Ross Stores Posts 1.6% Profit Dip

Ross Stores Inc. posted a 1.6% drop in profit Wednesday for its latest quarter as higher distribution costs nibbled away at its bottom line.

The discount apparel chain also gave a discouraging profit forecast for the next two quarters.

Shares of Ross Stores declined $1.15, or 4.5%, to $24.50 on Nasdaq. They have gained 25% in the last year.

Net income for the company’s fiscal first quarter ended May 1 fell to $48.5 million, or 32 cents a share, from $49.3 million, or 32 cents, a year earlier.

Ross Stores’ latest results matched the average earnings forecast of analysts surveyed by Thomson First Call.

Sales surged 13% to $992 million from $879 million. Sales at stores open at least a year, also known as same-store sales, grew 3%.

Distribution costs increased during the latest quarter because of bad weather and a partial roof collapse at its South Carolina facility in January, the company said. Costs to retrofit its Pennsylvania distribution center and to start up its Southwest facility also hurt results.

Fiscal second- and third-quarter results will decline from a year ago, Ross Stores said, because of low inventory levels and a slow start for its new inventory management technology.

The guidance doesn’t include a potential $35-million write-down of the company’s Newark, Calif., headquarters and distribution center. Ross Stores has said since February that it may need to take the charge if it opts to sell the facility instead of using it for other purposes. The company is moving its corporate offices to Pleasanton, Calif., in July.

Ross Stores has more than 370 stores in the United States.