Ross Stores Reports Strong First Quarter Earnings, Raises Fiscal Year 2012 Guidance and Increases Long-Term Store Growth Potential

PLEASANTON, Calif., May 17, 2012 /PRNewswire/ --  Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for the 13 weeks ended April 28, 2012 of $.93, up from a split-adjusted $.74 for the 13 weeks ended April 30, 2011.  These results represent a 26% increase on top of a 28% gain in last year's first quarter.  Net earnings for the 2012 first quarter grew to $208.6 million, up 21% from $173.0 million in the prior year.  Sales for the quarter ended April 28, 2012 increased 14% to $2.357 billion, with comparable store sales up a strong 9% on top of a 3% gain in 2011.

Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, "We are pleased with our much better-than-expected financial results in the first quarter.  Our robust sales and earnings were driven mainly by our ongoing ability to deliver a wide array of fresh and exciting name brand bargains to today's value-focused consumers. In addition, we believe that favorable weather across many of our markets also contributed to our above-plan performance." 

Mr. Balmuth continued, "Operating margin for the period grew about 70 basis points to a record 14.4% driven primarily by leverage on selling, general and administrative expenses from the robust gains in same store sales. Cost of goods sold as a percent of sales improved by 15 basis points from the prior year, as higher merchandise gross margin and leverage on occupancy were partially offset by increases in distribution, freight and buying costs."

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 2012, we repurchased 2.0 million shares of common stock for an aggregate price of
$111 million.  We remain on track to buy back a total of $450 million in common stock during fiscal 2012 to complete the two-year $900 million program authorized in early 2011."  

Looking ahead, Mr. Balmuth said, "For the second quarter ending July 28, 2012, we are now forecasting same store sales to increase 3% to 4% and earnings per share of $.72 to $.75, up from last year's $.64.  This represents 13% to 17% projected growth on top of a 20% increase in the second quarter of 2011. In addition, we are raising our 2012 earnings per share guidance for the 53 weeks ending February 2, 2013 to $3.26 to $3.37, above our initial guidance of $3.12 to $3.27 and compared to $2.86 in fiscal 2011."

Commenting on the Company's future expansion plans, Mr. Balmuth said, "We are pleased to announce that we have increased our long-term projected store potential to 2,500 locations in the United States. Our current research and proven ability to cluster stores closer together indicate that we can more fully saturate existing and new markets.  As a result, we now believe that Ross Dress for Less can grow to approximately 2,000 locations across the country, up from our prior target of 1,500. We continue to believe that dd's DISCOUNTS can become a chain of about 500 stores. Combined, we therefore have the ability over time to more than double the size of our Company domestically."

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 17, 2012 at 11:00 a.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 24, 2012 at 404-537-3406, ID # 80147849.


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 merchandise industry; changes in the level of consumer spending on or preferences for apparel or home-related merchandise; the impact from the macro-economic environment and financial and credit markets 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; disruptions in supply chain; 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; our ability to attract and retain personnel with the retail talent necessary to execute our strategies; our ability to effectively operate our various supply chain, core merchandising and other information systems; our ability to improve our merchandising capabilities through the implementation of new processes and systems enhancements; achieving and maintaining targeted levels of productivity and efficiency in our distribution centers; and obtaining acceptable new store locations. Other risk factors are set forth in our SEC filings including without limitation, the Form 10-K for fiscal 2011 and Form 8-Ks for fiscal 2012.  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 2011 revenues of $8.6 billion.  The Company operates Ross Dress for Less® ("Ross"), the largest off-price apparel and home fashion chain in the United States with 1,051 locations in 30 states, the District of Columbia and Guam. 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 95 dd's DISCOUNTS® in eight 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:     

John G. Call     

Bobbi Chaville


Group Senior Vice President, 

Senior Director, Investor Relations


Chief Financial Officer

(925) 965-4289


(925) 965-4315

bobbi.chaville@ros.com



Ross Stores, Inc.


