Ross Stores Reports First Quarter 2008 Results, Provides Second Quarter 2008 Guidance
PLEASANTON, Calif., May 21 /PRNewswire-FirstCall/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported that earnings per share for the 13 weeks ended May 3, 2008 rose 25% to $.60, from $.48 for the 13 weeks ended May 5, 2007. First quarter 2008 results include a real estate settlement that added income equivalent to about $.02 per share during the period. Net earnings for the first quarter of 2008 were $79.5 million, compared to $67.0 million in the first quarter of 2007. Sales for the 13 weeks ended May 3, 2008 grew 10% to $1.556 billion, with comparable store sales up 3% over the prior year.
Michael Balmuth, Vice Chairman, President and Chief Executive Officer, commented, "We are pleased with our solid, better-than-expected sales and earnings performance in the first quarter, especially considering the difficult retail climate. Business benefited as customers responded favorably to the fresh and exciting assortments of name brand bargains we offered. Dresses and Shoes were the top performing merchandise categories during the period, while the Mid-Atlantic and Texas were the strongest geographic regions."
Mr. Balmuth continued, "Strong execution of our merchandising strategies, combined with strict inventory and expense management, were the primary drivers of our ahead-of-plan earnings during the quarter. As a result, we were able to realize healthy increases in operating margin, which grew about 45 basis points to 8.2%. Profit margins benefited mainly from better-than-expected improvement in merchandise margins, lower distribution and corporate expenses as a percent of sales and income from a real estate settlement."
Mr. Balmuth also noted, "Our balance sheet and cash flows remain strong. We continued to return capital to stockholders during the quarter through our stock repurchase and dividend programs. During the first three months of fiscal 2008, we repurchased 2.5 million shares of common stock for an aggregate purchase price of $77 million. We remain on track to complete half of our current two-year $600 million stock repurchase program this year. In addition, we expect to complete this two-year program without taking on any incremental long-term debt."
Looking ahead, Mr. Balmuth said, "For the second quarter ending August 2, 2008, we are forecasting same store sales gains of 1% to 3% and earnings per share in the range of $.43 to $.47, for a targeted increase of 16% to 27% over the $.37 in earnings per share for the second quarter ended August 4, 2007. For the fiscal 2008 year ending January 31, 2009, we are now projecting earnings per share in the range of $2.19 to $2.29, which would represent growth of 15% to 21% over the $1.90 in earnings per share for fiscal 2007."
The Company will provide additional details concerning its first quarter results and management's outlook for the balance of 2008 on a conference call to be held on Wednesday, May 21, 2008 at 11:00 a.m. Eastern Time. Participants may listen to a real time audio webcast of the conference call by visiting the Company's website located at http://www.rossstores.com. A recorded version of the call will also be available until the end of July at the website address and via a telephone recording through 8:00 p.m. Eastern Time on Wednesday, May 28, 2008 at 706-645-9291, PIN # 34941710.
Forward-Looking Statements: This press release and the recorded comments on our website contain forward-looking statements regarding expected sales and earnings levels and our stock repurchase program 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," "anticipate," "estimate," "believe," "forecast," "projected," "guidance," "looking ahead" and similar expressions identify forward-looking statements. Risk factors for Ross Dress for Less(R) ("Ross") and dd's DISCOUNTS(R) include, without limitation, competitive pressures in the apparel industry; changes in the level of consumer spending on or preferences for apparel or home-related merchandise, including the potential impact from uncertainty in mortgage credit markets and higher gas and commodity prices; changes in geopolitical and general economic 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 development and implementation of new processes and systems enhancements; achieving and maintaining targeted levels of productivity and efficiency in our distribution centers; potential pressure on freight costs from higher-than-expected fuel surcharges; and obtaining acceptable new store locations. Other risk factors are detailed in our SEC filings including, without limitation, the Form 10-K and 10-Q's for fiscal 2007 and Form 8-K's for fiscal 2008. 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., a Fortune 500 company headquartered in Pleasanton, California, is the nation's second largest off-price retailer with fiscal 2007 revenues of $6.0 billion. As of May 3, 2008, the Company operated 864 Ross Dress for Less(R) ("Ross") stores and 54 dd's DISCOUNTS(R) locations, compared to 796 Ross and 34 dd's DISCOUNTS locations at the end of the first quarter of 2007. 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 percent off department and specialty store regular prices. dd's DISCOUNTS features 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 percent off moderate department and discount store regular prices. Additional information is available on the Company's website at http://www.rossstores.com.
