Ross Stores Reports First Quarter Earnings, Issues Second Quarter 2013 Guidance

PLEASANTON, Calif., May 23, 2013 /PRNewswire/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for the 13 weeks ended May 4, 2013 of $1.07, up from $.93 for the 13 weeks ended April 28, 2012.  These results represent a 15% increase on top of a 26% gain in last year's first quarter.  Net earnings for the 2013 first quarter grew 12% to $234.6 million, up from $208.6 million in the prior year.  

First quarter 2013 sales increased 8% to $2.540 billion, up from $2.357 billion in the first quarter of 2012.  Comparable store sales for the 13 weeks ended May 4, 2013 rose 3% over the 13 weeks ended May 5, 2012.  This compared to a robust 9% same store sales gain for the 13 weeks ended April 28, 2012.

Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, "We are pleased with the slightly better-than-expected sales and earnings we delivered in the first quarter, especially considering this growth was achieved on top of strong prior year gains. These results continued to be driven by our ongoing ability to offer terrific bargains to today's value-oriented consumers."

Mr. Balmuth continued, "Operating margin for the period grew to a record 14.9%, up from 14.4% in the prior year.  This increased level of profitability was mainly driven by higher merchandise gross margin and also benefited from favorable timing of expenses."

Mr. Balmuth also noted, "We continued to enhance stockholder returns through our stock repurchase and dividend programs in the first quarter.  During the first three months of fiscal 2013, we repurchased 2.3 million shares of common stock for an aggregate price of $138 million.  We are on track to buy back a total of $550 million in common stock during fiscal 2013 under the two-year $1.1 billion authorization approved by our Board of Directors in January 2013."  

Looking ahead, Mr. Balmuth said, "For the 13 weeks ending August 3, 2013, we are forecasting same store sales to increase 1% to 2% compared to the 13 weeks ended August 4, 2012.  Earnings per share for the 2013 second quarter are projected to be in the range of $.89 to $.93, up from last year's $.81.  This represents forecasted growth of 10% to 15% on top of a strong 27% gain in the second quarter of 2012."

Mr. Balmuth concluded, "We now project earnings per share for the 52 weeks ending February 1, 2014 to be in the range of $3.70 to $3.81, up from our initial guidance of $3.65 to $3.80 and compared to $3.53 for the 53 weeks ended February 2, 2013.  As previously disclosed, the 53rd week in fiscal 2012 added an estimated $.10 to earnings per share."

The Company will provide additional details about its first quarter results and management's outlook for the second quarter on a conference call to be held on Thursday, May 23, 2013 at 4:15 p.m. Eastern time.  Participants may listen to a real time audio webcast of the conference call by visiting the Investors section of the Company's website located at www.rossstores.com.  A recorded version of the call will also be available at the website address, and via a telephone recording through 8:00 p.m. Eastern time on Thursday, May 30, 2013 at 404-537-3406, ID #71959797.

Forward-Looking Statements:  This press release and the recorded comments on our corporate website contain forward-looking statements regarding expected sales, earnings levels and other financial results in future periods that are subject to risks and uncertainties which could cause our actual results to differ materially from management's current expectations. The words "plan," "expect," "target," "anticipate," "estimate," "believe," "forecast," "projected," "guidance," "looking ahead" and similar expressions identify forward-looking statements. Risk factors for Ross Dress for Less® ("Ross") and dd's DISCOUNTS® include without limitation, competitive pressures in the apparel or home-related retailing merchandise industry; changes in the level of consumer spending on or preferences for apparel or home-related merchandise; impacts from the macro-economic environment and financial and credit markets that affect consumer disposable income and consumer confidence, including but not limited to interest rates, recession, inflation, deflation, energy costs, tax rates and policy, unemployment trends, and fluctuating commodity costs; changes in geopolitical and geo-economic conditions; unseasonable weather trends; potential disruptions in supply chain or information systems; lower than planned gross margin, including higher than planned markdowns and higher than expected inventory shortage; greater than planned operating costs; our ability to continue to purchase attractive brand name merchandise at desirable discounts; attracting and retaining personnel with the retail talent necessary to execute our strategies; effectively operating and continually upgrading our various supply chain, core merchandising and other information systems; improving our merchandising and transaction processing capabilities through the implementation of new processes and systems enhancements; managing our planned data center and headquarters moves without disruption or unanticipated costs; obtaining acceptable new store locations and improving new store sales and profitability, especially in newer regions and markets; adding capacity to our existing distribution centers and building out planned additional distribution centers timely and cost effectively; and achieving and maintaining targeted levels of productivity and efficiency in our existing and new distribution centers. Other risk factors are set forth in our SEC filings including without limitation, the Form 10-K for fiscal 2012 and Form 8-Ks for fiscal 2013.  The factors underlying our forecasts are dynamic and subject to change.  As a result, our forecasts speak only as of the date they are given and do not necessarily reflect our outlook at any other point in time.  We do not undertake to update or revise these forward-looking statements.

