Ross Stores Opens 26 Outlets, On Track With FY20 Target

Ross Stores, Inc. (NASDAQ:ROST) has been consistent with the execution of its store expansion plans over the years. In sync with this, the company opened 26 stores across nine different states in February and March. These included 19 Ross and seven dd’s DISCOUNTS stores. These store openings are part of the company's plans to add about 28 stores, including 21 Ross and seven dd's DISCOUNTS in first-quarter fiscal 2020.

Furthermore, this first round of store openings keeps it on track for the target of inaugurating 100 stores in fiscal 2020 — including 75 Ross and 25 dd’s DISCOUNTS outlets. The target does not include plans to close or relocate 10 existing stores.

With this, the company now operates nearly 1,831 Ross stores and dd’s DISCOUNTS stores across 39 states, the District of Columbia and Guam. Over the long term, it expects to expand the Ross chain of stores to 2,400 locations alongside operating about 600 dd’s DISCOUNTS stores.

Ross Stores’ Strategies Bode Well

Apart from store expansion plan, the company continues to focus on merchandising organization through investments in workforce, processes and technology to keep itself on growth trajectory. It has a proven business model as the competitive bargains it offers continue to make its stores attractive destinations for customers in all economic scenarios.

Moreover, the off-price model offers strong value proposition and micro-merchandising that drive better product allocation and margins. These actions make us confident of its growth potential alongside its ability to sustain top- and bottom-line growth trends. The company expects a 4-5% increase in total sales for fiscal 2020, with comps growth of 1-2%. For the first quarter of fiscal 2020, the company expects a 4-5% improvement in total sales, with comps growth of 1-2%. However, higher cost of goods sold along with increased distribution expenses may dent Ross Stores’ margins and profits.

We note that, shares of this Zacks Rank #3 (Hold) company have decreased 17.5% in the past three months, wider than the industry’s decline of 3.3%.

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