2014

Ross Stores Reports Second Quarter Sales And Earnings, Issues Second Half 2013 Guidance

PLEASANTON, Calif., Aug. 22, 2013 /PRNewswire/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for the 13 weeks ended August 3, 2013 of $.98, up from $.81 for the 13 weeks ended July 28, 2012.  These results represent a 21% increase on top of a 27% gain in last year's second quarter.  Net earnings for the 2013 second quarter grew 17% to $213.1 million, up from $182.0 million in the prior year.  

Second quarter 2013 sales increased 9% to $2.551 billion, up from $2.341 billion in the second quarter of 2012.  Comparable store sales for the 13 weeks ended August 3, 2013 rose 4% over the 13 weeks ended August 4, 2012.  This compared to a strong same store sales gain of 7% for the 13 weeks ended July 28, 2012.

For the six months ended August 3, 2013, earnings per share were $2.06, up from $1.74 for the six months ended July 28, 2012.  These results represent earnings per share growth of 18% on top of a 26% gain in the first half of 2012.  Net earnings for the six months ended August 3, 2013 were $447.7 million, up 15% from $390.6 million in the first half of 2012.  Sales for the first six months of 2013 increased 8% to $5.091 billion, with comparable store sales up 3% on top of a robust 8% gain for the six months ended July 28, 2012.  

Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, "We are pleased with our better-than-expected results for the second quarter and first six months of 2013, which were mainly driven by above-plan sales and merchandise gross margin.  Our performance for both the quarter and year-to-date periods continues to benefit from the solid execution of our core off-price strategy of delivering compelling name brand bargains to today's value-focused consumers." 

Mr. Balmuth continued, "Operating margin for the second quarter grew to a record 13.6%, up from 12.8% in the prior year.  This increased level of profitability was driven by a 70 basis point improvement in cost of goods sold, mainly due to higher merchandise gross margin, and a 10 basis point decline in selling, general and administrative expenses."

Mr. Balmuth also noted, "We continued to enhance stockholder returns through our stock repurchase and dividend programs in the second quarter.  During the first six months of fiscal 2013, we repurchased 4.4 million shares of common stock for an aggregate price of $277 million.  We remain on track to buy back a total of $550 million in common stock during fiscal 2013 under the two-year $1.1 billion program authorized at the beginning of this year."  

Mr. Balmuth continued, "Looking ahead, given the ongoing uncertainty in the macro-economic environment and the potential for a more promotional and competitive retail climate, we believe it is prudent to maintain a somewhat cautious outlook for the remainder of the year.  While we hope to do better, we continue to project earnings per share of $.75 to $.78 for the 13 weeks ending November 2, 2013.  This compares to $.72 in last year's third quarter, which included about $.02 from better-than-expected shortage results.  Our forecast for the 13 weeks ending February 1, 2014 also remains unchanged, with earnings per share targeted to be in the range of $.99 to $1.03.  This compares to earnings per share for the 14 weeks ended February 2, 2013 of $1.07, which included a $.10 benefit from the 53rd week in 2012.  This earnings guidance is based on same store sales that are projected to increase 2% to 3% for both the third and fourth quarters of 2013."

For the 52 weeks ending February 1, 2014, the Company is now forecasting earnings per share of $3.80 to $3.87, up from $3.53 for the 53 weeks ended February 2, 2013.  On a 52-week basis, the Company's updated projection for fiscal 2013 represents estimated EPS growth of 11% to 13% on top of strong prior year gains of 20% and 24%, respectively in 2012 and 2011.

The Company will provide additional details about its second quarter results and management's outlook for the remainder of the year on a conference call to be held on Thursday, August 22, 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, August 29, 2013 at 404-537-3406, ID #32638960.

