Ross Stores, Inc. (ROST) recently posted fourth-quarter earnings of 76 cents per share, beating last year’s 70 cents and matching analysts’ expectations. The company’s share price, which is trading slightly below a 52-week high, has experienced significant growth over the past year as it outpaced the major averages.

Company Description

Ross Stores is the second largest off-price retailer with fiscal 2008 revenues of $6.5 billion. As of January 31, 2009, the Company operated 904 Ross Dress for Less® stores in 27 states and Guam and 52 dd’s DISCOUNTS® locations in California, Florida, Texas and Arizona. The company is headquartered in Pleasanton, California.

Ross Dress for Less offers first-quality, in-season, name brand and designer apparel, accessories, footwear and home fashions for the entire family at everyday savings of 20% to 60% off department and specialty store regular prices.

dd’s DISCOUNTS features a more moderately-priced assortment of first-quality, in-season, name brand and fashion apparel, accessories and footwear for the entire family at everyday savings of 20% to 70% off moderate department and discount store regular prices as well as similar savings on a wide assortment of merchandise for the home.

Record Results

The company recently posted stellar fourth-quarter results. Net earnings hit a record $97.4 million, versus last year’s fourth-quarter total of $94.5 million. The earnings per share total of 76, matched the consensus estimate and topped the previous year’s 70 cents.

Sales jumped 5% on a year-over-year basis. Comparable store sales slipped by 1% after seeing growth in the year-prior quarter.

Management was happy with the performance, noting that the solid results were achieved in an extremely challenging macro-economic and retail environment that became increasingly difficult as the year progressed.

The company stated that a key driver of its performance was the efficient execution of its resilient and flexible off-price strategies, which included taking advantage of the huge amount of close-out opportunities in the marketplace. This enabled ROST to deliver fresh and exciting assortments of sharply priced name brand bargains. The company added that the strong results were seen while operating the business with leaner in-store inventories, which drove faster turns and reduced markdowns, resulting in higher merchandise gross margin.

Favorable Industry Comparisons

Ross Stores also rewards shareholders with income, paying am industry-leading dividend yield of 1.1%. The company’s return on equity of 31% is well above the industry average of 18%. Its net profit margin of 6% doubles the industry average of 3%.

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