Ross Stores Reports Third Quarter Sales And Earnings, Updates Fourth Quarter Guidance

PLEASANTON, Calif., Nov. 21, 2013 /PRNewswire/ -- Ross Stores, Inc. (Nasdaq:   ROST) today reported earnings per share for the 13 weeks ended November 2, 2013 of $.80, up from $.72 for the 13 weeks ended October 27, 2012.  These results reflect an 11% increase on top of a 14% gain in the third quarter of 2012.  Net earnings for the third quarter ended November 2, 2013 were $171.6 million, up from $159.5 million for the third quarter ended October 27, 2012.  Fiscal 2013 third quarter sales increased 6% to $2.398 billion, with comparable store sales up 2% on top of a 6% gain in the prior year.  

For the nine months ended November 2, 2013, earnings per share were $2.86, up from $2.46 for the nine months ended October 27, 2012.  These results represent 16% growth versus 22% for the first nine months of 2012.  Net earnings for the 2013 year-to-date period grew to $619.4 million, up from $550.2 million in the prior year.  Sales for the first nine months of 2013 increased 8% to $7.489 billion, with comparable store sales up 3% on top of a 7% gain for the first nine months of 2012.  

Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, "Third quarter sales were in line with our guidance, while earnings were better-than-expected mainly due to above-plan merchandise gross margin.  Operating margin of 11.3% was relatively flat to last year.  As a percent of sales, an improvement in cost of goods sold was offset by an increase in selling, general and administrative expenses."

Mr. Balmuth also noted, "We continued to enhance stockholder returns through our share repurchase and dividend programs in the third quarter.  During the first nine months of fiscal 2013, we repurchased 6.4 million shares of common stock for an aggregate price of
$421 million.  We expect to buy an additional $129 million during the fourth quarter, which puts us on track to complete about $550 million of the two-year $1.1 billion stock repurchase authorization announced at the beginning of this year."  

Fourth Quarter 2013 Guidance

Looking ahead, Mr. Balmuth said, "As we enter the fourth quarter, our merchants have acquired a wide array of exciting and sharply-priced name brand fashions and gifts to appeal to today's value-focused shoppers. That said, we are up against our own challenging multi-year comparisons and an upcoming holiday season that we believe will be the most intensely competitive and promotional selling period in recent years.  As a result, while we hope to do better, we believe it is prudent to adopt a more cautious outlook for the fourth quarter."

For the 13 weeks ending February 1, 2014, the Company is now projecting comparable store sales to be up 1% to 2% on top of a 5% increase in last year's fourth quarter.  Earnings per share are forecast to be $.97 to $1.01, compared to $1.07 for the 14 weeks ended February 2, 2013.  For the 52 weeks ending February 1, 2014, earnings per share are now projected to be $3.83 to $3.87, up from $3.53 for the 53 weeks ended February 2, 2013.  The 53rd week in 2012 added approximately $.10 to last year's fourth quarter and fiscal year earnings per share.

The Company will provide additional details concerning its third quarter results, fourth quarter and fiscal 2013 guidance, and business outlook on a conference call to be held on Thursday, November 21, 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 be available at the website address and via a telephone recording until 8:00 p.m. Eastern time on November 29, 2013 at 404-537-3406, PIN #97738170.

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 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-Qs 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 1,154 locations in 33 states, the District of Columbia and Guam as of November 2, 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 131 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 


Nine Months Ended 





November 2,


October 27,


November 2,


October 27,

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


2013


2012


2013


2012












Sales


$ 2,398,122


$   2,262,723


$ 7,489,313


$ 6,960,419












Costs and Expenses










Costs of goods sold


1,746,235


1,648,997


5,368,823


5,017,767


Selling, general and administrative


381,860


357,983


1,125,021


1,047,883


Interest (income) expense, net


(152)


1,643


(118)