Condensed Consolidated Statements of Earnings














Three Months Ended 






April 28,


April 30,


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


2012


2011










Sales


$ 2,356,841


$ 2,074,576










Costs and Expenses







Costs of goods sold


1,679,127


1,481,206



Selling, general and administrative


337,811


309,160



Interest expense, net


2,232


2,495




Total costs and expenses


2,019,170


1,792,861










Earnings before taxes


337,671


281,715


Provision for taxes on earnings


129,058


108,742


Net earnings


$    208,613


$    172,973










Earnings per share (1)







Basic


$          0.94


$          0.75



Diluted


$          0.93


$          0.74


















Weighted average shares outstanding (000) (1)







Basic


221,104


229,528



Diluted


224,929


233,547


















Dividends (1)







Cash dividends declared per share


$               -


$               -


















Stores open at end of period


1,146


1,068










(1) All share and per share amounts have been adjusted for the two-for-one stock split effective December 15, 2011.





Ross Stores, Inc.

Condensed Consolidated Balance Sheets












April 28,


April 30,

($000, unaudited)


2012


2011

Assets












Current Assets






Cash and cash equivalents


$      741,117


$      671,005


Short-term investments


463


3,275


Accounts receivable


66,632


61,683


Merchandise inventory


1,134,703


1,172,716


Prepaid expenses and other


104,216


72,900


Deferred income taxes


11,854


15,662



Total current assets


2,058,985


1,997,241








Property and equipment, net


1,246,601


1,005,674

Long-term investments


5,614


12,191

Other long-term assets


146,286


86,888

Total assets


$    3,457,486


$    3,101,994








Liabilities and Stockholders' Equity












Current Liabilities






Accounts payable    


$      830,044


$      742,600


Accrued expenses and other


284,108


265,586


Accrued payroll and benefits


148,770


141,268


Income taxes payable


107,715


89,340



Total current liabilities


1,370,637


1,238,794








Long-term debt


150,000


150,000

Other long-term liabilities


211,777


200,575

Deferred income taxes


114,437


106,519








Commitments and contingencies












Stockholders' Equity


1,610,635


1,406,106

Total liabilities and stockholders' equity


$    3,457,486


$    3,101,994















 


Ross Stores, Inc.

Condensed Consolidated Statements of Cash Flows












Three Months Ended





April 28,


April 30,

($000, unaudited)


2012


2011








Cash Flows From Operating Activities





Net earnings


$      208,613


$      172,973

Adjustments to reconcile net earnings to net cash





provided by operating activities:






Depreciation and amortization


43,136


39,934


Stock-based compensation


11,587


9,894


Deferred income taxes


(339)


9,657


Tax benefit from equity issuance


23,123


10,021


Excess tax benefit from stock-based compensation


(22,662)


(9,727)


Change in assets and liabilities:







Merchandise inventory


(4,633)


(85,799)



Other current assets


(28,890)


(25,392)



Accounts payable


100,177


1,120



Other current liabilities 


(33,792)


(80,429)



Other long-term, net


1,010


(1,201)



Net cash provided by operating activities


297,330


41,051








Cash Flows From Investing Activities





Additions to property and equipment


(57,993)


(70,096)

Increase in restricted cash and investments


(13,410)


-

Purchases of investments


(424)


-

Proceeds from investments


618


1,814



Net cash used in investing activities


(71,209)


(68,282)








Cash Flows From Financing Activities





Excess tax benefit from stock-based compensation


22,662


9,727

Issuance of common stock related to stock plans


7,955


5,827

Treasury stock purchased


(23,123)


(12,837)

Repurchase of common stock


(110,614)


(112,500)

Dividends paid


(31,719)


(25,905)



Net cash used in financing activities


(134,839)


(135,688)








Net increase (decrease) in cash and cash equivalents


91,282


(162,919)








Cash and cash equivalents:







Beginning of period


649,835


833,924



End of period


$    741,117


$   671,005








Supplemental Cash Flow Disclosures





Interest paid


$                -


$               -

Income taxes paid


$      30,258


$     54,705








Non-Cash Investing Activities





Decrease in fair value of investment securities


$           (13)


$            (4)








SOURCE Ross Stores, Inc.



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