Someone forgot to tell Ross Stores
Like the company's larger competitor, TJX
These sales stand in sharp contrast to those of department stores like Kohl's
Ross' earnings per share of $0.70 met analyst estimates for the eighth quarter in a row, growing 6% over last year's fourth quarter. Operating margins of 9% for the quarter improved roughly 25 basis points from the prior year (adjusted for the extra week) on a slight expansion of merchandise margins.
It's easy to see why Ross was able to grow margins while most of the apparel world took big fourth-quarter markdown hits. Unlike many retailers these days, the company's inventory level ended the season exceptionally clean -- down 2.5% in total, with average in-store inventory down 9%.
Deep discounters seem like a welcome ray of sunshine in the current retail environment. Fool Alyce Lomax noted last month that Wal-Mart
Last summer, Ross looked like it was running out of steam. But in the current consumer environment, I think those concerns are overblown: Ross enjoyed 2% comp sales growth during the quarter and 4% growth in February. As long as the company can continue to fill the pipeline with name-brand merchandise at "treasure hunt" prices, it should be solidly positioned.
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Fool contributor Timothy M. Otte surveys the retail scene from Dallas. He welcomes comments on his articles, and owns shares of Wal-Mart, but none of the other companies mentioned in this article. The Fool has a disclosure policy.