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 10-Q and 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 1,131 locations in 33 states, the District of Columbia and Guam as of August 3, 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 122 dd's DISCOUNTS® in ten 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 


Six Months Ended 






August 3,


July 28,


August 3,


July 28,

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



2013


2012


2013


2012













Sales



$ 2,551,277


$ 2,340,855


$ 5,091,191


$ 4,697,696













Costs and Expenses











Costs of goods sold



1,823,777


1,689,643


3,622,588


3,368,770


Selling, general and administrative



381,193


352,089


743,161


689,900


Interest (income) expense, net



(175)


2,086


34


4,318



Total costs and expenses



2,204,795


2,043,818


4,365,783


4,062,988













Earnings before taxes



346,482


297,037


725,408


634,708

Provision for taxes on earnings



133,361


115,013


277,675


244,071

Net earnings



$    213,121


$    182,024


$    447,733


$    390,637













Earnings per share 











Basic



$         1.00


$         0.83


$         2.09


$         1.77


Diluted



$         0.98


$         0.81


$         2.06


$         1.74

























Weighted average shares outstanding (000) 











Basic



213,836


220,065


214,622


220,585


Diluted



216,613


223,605


217,570


224,289

























Dividends 











Cash dividends declared per share



$         0.17


$         0.14


$         0.17


$         0.14

























Stores open at end of period



1,253


1,174


1,253


1,174













 

Ross Stores, Inc.

Condensed Consolidated Balance Sheets












August 3,


July 28,

($000, unaudited)


2013


2012

Assets












Current Assets






Cash and cash equivalents


$   550,565


$   721,046


Short-term investments


13


1,456


Accounts receivable


79,202


65,731


Merchandise inventory


1,330,536


1,219,092


Prepaid expenses and other


115,025


98,718


Deferred income taxes


23,136


11,949



Total current assets


2,098,477


2,117,992








Property and equipment, net


1,646,457


1,295,097

Long-term investments


4,215


4,540

Other long-term assets


159,336


142,534

Total assets


$3,908,485


$3,560,163








Liabilities and Stockholders' Equity












Current Liabilities






Accounts payable    


$   938,059


$   885,892


Accrued expenses and other


342,851


315,748


Accrued payroll and benefits


190,904


199,937


Income taxes payable


-


13,559



Total current liabilities


1,471,814


1,415,136








Long-term debt


150,000


150,000

Other long-term liabilities


270,776


215,910

Deferred income taxes


84,925


114,964








Commitments and contingencies












Stockholders' Equity


1,930,970


1,664,153

Total liabilities and stockholders' equity


$3,908,485


$3,560,163








 

Ross Stores, Inc.

Condensed Consolidated Statements of Cash Flows

















Six Months Ended 





August 3, 


July 28,

($000, unaudited)


2013


2012








Cash Flows From Operating Activities





Net earnings


$447,733


$390,637

Adjustments to reconcile net earnings to net cash





provided by operating activities:






Depreciation and amortization


98,853


87,684


Stock-based compensation


24,211


24,241


Deferred income taxes


(2,105)


93


Tax benefit from equity issuance


22,544


24,577


Excess tax benefit from stock-based compensation


(22,123)


(23,984)


Change in assets and liabilities:







Merchandise inventory


(121,299)


(89,022)



Other current assets


(36,751)


(24,845)



Accounts payable


168,084


156,026



Other current liabilities 


(61,570)


(44,081)



Other long-term, net


14,751


2,837



Net cash provided by operating activities


532,328


504,163








Cash Flows From Investing Activities





Additions to property and equipment


(271,690)


(152,105)

Increase in restricted cash and investments


(12,345)


(4,970)

Purchases of investments


-


(424)

Proceeds from investments


1,139


704



Net cash used in investing activities


(282,896)


(156,795)








Cash Flows From Financing Activities





Excess tax benefit from stock-based compensation


22,123


23,984

Issuance of common stock related to stock plans


10,213


11,467

Treasury stock purchased


(26,752)


(24,603)

Repurchase of common stock


(276,608)


(223,743)

Dividends paid


(74,604)


(63,262)



Net cash used in financing activities


(345,628)


(276,157)








Net (decrease) increase in cash and cash equivalents


(96,196)


71,211








Cash and cash equivalents:







Beginning of period


646,761


649,835



End of period


$550,565


$721,046








Supplemental Cash Flow Disclosures





Interest paid


$    4,834


$    4,834

Income taxes paid


$305,040


$235,260








Non-Cash Investing Activities





(Decrease) increase in fair value of investment securities


$     (227)


$        25















SOURCE Ross Stores, Inc.



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