PLEASANTON, Calif.–Net income for Ross Stores finished the second quarter at $129.3 million, 25 percent better than in the second quarter of 2009 and a record for the off-price retail company.
The profit level improved thanks to an 8.1 percent gain in second-quarter net sales to $1.2 billion (including a same-store sales rise of 4 percent), and a pickup of 110 basis points in gross margin to 27 percent.
Michael Balmuth, Ross’ vice chairman and chief executive officer, said “higher merchandise gross margin, a timing shift in distribution expenses related to packaway levels, lower shortage costs and leverage on other operating expenses” helped to drive the company’s bottom line in the quarter. Selling, general and administrative expenses rose 9.3 percent but fell 30 basis points as a percentage of sales, to 15.9 percent.
Although Ross logged strong results in the quarter, Balmuth said the company remains cautious in its outlook for the rest of the year. For the third quarter, Ross projected that same-store sales will increase by from 1 to 2 percent, and for the fourth quarter they will be flat to down 1 percent. These numbers are partly based on year-over-year comparisons; Balmuth noted that Ross’ comparable-store sales increased 9 percent in the second half of last year.