Ross Stores Reports First Quarter Earnings, Issues Second Quarter 2014 Guidance

22 May, 2014, 16:01 ET from Ross Stores, Inc.

DUBLIN, Calif., May 22, 2014 /PRNewswire/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for the 13 weeks ended May 3, 2014 of $1.15, up from $1.07 for the 13 weeks ended May 4, 2013.  These results represent a 7% increase on top of 15% and 26% gains in the first quarters of 2013 and 2012, respectively.  Net earnings for the 2014 first quarter were $243.9 million, up from $234.6 million in the prior year.  

First quarter 2014 sales increased 6% to $2.681 billion, up from $2.540 billion in the first quarter of 2013.  Comparable store sales for the 13 weeks ended May 3, 2014 rose 1% on top of 3% and 9% gains in the first quarters of 2013 and 2012, respectively.

Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, "First quarter earnings per share performed at the high end of our guidance as strict inventory and expense controls offset the impact from unfavorable weather and a more challenging retail environment. Sales trends improved in April with more seasonal Spring weather that coincided with the later Easter shopping period.  Operating margin for the quarter was better than forecasted, declining 25 basis points to 14.6%.  A 35 basis point increase in cost of goods sold was partially offset by a 10 basis point improvement in selling, general and administrative costs."

Mr. Balmuth continued, "During the first three months of fiscal 2014, we repurchased 2.0 million shares of common stock for an aggregate price of $139 million.  We expect to buy back a total of $550 million in common stock during fiscal 2014, which will complete 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 2, 2014, we are forecasting same store sales to increase 1% to 2% on top of 4% and 7% gains in the second quarters of 2013 and 2012, respectively.  Earnings per share for the 2014 second quarter are projected to be in the range of $1.05 to $1.09, up from $.98 last year."

Mr. Balmuth concluded, "Based on our first quarter results and guidance for the second quarter, we now project earnings per share for the 52 weeks ending January 31, 2015 to be in the range of $4.09 to $4.21, compared to $3.88 for the 52 weeks ended February 1, 2014."

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 22, 2014 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 29, 2014 at 404-537-3406, ID #41229493.

Forward-Looking Statements:  This press release contains 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 merchandise retailing 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 geoeconomic 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 and the reliability and security of our data communications systems through the implementation of new processes and systems enhancements; protecting against security breaches, including cyber-attacks on our transaction processing and computer information systems, that could result in the theft, transfer or unauthorized disclosure of customer, credit card, employee or other private and valuable information that we collect and process in the ordinary course of our business, and avoiding resulting damage to our reputation, loss of customer confidence, exposure to litigation and regulatory action, unanticipated costs and disruption of our operations; 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 2013 and 8-Ks for fiscal 2014.  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 Dublin, California, with fiscal 2013 revenues of $10.2 billion.  The Company operates Ross Dress for Less® ("Ross"), the largest off-price apparel and home fashion chain in the United States with 1,172 locations in 33 states, the District of Columbia and Guam as of May 3, 2014. 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 137 dd's DISCOUNTS® in ten states as of May 3, 2014 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

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 3, 2014

May 4, 2013

Sales

$2,680,593

$2,539,914

Costs and Expenses

Costs of goods sold

1,908,184

1,798,811

Selling, general and administrative

379,802

361,968

Interest (income) expense, net

(104)

209

Total costs and expenses

2,287,882

2,160,988

Earnings before taxes

392,711

378,926

Provision for taxes on earnings

148,798

144,314

Net earnings

$   243,913

$   234,612

Earnings per share 

Basic

$        1.17

$        1.09

Diluted

$        1.15

$        1.07

Weighted average shares outstanding (000) 

Basic

208,949

215,408

Diluted

211,515

218,496

Dividends 

Cash dividends declared per share

$        0.20

$              -

Stores open at end of period

1,309

1,227

 

 

Ross Stores, Inc.

Condensed Consolidated Balance Sheets

($000, unaudited)

May 3, 2014

May 4, 2013

Assets

Current Assets

Cash and cash equivalents

$   595,950

$   714,174

Short-term investments

-

1,038

Accounts receivable

84,492

77,284

Merchandise inventory

1,250,759

1,226,449

Prepaid expenses and other

118,751

111,405

Deferred income taxes

13,070

22,846

Total current assets

2,063,022

2,153,196

Property and equipment, net

1,924,038

1,526,564

Long-term investments

3,670

4,302

Other long-term assets

160,864

158,699

Total assets

$4,151,594

$3,842,761

Liabilities and Stockholders' Equity

Current Liabilities

Accounts payable    

$   930,576

$   859,595

Accrued expenses and other

352,559

328,690

Accrued payroll and benefits

171,535

168,088

Income taxes payable

121,683

110,829

Total current liabilities

1,576,353

1,467,202

Long-term debt

150,000

150,000

Other long-term liabilities

286,672

261,301

Deferred income taxes

63,291

88,997

Commitments and contingencies

Stockholders' Equity

2,075,278

1,875,261

Total liabilities and stockholders' equity

$4,151,594

$3,842,761

 

 

Ross Stores, Inc.

Condensed Consolidated Statements of Cash Flows

Three Months Ended 

($000, unaudited)

May 3, 2014

May 4, 2013

Cash Flows From Operating Activities

Net earnings

$   243,913

$   234,612

Adjustments to reconcile net earnings to net cash

provided by operating activities:

Depreciation and amortization

56,465

48,726

Stock-based compensation

12,035

11,788

Deferred income taxes

1,577

2,257

Tax benefit from equity issuance

23,141

20,341

Excess tax benefit from stock-based compensation

(22,943)

(20,114)

Change in assets and liabilities:

Merchandise inventory

6,396

(17,212)

Other current assets

(36,623)

(31,197)

Accounts payable

157,254

89,620

Other current liabilities 

71,446

8,077

Other long-term, net

(8,084)

5,961

Net cash provided by operating activities

504,577

352,859

Cash Flows From Investing Activities

Additions to property and equipment

(148,700)

(97,552)

Increase in restricted cash and investments

(6,980)

(12,254)

Proceeds from investments

12,022

107

Net cash used in investing activities

(143,658)

(109,699)

Cash Flows From Financing Activities

Excess tax benefit from stock-based compensation

22,943

20,114

Issuance of common stock related to stock plans

5,668

5,766

Treasury stock purchased

(35,471)

(25,848)

Repurchase of common stock

(138,696)

(138,304)

Dividends paid

(42,581)

(37,475)

Net cash used in financing activities

(188,137)

(175,747)

Net increase in cash and cash equivalents

172,782

67,413

Cash and cash equivalents:

Beginning of period

423,168

646,761

End of period

$   595,950

$   714,174

Supplemental Cash Flow Disclosures

Interest paid

$                -

$                -

Income taxes paid

$      28,936

$      59,232

SOURCE Ross Stores, Inc.



RELATED LINKS

http://www.rossstores.com