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

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.



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