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Ross Stores Reports First Quarter Results

NEWARK, Calif., May 20, 2003 /PRNewswire-FirstCall via COMTEX/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported that earnings per share for the 13 weeks ended May 3, 2003 increased 7% to $.63, from $.59 for the 13 weeks ended May 4, 2002. Net earnings in the first quarter of 2003 were $49.3 million, up from $47.7 million in the prior year period. Sales for the first quarter ended May 3, 2003 increased 7% to $879 million, from $820 million for the quarter ended May 4, 2002. Comparable store sales for the same period declined 3% from the prior year.

Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, "We are pleased to report that strong inventory and expense controls, as well as the earlier-than-planned opening of several new stores, offset the impact of lower-than-expected revenue on first quarter earnings. External issues, including unseasonable weather trends, the war in Iraq and the lackluster economic climate, negatively affected business during the period. Despite these pressures, however, we were able to show respectable earnings per share growth."

Mr. Balmuth continued, "Expense trends improved during the first quarter, due mainly to lower incentive plan costs, combined with better than planned store payroll and benefit expenses. As a result, a 48 basis point decline in general, selling and administrative expenses as a percent of sales partially offset an 86 basis point decline in gross margin. Operating margin for the first quarter was 9.2% compared to 9.6% in the prior year.

"Consistent with our long-term plan for 12% annual unit growth, we expect to add about 62 stores in 2003. Twenty-three of these new locations opened during the first quarter, including our initial entry into the state of Tennessee. We ended the period with 530 stores in 24 states," noted Mr. Balmuth.

Mr. Balmuth continued, "We remain committed to returning capital to stockholders through our stock repurchase and dividend programs. During the first three months of 2003, we repurchased 1.1 million shares of common stock for an aggregate of $40.7 million under the two-year $300 million program authorized by our Board of Directors in early 2002. We ended the quarter with 76.7 million shares of common stock outstanding and approximately $109 million remaining under this repurchase authorization, which we expect to complete in fiscal 2003."

The Company will provide additional details concerning its first quarter results and business outlook for the balance of 2003 on a conference call to be held on Tuesday, May 20, 2003 at 11:00 a.m. Eastern Daylight Time. Participants may listen to a real time audio webcast of the conference call by visiting the Company's web site located at A recorded version of the call will also be available until the end of the month at the web site address and via a telephone recording through Tuesday, May 27, 2003 at 402-220-5900, PIN #2342.

Forward-Looking Statements: This press release contains certain forward-looking statements regarding expected annual unit growth and new store locations, which are subject to risks and uncertainties that could cause the Company's actual results to differ materially from management's current expectations. The words "expect," "anticipate," "estimate," "believe," "forecast," "project" and similar expressions identify forward-looking statements. Risk factors include obtaining acceptable new store locations, competitive pressures in the apparel industry, changes in geopolitical and general economic conditions, changes in the level of consumer spending on or preferences in apparel or home-related merchandise and the Company's ability to successfully implement various new supply chain and merchandising systems in a timely and cost effective manner. Other risk factors are detailed in the Company's Form 10-K for fiscal 2002. 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 the Company's outlook at any other point in time. The Company does not undertake to update or revise these forward-looking statements.

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 530 stores in operation as of May 3, 2003, compared to 470 stores at the end of the same period last year.

                              ROSS STORES, INC.

                                                     Three Months Ended
                                                   May 3,            May 4,
    ($000, except per share data, unaudited)        2003              2002

    Sales                                         $879,284          $819,611

    Costs and Expenses
      Cost of goods sold, including related
       buying, distribution and occupancy
       costs                                       653,248           601,857
      General, selling and administrative          145,139           139,255
      Interest (income) expense                        (70)              224
                                                   798,317           741,336

    Earnings before income taxes                    80,967            78,275

    Provision for taxes on earnings                 31,658            30,606
    Net earnings                                   $49,309           $47,669

    Earnings per share
      Basic                                          $0.64             $0.60
      Diluted                                        $0.63             $0.59

    Weighted average shares outstanding (000)
      Basic                                         77,052            78,865
      Diluted                                       78,254            80,585

    Stores open end of period                          530               470

                              ROSS STORES, INC.

                                                    May 3,            May 4,
    ($000, unaudited)                                2003              2002

    Current Assets
      Cash and cash equivalents                   $116,544           $72,630
      Accounts receivable                           23,260            24,464
      Merchandise inventory                        756,002           674,033
      Other current assets                          48,563            26,940
        Total Current Assets                      $944,369          $798,067

    Property and equipment, net                    415,552           344,623
    Other long-term assets                          39,833            38,984
                                                $1,399,754        $1,181,674


    Current Liabilities
      Accounts payable, accrued expenses and
       other                                      $591,635          $535,966
      Income taxes payable                          30,580            30,568
        Total Current Liabilities                 $622,215          $566,534

    Long-term debt                                  50,000                --
    Other liabilities                               45,302            43,675
    Deferred income taxes                           25,021             7,646

    Stockholders' Equity                           657,216           563,819
                                                $1,399,754        $1,181,674

                              ROSS STORES, INC.

                                                       Three Months Ended
                                                     May 3,            May 4,
     ($000, unaudited)                                2003              2002

     Net earnings                                   $49,309           $47,669
     Adjustments to reconcile net earnings to
      net cash provided by operating activities:
        Depreciation and amortization of property
         and equipment                               13,965            12,861
        Other amortization                            3,649             3,082
     Change in assets and liabilities:
        Merchandise inventory                       (39,484)          (50,643)
        Other current assets - net                  (16,570)             (154)
        Accounts payable                              3,493            51,536
        Other current liabilities                    (2,921)           33,211
        Other                                           120            (3,050)
        Net cash provided by operating activities    11,561            94,512

     Additions to property and equipment            (27,419)          (27,260)
       Net cash used in investing activities        (27,419)          (27,260)

     Proceeds from long-term debt                    25,000                --
     Issuance of common stock related to stock
      plans                                           1,879            10,841
     Repurchase of common stock                     (40,677)          (42,075)
     Dividends paid                                  (4,449)           (3,739)
       Net cash used in financing activities        (18,247)          (34,973)
     Net (decrease) increase in cash and cash
      equivalents                                   (34,105)           32,279
     Cash and cash equivalents:
       Beginning of period                          150,649            40,351
       End of period                               $116,544           $72,630

SOURCE Ross Stores, Inc.

John G. Call, Senior Vice President, Chief Financial Officer, +1-510-505-4315, or Katie Loughnot, Vice President, Investor Relations, +1-510-505-4509, or, both of Ross Stores, Inc.