5,961



Total costs and expenses


2,127,943


2,008,623


6,493,726


6,071,611












Earnings before taxes


270,179


254,100


995,587


888,808

Provision for taxes on earnings


98,561


94,576


376,236


338,647

Net earnings


$    171,618


$     159,524


$    619,351


$    550,161












Earnings per share 










Basic


$          0.81


$           0.73


$          2.90


$          2.50


Diluted


$          0.80


$           0.72


$          2.86


$          2.46























Weighted average shares outstanding (000) 










Basic


211,986


218,583


213,743


219,917


Diluted


214,803


222,185


216,662


223,596























Dividends 










Cash dividends declared per share


$           0.17


$            0.14


$           0.34


$          0.28























Stores open at end of period


1,285


1,205


1,285


1,205












 

Ross Stores, Inc.

Condensed Consolidated Balance Sheets















($000, unaudited)


November 2, 2013


October 27, 2012

Assets












Current Assets






Cash and cash equivalents


$               372,270


$       623,822


Short-term investments


12,016


1,533


Accounts receivable


72,819


68,493


Merchandise inventory


1,430,467


1,342,904


Prepaid expenses and other


145,646


102,609


Deferred income taxes


16,871


11,509



Total current assets


2,050,089


2,150,870








Property and equipment, net


1,740,879


1,352,166

Long-term investments


4,212


4,397

Other long-term assets


151,543


140,504

Total assets


$            3,946,723


$     3,647,937








Liabilities and Stockholders' Equity












Current Liabilities






Accounts payable    


$               908,797


$       886,629


Accrued expenses and other


349,894


352,484


Accrued payroll and benefits


238,006


227,475



Total current liabilities


1,496,697


1,466,588








Long-term debt


150,000


150,000

Other long-term liabilities


279,654


223,477

Deferred income taxes


79,245


110,137








Commitments and contingencies












Stockholders' Equity


1,941,127


1,697,735

Total liabilities and stockholders' equity


$            3,946,723


$     3,647,937








 

Ross Stores, Inc.

Condensed Consolidated Statements of Cash Flows

















Nine Months Ended 

($000, unaudited)


November 2, 2013


October 27, 2012








Cash Flows From Operating Activities





Net earnings


$             619,351


$          550,161

Adjustments to reconcile net earnings to net cash





provided by operating activities:






Depreciation and amortization


149,411


133,824


Stock-based compensation


35,672


37,380


Deferred income taxes


(1,520)


(4,294)


Tax benefit from equity issuance


27,678


27,714


Excess tax benefit from stock-based compensation


(26,998)


(26,997)


Change in assets and liabilities:







Merchandise inventory


(221,230)


(212,834)



Other current assets


(63,749)


(32,340)



Accounts payable


138,821


156,763



Other current liabilities 


(876)


6,628



Other long-term, net


24,661


10,265



Net cash provided by operating activities


681,221


646,270








Cash Flows From Investing Activities





Additions to property and equipment


(423,211)


(255,332)

Increase in restricted cash and investments


(2,832)


(2,012)

Purchases of investments


(12,012)


(424)

Proceeds from investments


1,150


809



Net cash used in investing activities


(436,905)


(256,959)








Cash Flows From Financing Activities





Excess tax benefit from stock-based compensation


26,998


26,997

Issuance of common stock related to stock plans


16,069


15,317

Treasury stock purchased


(29,114)


(28,727)

Repurchase of common stock


(421,345)


(334,357)

Dividends paid


(111,415)


(94,554)



Net cash used in financing activities


(518,807)


(415,324)








Net decrease in cash and cash equivalents


(274,491)


(26,013)








Cash and cash equivalents:







Beginning of period


646,761


649,835



End of period


$                372,270


$          623,822








Supplemental Cash Flow Disclosures





Interest paid


$                    4,834


$              4,834

Income taxes paid


$                424,260


$          344,686








Non-Cash Investing Activities





(Decrease) increase in fair value of investment securities


$                     (231)


$                   14















 

SOURCE Ross Stores, Inc.



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