Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for
the 13 weeks ended May 4, 2019 of $1.15, up from $1.11 for the same
period last year. Net earnings for the 2019 first quarter were $421
million, compared to $418 million in the prior year. These results
include an approximate $.02 per share benefit from the favorable timing
of expenses that are expected to reverse over the balance of the year.
Sales for the period grew 6% to $3.8 billion, with comparable store
sales up 2%.
Barbara Rentler, Chief Executive Officer, commented, “For the first
quarter, we delivered sales gains at the high end of our guidance as
well as better-than-expected earnings per share growth despite continued
underperformance in Ladies apparel. While operating margin of 14.1% was
down from the prior year, it was above plan mainly due to higher
merchandise margin. As expected, this improvement was more than offset
by increases in freight and wage costs and the timing of
packaway-related expenses that benefited the prior year period.”
Ms. Rentler continued, “During the first quarter of fiscal 2019, we
repurchased 3.4 million shares of common stock for an aggregate price of
$320 million. As planned, we remain on track to buy back a total of
$1.275 billion in common stock during fiscal 2019.”
Looking ahead, Ms. Rentler said, “For the 13 weeks ending August 3,
2019, we are forecasting same store sales to be up 1% to 2% on top of a
5% gain last year. Second quarter 2019 earnings per share are projected
to be $1.06 to $1.11, up from $1.04 in the prior year period.”
Ms. Rentler continued, “Based on our first quarter results and guidance
for the second quarter, we now project earnings per share for the 52
weeks ending February 1, 2020 to be in the range of $4.38 to $4.52, up
from $4.26 last year, which included a $.07 per share benefit in the
fourth quarter from the favorable resolution of a tax matter.”
The Company will host a conference call on Thursday, May 23, 2019 at
4:15 p.m. Eastern time to provide additional details concerning its
first quarter results and management’s outlook for the second quarter of
fiscal 2019. A real-time audio webcast of the conference call will be
available in the Investors section of the Company’s website, located at www.rossstores.com.
An audio playback will be available at 404-537-3406, PIN #6291179 until
8:00 p.m. Eastern time on May 30, 2019, as well as on the Company’s
website.
Forward-Looking Statements: This
press release contains forward-looking statements regarding expected
sales, earnings levels, new store growth, 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,” “outlook,”
“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 and
home-related merchandise; market availability, quantity, and quality of
attractive brand name merchandise at desirable discounts and our buyers’
ability to purchase merchandise that enables us to offer customers a
wide assortment of merchandise at competitive prices; impacts from the
macro-economic environment, financial and credit markets, and
geopolitical conditions that affect consumer confidence and consumer
disposable income; our ability to continually attract, train, and retain
associates to execute our off-price strategies; unseasonable weather
that may affect shopping patterns and consumer demand for seasonal
apparel and other merchandise, and may result in temporary store
closures and disruptions in deliveries of merchandise to our stores;
potential information or data security breaches, including cyber-attacks
on our transaction processing and computer information systems, which
could result in theft or unauthorized disclosure of customer, credit
card, employee, or other private and valuable information that we handle
in the ordinary course of our business; potential disruptions in our
supply chain or information systems; issues involving the quality,
safety, or authenticity of products we sell, which could harm our
reputation, result in lost sales, and/or increase our costs; our ability
to effectively manage our inventories, markdowns, and inventory shortage
to achieve planned gross margin; changes in U.S. tax or trade policy
regarding apparel and home-related merchandise produced in other
countries that could adversely affect our business; volatility in
revenues and earnings; an adverse outcome in various legal, regulatory,
or tax matters; a natural or man-made disaster in California or in
another region where we have a concentration of stores, offices, or a
distribution center; unexpected issues or costs from expanding in
existing markets and entering new geographic markets; obtaining
acceptable new store sites with favorable consumer demographics; damage
to our corporate reputation or brands; effectively advertising and
marketing our brands; issues from selling and importing merchandise
produced in other countries; and maintaining sufficient liquidity to
support our continuing operations, new store and distribution center
growth plans, and stock repurchase and dividend programs. Other risk
factors are set forth in our SEC filings including without limitation,
the Form 10-K for fiscal 2018, and Form 10-Q and Form 8-Ks for fiscal
2019. 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 2018 revenues
of $15.0 billion. As of May 4, 2019, the Company operates Ross Dress for
Less® (“Ross”), the largest off-price apparel and home
fashion chain in the United States with 1,502 locations in 38 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 savings of 20% to 60% off
department and specialty store regular prices every day. The Company
also operates 243 dd’s DISCOUNTS® in 18 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 savings of 20% to 70% off moderate department and discount
store regular prices every day. Additional information is available at www.rossstores.com.
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Ross Stores, Inc.