Ross Stores, Inc. Condensed Consolidated Statements of Earnings Three Months Ended ($000, except stores and per share May 3, May 5, data, unaudited) 2008 2007 Sales $1,556,328 $1,410,541 Costs and expenses Cost of goods sold 1,181,557 1,071,278 Selling, general and administrative 247,672 230,203 Interest income, net (1,621) (1,391) Total costs and expenses 1,427,608 1,300,090 Earnings before taxes 128,720 110,451 Provision for taxes on earnings 49,235 43,407 Net earnings $79,485 $67,044 Earnings per share Basic $0.61 $0.49 Diluted $0.60 $0.48 Weighted average shares outstanding (000) Basic 131,319 137,087 Diluted 133,314 139,576 Dividends per share Cash dividends declared per share $- $- Stores open at end of period 918 830 Ross Stores, Inc. Condensed Consolidated Balance Sheets May 3, May 5, ($000, unaudited) 2008 2007 Assets Current Assets Cash and cash equivalents $305,804 $199,123 Short-term investments 2,237 6,821 Accounts receivable 48,892 36,940 Merchandise inventory 1,028,576 1,101,525 Prepaid expenses and other 61,263 51,029 Deferred income taxes 20,149 29,516 Total current assets 1,466,921 1,424,954 Property and equipment, net 870,556 762,345 Other long-term assets 66,486 69,299 Long-term investments 40,430 33,548 Total assets $2,444,393 $2,290,146 Liabilities and Stockholders' Equity Current Liabilities Accounts payable, accrued expenses and other $1,005,503 $919,410 Income taxes payable 42,672 33,575 Total current liabilities 1,048,175 952,985 Long-term debt 150,000 150,000 Other long-term liabilities 169,487 166,165 Deferred income taxes 82,506 84,987 Commitments and contingencies Stockholders' Equity 994,225 936,009 Total liabilities and stockholders' equity $2,444,393 $2,290,146 Ross Stores, Inc. Condensed Consolidated Statements of Cash Flows Three Months Ended May 3, May 5, ($000, unaudited) 2008 2007 Cash Flows From Operating Activities Net earnings $79,485 $67,044 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 31,890 28,522 Stock-based compensation 5,196 6,370 Deferred income taxes 3,097 (14,489) Tax benefit from equity issuance 3,149 4,565 Excess tax benefits from stock-based compensation (2,167) (3,826) Change in assets and liabilities: Merchandise inventory (3,281) (49,796) Other current assets, net (20,766) (13,619) Accounts payable 37,428 (78,829) Other current liabilities 19,620 (36,889) Other long-term, net 7,184 24,902 Net cash provided by (used in) operating activities 160,835 (66,045) Cash Flows From Investing Activities Additions to property and equipment (42,278) (47,381) Proceeds from sales of property and equipment 108 - Purchases of investments (40,665) (9,016) Proceeds from investments 43,503 5,257 Net cash used in investing activities (39,332) (51,140) Cash Flows From Financing Activities Issuance of common stock related to stock plans 16,820 8,863 Excess tax benefits from stock-based compensation 2,167 3,826 Treasury stock purchased (2,542) (2,592) Repurchase of common stock (77,192) (50,868) Dividends paid (12,532) (10,309) Net cash used in financing activities (73,279) (51,080) Net increase (decrease) in cash and cash equivalents 48,224 (168,265) Cash and cash equivalents: Beginning of period 257,580 367,388 End of period $305,804 $199,123 Supplemental Cash Flow Disclosures Income taxes paid $21,961 $33,288 Non-Cash Investing Activities Change in fair value of investment securities - unrealized $(1,359) $227 (loss) gain
SOURCE Ross Stores, Inc.
John G. Call,
Senior Vice President,
Chief Financial Officer,
both of Ross Stores, Inc.
Web site: http://www.rossstores.com