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Ross Stores raises earnings expectations

PLEASANTON, Calif. (AP) -- Ross Stores Inc. reported Thursday that a key sales measure increased 4 percent in January, slightly ahead of what analysts were expecting. It raised its earnings forecast based on those results and increased its cash dividend.

The discount retailer said that revenue from its stores open a year increased 4 percent for the four-week period that ended Jan. 26, on top of a 5 percent gain last year. This topped analyst expectations of a 3.5 percent increase, according to Thomson Reuters. This is considered a key measure of financial performance because it strips away the impact of recently opened or closed stores.

Ross said that total revenue for the five-week period that ended Feb. 2 increased 39 percent to $672 million from the prior year.

Vice Chairman and CEO Michael Balmuth said sales were ahead of the company's expectations and credited Ross Stores' name-brand bargains with appealing to consumers focused on value.

Ross raised its profit estimates based on its results. The company now expects to earn between $1.06 and $1.07 per share for the quarter that ended Feb. 2 and $3.52 to $3.53 for the fiscal year. Both periods include a benefit of 10 cents per share from an added week. Analysts polled by FactSet were expecting the company to earn $1.06 per share for the quarter and $3.51 per share for the year.

The company expects earnings of $1 to $1.04 per share for the first quarter with sales growth of 1 to 2 percent in locations open at least a year; analysts had forecast $1.04 per share.

For its fiscal year ending next February, the company also expects its revenue from stores open at least a year to increase 1 to 2 percent. It expects to earn $3.65 to $3.80 per share for the year, below the Street forecast of $3.89 per share.

The retailer also said that its board has authorized it to buy back up to $1.1 billion shares of its stock over the next two years. It also raised its quarterly cash dividend by 21 percent to 17 cents per share. The new divided in payable March 29 to shareholders of record as of Feb, 22.

Ross shares gained 30 cents to $59.41 by midday after spiking as high as $62.07 earlier in the day. Its stock remains at the lower end of its 52-week trading range of $50.91 to $70.82.