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Condensed Consolidated Statements of Earnings
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Three Months Ended
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($000, except stores and per share data, unaudited)
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May 4, 2019
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May 5, 2018
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Sales
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$
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3,796,642
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$
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3,588,619
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Costs and Expenses
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Cost of goods sold
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2,701,668
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2,522,219
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Selling, general and administrative
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558,250
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524,423
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Interest income, net
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(5,635
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)
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(503
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)
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Total costs and expenses
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3,254,283
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3,046,139
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Earnings before taxes
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542,359
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542,480
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Provision for taxes on earnings
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121,217
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124,228
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Net earnings
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$
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421,142
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$
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418,252
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Earnings per share
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Basic
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$
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1.16
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$
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1.12
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Diluted
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$
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1.15
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$
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1.11
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Weighted average shares outstanding (000)
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Basic
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363,085
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373,797
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Diluted
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365,912
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377,062
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Stores open at end of period
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1,745
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1,651
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Ross Stores, Inc.
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Condensed Consolidated Balance Sheets
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($000, unaudited)
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May 4, 2019
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May 5, 2018
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Assets
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Current Assets
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Cash and cash equivalents
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$
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1,366,592
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$
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1,302,836
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Accounts receivable
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121,607
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109,425
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Merchandise inventory
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1,813,773
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1,895,456
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Prepaid expenses and other
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160,733
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146,362
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Total current assets
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3,462,705
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3,454,079
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Property and equipment, net
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2,436,372
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2,369,215
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Operating lease assets
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2,942,980
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-
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Other long-term assets
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207,063
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197,542
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Total assets
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$
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9,049,120
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$
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6,020,836
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Liabilities and Stockholders’ Equity
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Current Liabilities
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Accounts payable
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$
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1,296,183
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$
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1,299,145
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Accrued expenses and other
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450,762
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435,606
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Current operating lease liabilities
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536,900
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-
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Accrued payroll and benefits
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220,376
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209,570
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Income taxes payable
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89,290
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77,323
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Current portion of long-term debt
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-
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84,981
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Total current liabilities
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2,593,511
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2,106,625
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Long-term debt
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312,552
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312,105
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Non-current operating lease liabilities
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2,514,530
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-
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Other long-term liabilities
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226,788
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362,445
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Deferred income taxes
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134,213
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109,373
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Commitments and contingencies
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Stockholders’ Equity
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3,267,526
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3,130,288
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Total liabilities and stockholders’ equity
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$
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9,049,120
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$
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6,020,836
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Ross Stores, Inc.
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Condensed Consolidated Statements of Cash Flows
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Three Months Ended
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($000, unaudited)
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May 4, 2019
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May 5, 2018
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Cash Flows From Operating Activities
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Net earnings
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$ 421,142
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$ 418,252
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Adjustments to reconcile net earnings to net cash
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provided by operating activities:
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Depreciation and amortization
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82,757
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79,797
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Stock-based compensation
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19,689
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23,760
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Deferred income taxes
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16,543
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16,842
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Change in assets and liabilities:
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Merchandise inventory
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(63,331)
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(253,721)
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Other current assets
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(41,777)
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(46,028)
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Accounts payable
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122,654
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238,677
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Other current liabilities
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(108,208)
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(95,966)
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Income taxes
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56,206
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90,322
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Operating lease assets and liabilities, net
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2,855
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-
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Other long-term, net
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|
457
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115
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Net cash provided by operating activities
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508,987
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472,050
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Cash Flows From Investing Activities
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Additions to property and equipment
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(95,629)
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(79,793)
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Proceeds from investments
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517
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505
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Net cash used in investing activities
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(95,112)
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(79,288)
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Cash Flows From Financing Activities
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Issuance of common stock related to stock plans
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5,295
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4,682
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Treasury stock purchased
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(50,880)
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(44,798)
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Repurchase of common stock
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(320,130)
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(255,370)
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Dividends paid
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(93,722)
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(85,410)
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Net cash used in financing activities
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(459,437)
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(380,896)
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Net (decrease) increase in cash, cash equivalents, and restricted
cash and cash equivalents
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(45,562)
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|
11,866
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Cash, cash equivalents, and restricted cash and cash equivalents:
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|
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Beginning of period
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1,478,079
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1,353,272
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End of period
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$ 1,432,517
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$ 1,365,138
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Reconciliations:
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Cash and cash equivalents
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$ 1,366,592
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$ 1,302,836
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Restricted cash and cash equivalents included in prepaid expenses
and other
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11,867
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8,900
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Restricted cash and cash equivalents included in other long-term
assets
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54,058
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|
53,402
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Total cash, cash equivalents, and restricted cash and cash
equivalents:
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$ 1,432,517
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$ 1,365,138
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|
|
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Supplemental Cash Flow Disclosures
|
|
|
|
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Interest paid
|
|
$ 4,219
|
|
$ 4,219
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Income taxes paid
|
|
$ 48,468
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|
$ 17,058
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