Ross Stores, Inc. is an S&P 500, Fortune 500 and Nasdaq 100 (ROST) company headquartered in Pleasanton, California, with fiscal 2012 revenues of $9.7 billion.  The Company operates Ross Dress for Less® ("Ross"), the largest off-price apparel and home fashion chain in the United States with 1,112 locations in 33 states, the District of Columbia and Guam as of May 4, 2013.  Ross offers first-quality, in-season, name brand and designer apparel, accessories, footwear and home fashions for the entire family at everyday savings of 20% to 60% off department and specialty store regular prices. The Company also operates 115 dd's DISCOUNTS® in nine states that feature a more moderately-priced assortment of first-quality, in-season, name brand apparel, accessories, footwear and home fashions for the entire family at everyday savings of 20% to 70% off moderate department and discount store regular prices. Additional information is available at www.rossstores.com.

Contact:

Michael Hartshorn 

Connie Wong


Senior Vice President, 

Director, Investor Relations


Deputy Chief Financial Officer 

(925) 965-4668


(925) 965-4503 

connie.wong@ros.com

 

 

Ross Stores, Inc.

Condensed Consolidated Statements of Earnings






















Three Months Ended 

($000, except stores and per share data, unaudited)


May 4, 2013


April 28, 2012









Sales



$2,539,914


$  2,356,841









Costs and Expenses







Costs of goods sold



1,798,811


1,679,127


Selling, general and administrative



361,968


337,811


Interest expense, net



209


2,232



Total costs and expenses



2,160,988


2,019,170









Earnings before taxes



378,926


337,671

Provision for taxes on earnings



144,314


129,058

Net earnings



$   234,612


$     208,613









Earnings per share 







Basic



$          1.09


$            0.94


Diluted



$          1.07


$            0.93

















Weighted average shares outstanding (000) 







Basic



215,408


221,104


Diluted



218,496


224,929

















Dividends 







Cash dividends declared per share



$                -


$                  -

















Stores open at end of period



1,227


1,146









 

 

Ross Stores, Inc.

Condensed Consolidated Balance Sheets













($000, unaudited)


May 4, 2013


April 28, 2012

Assets












Current Assets






Cash and cash equivalents


$      714,174


$      741,117


Short-term investments


1,038


463


Accounts receivable


77,284


66,632


Merchandise inventory


1,226,449


1,134,703


Prepaid expenses and other


111,405


104,216


Deferred income taxes


22,846


11,854



Total current assets


2,153,196


2,058,985








Property and equipment, net


1,526,564


1,246,601

Long-term investments


4,302


5,614

Other long-term assets


158,699


146,286

Total assets


$   3,842,761


$   3,457,486








Liabilities and Stockholders' Equity












Current Liabilities






Accounts payable    


$      859,595


$      830,044


Accrued expenses and other


328,690


284,108


Accrued payroll and benefits


168,088


148,770


Income taxes payable


110,829


107,715



Total current liabilities


1,467,202


1,370,637








Long-term debt


150,000


150,000

Other long-term liabilities


261,301


211,777

Deferred income taxes


88,997


114,437








Commitments and contingencies












Stockholders' Equity


1,875,261


1,610,635

Total liabilities and stockholders' equity


$   3,842,761


$   3,457,486















 

 

Ross Stores, Inc.

Condensed Consolidated Statements of Cash Flows



















Three Months Ended 

($000, unaudited)


May 4, 2013


April 28, 2012








Cash Flows From Operating Activities





Net earnings


$      234,612


$      208,613

Adjustments to reconcile net earnings to net cash





provided by operating activities:






Depreciation and amortization


48,726


43,136


Stock-based compensation


11,788


11,587


Deferred income taxes


2,257


(339)


Tax benefit from equity issuance


20,341


23,123


Excess tax benefit from stock-based compensation


(20,114)


(22,662)


Change in assets and liabilities:







Merchandise inventory


(17,212)


(4,633)



Other current assets


(31,197)


(28,890)



Accounts payable


89,620


100,177



Other current liabilities 


8,077


(33,792)



Other long-term, net


5,961


1,010



Net cash provided by operating activities


352,859


297,330








Cash Flows From Investing Activities





Additions to property and equipment


(97,552)


(57,993)

Increase in restricted cash and investments


(12,254)


(13,410)

Purchases of investments


-


(424)

Proceeds from investments


107


618



Net cash used in investing activities


(109,699)


(71,209)








Cash Flows From Financing Activities





Excess tax benefit from stock-based compensation


20,114


22,662

Issuance of common stock related to stock plans


5,766


7,955

Treasury stock purchased


(25,848)


(23,123)

Repurchase of common stock


(138,304)


(110,614)

Dividends paid


(37,475)


(31,719)



Net cash used in financing activities


(175,747)


(134,839)








Net increase in cash and cash equivalents


67,413


91,282








Cash and cash equivalents:







Beginning of period


646,761


649,835



End of period


$      714,174


$      741,117








Supplemental Cash Flow Disclosures





Interest paid


$                    -


$                    -

Income taxes paid


$         59,232


$         30,258








Non-Cash Investing Activities





Increase (decrease) in fair value of investment securities


$                    2


$              (13)






















SOURCE Ross Stores, Inc.



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