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

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.