<<  Back

Ross Stores, Inc. Reports Record Results for Fourth Quarter and Fiscal 1998

    NEWARK, Calif., March 16 /PRNewswire/ -- Ross Stores, Inc. (Nasdaq: ROST)
today reported record earnings for both the fourth quarter and fiscal year
ended January 30, 1999.  Net earnings for the 13 weeks ended January
30, 1999 totaled $45.6 million, compared to $40.7 million for the 13 weeks
ended January 31, 1998.  Earnings per share on a diluted basis for the fourth
quarter of 1998 increased 17% to $.97, compared to $.83 per share for the
fourth quarter of 1997.

For the 52 weeks ended January 30, 1999, net earnings totaled $133.8 million, compared to $117.5 million for the 52 weeks ended January 31, 1998. Earnings per share on a diluted basis for the 1998 fiscal year increased 19% to $2.80, from $2.35 per share in fiscal 1997.

For the 13 weeks ended January 30, 1999, sales increased 10% to $630.0 million, compared to $572.3 million for the 13 weeks ended January 31, 1998. Comparable store sales for the fourth quarter increased 3%, on top of a 7% gain for the same period last year. Sales for the 52 weeks ended January 30, 1999 increased 10% to $2.182 billion, compared to $1.989 billion for the 52 weeks ended January 31, 1998. Comparable store sales increased 3%, on top of a 10% increase for the same period last year.

In commenting on these results, Vice Chairman and Chief Executive Officer Michael Balmuth stated, "We are pleased with the solid gains we achieved in both sales and earnings during fiscal 1998, especially considering the record increases reported over the past two years. Earnings per share grew 49% in 1997 on top of an 82% increase in 1996, and comparable store sales increased 10% and 13%, respectively, in 1997 and 1996. Our focus on offering customers an increasingly wide assortment of recognizable brands at large discounts, combined with our ability to effectively manage both inventories and expenses, have been the key drivers of our performance."

Mr. Balmuth continued, "Operating income for fiscal 1998 benefited from a 43 basis point increase in gross margin, driven by a combination of improved merchandise margins and leverage on occupancy. This improvement was partially offset by a 22 basis point increase in general, selling and administrative expenses, due mainly to about $4.0 million in non-recurring expenses related to the company's Year 2000 compliance program. As a result, operating margin in fiscal 1998 grew to a record 10.1%, up from 9.8% in 1997 and almost double the 5.2% we realized in 1995."

In commenting on the company's financial position, Mr. Balmuth said, "Strong cash flows have enabled the company to internally fund store growth, repurchase stock, increase our dividend pay-outs and end the year with no debt on the balance sheet. Return on average stockholders' equity was 33% in 1998, benefiting from the solid growth in earnings and the repurchase of 2.8 million shares during the year at an aggregate cost of $110 million. In addition, on January 28, 1999, the Board of Directors approved a $120 million repurchase program for the current year and an 18% increase in the quarterly cash dividend payment. These actions reflect our ongoing commitment to enhancing stockholder returns."

In conclusion, he stated, "Looking ahead, we continue to see opportunities to grow the business by continuing to fine-tune and effectively execute the strategies that have contributed to our record-breaking financial results -- ongoing investments in our merchandise organization and systems, further diversification of our product assortments, strict management of inventories and expenses, and focused store growth over the next couple of years, primarily in existing states."

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This press release contains certain forward-looking statements which are subject to risks and uncertainties that could cause the company's actual results to differ materially from management's current expectations. These factors include competitive pressures in the apparel industry, changes in the level of consumer spending on or preferences in apparel or home-related merchandise, obtaining acceptable store locations, the company's ability to continue to purchase attractive name brand merchandise at desirable discounts, unseasonable weather trends, and larger than planned operating costs including those that could be related to necessary modifications to the company's computer hardware and software systems to enable them to process information with dates or date ranges spanning the year 2000 and beyond. Other risk factors are detailed in the company's Form 10-K for fiscal 1998.

Ross Stores, Inc. operates a national chain of off-price retail stores offering first quality, in-season, branded apparel and apparel-related merchandise for the entire family at prices that average 20% to 60% less than department and specialty stores, as well as merchandise for the home at similar savings. The company had 349 stores in operation January 30, 1999, compared to 325 stores at the end of the same period last year. ROSS STORES, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS Three Months Ended Twelve Months Ended January 30, January 31, January 30, January 31, ($000, except per share data, unaudited) 1999 1998 1999 1998 Sales $629,971 $572,297 $2,182,361 $1,988,692 Costs and Expenses Cost of goods sold and occupancy 439,423 402,511 1,513,889 1,388,098 General, selling and administrative 107,279 93,819 415,284 374,119 Depreciation and amortization 8,749 8,175 33,514 30,951 Interest (income) expense (200) 12 259 (265) 555,251 504,517 1,962,946 1,792,903 Earnings before income taxes 74,720 67,780 219,415 195,789 Provision for taxes on earnings 29,141 27,112 85,572 78,315 Net earnings $45,579 $40,668 $133,843 $117,474 Earnings per share Basic $0.99 $0.85 $2.85 $2.40 Diluted $0.97 $0.83 $2.80 $2.35 Weighted average shares outstanding Basic 46,105 47,743 47,035 48,928 Diluted 46,792 48,775 47,850 50,002 Stores open end of period 349 325 349 325 ROSS STORES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS January 30, January 31, ($000, unaudited) 1999 1998 ASSETS Current Assets Cash and cash equivalents $80,083 $56,369 Accounts receivable 11,566 8,122 Merchandise inventory 466,460 418,825 Other current assets 15,825 15,108 Total Current Assets $573,934 $498,424 Property and equipment, net 248,712 204,721 Lease rights, deferred income taxes and other assets 47,660 34,808 $870,306 $737,953 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable, accrued expenses and other $403,139 $323,746 Total Current Liabilities $403,139 $323,746 Other liabilities 42,464 33,526 Stockholders' Equity 424,703 380,681 $870,306 $737,953 SOURCE Ross Stores, Inc.