Ross Stores Up 5% As Q4 Results Top Estimates, Boosts Dividend 18%

(RTTNews) - Shares of Ross Stores, Inc. (ROST) surged nearly five percent in extended trading on Thursday after the discount apparel retailer reported results for the fourth quarter that topped analysts' expectations.

The company reported a profit for the quarter that grew 14 percent from last year, reflecting improved operating margins and double-digit net sales growth.

The company also provided guidance for the first quarter and full-year 2015, as well as boosted quarterly dividend 18 percent and approved a $1.4 billion share buyback program.

"We are pleased with our fourth quarter sales and earnings, both of which were well ahead of our expectations, as our value offering on a wide assortment of name brand bargains and gifts resonated well with our customers," CEO Barbara Rentler said in a statement.

The Pleasanton, California-based owner of the Ross Dress for Less and Dd's Discounts chains reported net earnings of $248.53 million or $1.20 per share for the fourth quarter, higher than $217.95 million or $1.02 per share in the prior-year quarter.

On average, 27 analysts polled by Thomson Reuters expected the company to report earnings of $1.11 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the quarter increased 11 percent to $3.03 billion from $2.74 billion in the same quarter last year, and topped twenty-six Wall Street analysts' consensus estimate of $2.93 billion.

Comparable store sales for the quarter rose 6 percent over the year-ago quarter.

Operating margin for the quarter improved 45 basis points to 13.1 percent, reflecting slightly higher merchandise gross margin and leverage on expenses from robust comparable sales gain.

The company's Board of Directors recently approved an 18 percent increase in the quarterly cash dividend to $0.235 per share, payable on March 31 to stockholders of record as of March 9, 2015.

The Board also recently approved a program to repurchase $1.4 billion of its common stock over the next two years through fiscal 2016. The new authorization represents a 27 percent increase over the prior two-year $1.1 billion authorization that was completed in January 2015.

Looking ahead to the first quarter, Ross Stores expects earnings in a range of $1.21 to $1.26 per share on projected same-store sales growth of 2 to 3 percent. Analysts currently expect earnings of $1.29 per share on sales of $2.89 billion for the quarter.

For fiscal 2015, the company projects earnings in the range of $4.60 to $4.80 per share on projected same-store sales growth of 1 to 2 percent. Street is currently looking for full-year 2015 earnings of $4.79 per share on annual sales of $11.69 billion.

"As we enter 2015, we continue to face ongoing uncertainty and volatility in the macro-economic and retail climates. While we hope to do better, based on these external factors and our own challenging multi-year sales and earnings comparisons, we are remaining somewhat cautious in our outlook," Rentler added.

ROST closed Thursday's regular trading session at $99.05, up $0.59 or 0.60% on a volume of 1.58 million shares. The stock gained a further $4.55 or 4.59% in after-hours trading.