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 www.rossstores.com. 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. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS 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. CONDENSED CONSOLIDATED BALANCE SHEETS 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 LIABILITIES AND STOCKHOLDERS' EQUITY 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. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended May 3, May 4, ($000, unaudited) 2003 2002 CASH FLOWS FROM OPERATING ACTIVITIES 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 CASH FLOWS USED IN INVESTING ACTIVITIES Additions to property and equipment (27,419) (27,260) Net cash used in investing activities (27,419) (27,260) CASH FLOWS USED IN FINANCING ACTIVITIES 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 email@example.com, both of Ross Stores, Inc.