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Ross Stores Opens 40 Stores, Achieves FY17 Expansion Target

Zacks

Ross Stores, Inc. ROST has reached its store expansion target for fiscal 2017 with the inauguration of 40 new stores in September and so far in October. These include 30 Ross Dress For Less and 10 dd's DISCOUNTS stores.

For fiscal 2017, management announced plans to open a total of 90 stores comprising 70 Ross and 20 dd’s DISCOUNTS outlets. However, these numbers exclude its plans to relocate or close 10 existing stores during the fiscal year. Markedly, so far in fiscal 2017, the company introduced a total of 96 outlets, including 74 Ross and 22 dd's DISCOUNTS stores.

These store openings mark Ross Stores’ expansion in 22 different states, in both new and existing markets. Notably, the fall openings strengthened the company’s footprint in its newest market — the Midwest, with roughly 50% of the new stores located in this region.

We note that Ross Stores remains committed to its store-expansion efforts. Evidently, the company is well on track to achieve the target of reaching 2,500 stores, comprising 2,000 Ross and 500 dd’s DISCOUNTS stores, over the long term. Currently, it operates roughly 1,412 off-price home fashion and apparel stores across 37 states, the District of Columbia and Guam.

Apart from Ross Stores, there are retailers like Nordstrom, Inc. JWN and Dick's Sporting Goods, Inc. DKS that aggressively continue to open stores amid a challenging retail backdrop.

Ross Stores’ Strategies Remain Intact

In addition to store-expansion strategy, Ross Stores continues to focus on merchandising organization through investments in workforce, processes and technology to keep itself on the growth trajectory. The company 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, Ross Stores’ 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.



In fact, these actions are reflected in the company’s share price, which rallied 20.2% in the last three months, faring better than the industry’s gain of 10.1%. Currently, Ross Stores carries a Zacks Rank #2 (Buy) with a VGM Score of B.

Another stock worth considering in the same space is Big Lots, Inc. BIG, which has a long-term earnings growth rate of 13.5%. Also, the company’s earnings have outpaced the Zacks Consensus Estimate in each of the trailing four quarters with an average of 81.1%. Currently, the stock carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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