* Q1 EPS $1.16 vs Street view $1.16
* Q1 same-store sales up 10 pct; sees Q2 up 3-4 pct
* Sees Q2 EPS $0.95-$0.99 vs Street view $1
* Sees FY EPS $4.11-$4.24 vs Street view $4.21
* Shares up 1.2 pct (Rewrites, adds CEO quote, analyst comment, updates share move)
By Phil Wahba
NEW YORK, May 20 Ross Stores Inc (ROST.O) reported a higher-than-expected quarterly profit, helped by bargain-hunting shoppers, and said operating margins hit an all-time high, sending its shares up.
But Ross maintained a profit outlook that fell short of Wall Street expectations, raising questions about whether the off-price retailer can hang onto shoppers in the long term as the economy heals.
"Consumers are finally returning to full-price retailers," Jefferies analyst Randal Konik wrote in a research note. "Average unit retails (spending per visit) could fall soon while traffic trends could stall or decline."
Sales at Ross stores open at least a year, or same-store sales, rose 10 percent during the quarter, while overall sales rose 14.4 percent to $1.93 billion.
The company said its operating profit margin had hit an all-time high, rising 3.2 percentage points to 12.1 percent, and that it was on track to buy back $375 million in stock by the end of its fiscal year.
Ross Chief Executive Michael Balmuth in a statement credited his company's "favorable position as a value retailer in the current economic and retail environment."
Ross and its larger rival TJX Cos Inc (TJX.N) buy excess inventory from vendors and sell them at steep discounts of as much as 60 percent compared to department stores.
Ross said net income in the first quarter, which ended May 1, was $142.3 million, or $1.16 per share, in line with analysts' average forecast, according to Thomson Reuters I/B/E/S. That is up 55.8 percent from $91.4 million, or 72 cents, per share a year ago.
Ross shares were up 62 cents at $52.35 on the Nasdaq.
On Thursday morning, the economy got a fresh jolt of bad news, when the U.S. government released data showing the number of jobless claims unexpectedly rose last week. [ID:nN20125298]
In another sign that the economic recovery has some way to go, Dollar Tree Inc (DLTR.O), which sells most of its merchandise for $1, reported stronger than expected earnings and raised its profit forecast. [ID:nN20242554]
While such economic conditions typically favor discounters and off-price retailers, Ross maintained its view that same-store sales will rise at a more moderate pace of 3 percent and 4 percent.
Ross, based in Pleasanton, California, still expects second-quarter earnings between 95 cents and 99 cents per share, below Wall Street analysts' average forecast of $1.
The chain's full-year forecast of earnings in the range of $4.11 to $4.24 per share compared to Wall Street expectations of full-year earnings of $4.21 per share.
Earlier this week, TJX also reported higher net income along with a disappointing profit outlook. [ID:nN18197193]
As of May 1, Ross operated 1,021 stores, up from 974 a year earlier.
(Reporting by Phil Wahba, editing by Dave Zimmerman)
BRIEF-Western Forest announces settlement for April 2011 tenure extinguishment
* Western Forest Products Inc announces settlement for the April 2011 tenure extinguishment in a portion of Tree Farm Licence 44
BRIEF-Oak Valley Bancorp Q3 earnings per share $0.24
* Q3 earnings per share $0.24 Source text for Eikon: Further company coverage: