October. These included 30 Ross and 12 dd’s DISCOUNTS stores. These store openings mark the completion of its planned store expansion for third-quarter fiscal 2019.

Furthermore, this third round of store opening completes the company’s target for fiscal 2019 with addition of 98 new outlets.

With this, the company now operates nearly 1,811 Ross stores and dd’s DISCOUNTS stores across 39 states, the District of Columbia and Guam. Over the long term, it expects to expand the Ross chain of stores to 2,400 locations alongside operating about 600 dd’s DISCOUNTS stores.

Apart from store expansion, the company’s commitment to pricing, merchandise initiatives and cost containment bode well. It has a proven business model as the competitive bargains it offer continue to make its stores attractive destination for customers in all economic scenarios.

The off-price model offers strong value proposition and micro-merchandising that drive better product allocation and margins. Further, solid execution of the off-price strategy should boost top and bottom lines.

Moreover, Ross Stores is witnessing robust comps trend over the past few quarters. Notably, comps improved 3% in second-quarter fiscal 2019, driven by slightly higher traffic and increased average basket size. Comps in the quarter also benefited from strength in the men’s category, and the Midwest and Southeast regions. It continues to anticipate comps growth of 1-2% for the third and fourth quarters of fiscal 2019.

However, the recently announced tariffs on goods sourced from China as well as higher operating costs remain a hindrance to the company’s growth path.

Although, shares of this Zacks Rank #3 (Hold) company have gained 12.6%, it has underperformed the industry’s growth of 19.7%.

Looking for Better-Ranked Picks? Check These

Burlington Stores, Inc BURL currently has a long-term earnings growth rate of 15.9% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dollar General Corporation DG, also a Zacks Rank #2 stock, has a long-term earnings growth rate of 9.6%.
Costco Wholesale Corporation COST presently has a long-term earnings growth rate of 8.5% and a Zacks Rank #2.

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Ross Stores, Inc. (ROST) : Free Stock Analysis Report
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