This Retailer’s on Sale: Ross Stores, Inc. (ROST), The TJX Companies, Inc. (TJX), Stein Mart, Inc. (SMRT)

Page 1 of 2

I was shocked by Ross Stores, Inc. (NASDAQ:ROST) report last week of a 1% dip in February same-store sales growth—the company’s first decline in the metric in at leastfifty months. Obviously flummoxed by the news as well, investors reacted by shoving Ross Stores, Inc. (NASDAQ:ROST) shares down 7.3% during Mar. 7 trading. The stock hasn’t yet recovered, but I have from that initial shock and continue to believe Ross Stores, Inc. (NASDAQ:ROST) presents a great opportunity for long-term gains. Hello, sale price!

I’m a big believer in the off-price clothing/home goods retail model shared by Ross Stores and companies including The TJX Companies, Inc. (NYSE:TJX) and Stein Mart, Inc. (NASDAQ:SMRT), and frankly assumed at least the former pair would shrug off lingering consumer-related concerns including the Federal payroll tax increase, delayed income tax returns and elevated gasoline prices. Turns out I was wrong where Ross Stores is concerned, as the company chiefly blamed delayed returns for its February under performance. The company said sales began to accelerate into March and maintained its same-store sales guidance for March (-1.5%) and April (+5.5%).

You read that correctly: Ross Stores, Inc. (NASDAQ:ROST) expects to suffer a second consecutive month of negative same-store sales growth. That’s disappointing, to be sure, but I refuse to believe the company’s management has suddenly misplaced its proven acumen, or that consumers no longer appreciate and seek out value. With that in mind, let’s look at the recent performances of Ross Stores, The TJX Companies, Inc. (NYSE:TJX), Stein Mart, Inc. (NASDAQ:SMRT) and Kohl’s Corporation (NYSE:KSS) in several key metrics. Note that Kohl’s offers similar price points to the other three, but instead thrives on routine discounting of regularly priced items; plus, it doesn’t carry high-end clothing brands.

EPS and sales

Even Sir Edmund Hillary would’ve likely been impressed by the upswing in annual EPS at Ross Stores and The TJX Companies, Inc. (NYSE:TJX) over the last four years. The move is particularly solid when considering the pair’s sales growth (see below), though steadily rising, has lagged comparatively, meaning management is pulling a lot of the right strings between the top and bottom lines. As for Kohl’s, its humming e-commerce unit has become somewhat of a double-edged sword. Online sales surged 42% in 2012 to $1.4 billion, but the company’s bricks-and-mortar sales have suffered as a result. Management estimates that one-third of the e-commerce growth has come from stores, and in response is remodeling some locations, boosting productivity through IT spending and freshening its marketing approach—all initiatives that eat into the bottom line despite steady sales growth. Stein Mart, Inc. (NASDAQ:SMRT) weathered sales declines from 2009-2011, but the company appears to be picking up momentum in the metric, sporting a multi-month run of same-store sales growth after a trying early 2012. The company’s 12.4% slashing of SG&A expenses in 2010 helped produced the EPS spike in the same year.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 44 percentage points in 21 months Learn how!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!