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Ross Stores Reports First Quarter Results

PLEASANTON, Calif., May 18, 2005 /PRNewswire-FirstCall via COMTEX/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for the 13 weeks ended April 30, 2005 of $.34, compared to $.31, as restated, for the 13 weeks ended May 1, 2004. Net earnings in the first quarter of 2005 were $50.1 million, compared to $48.1 million in the prior year period. Sales for the first quarter ended April 30, 2005 increased 13% to $1.124 billion, from $992 million for the quarter ended May 1, 2004. Comparable store sales for the same period grew 3% on top of a 3% gain in the prior year.

Michael Balmuth, Vice Chairman, President and Chief Executive Officer, commented, "Sales for the first quarter performed in line with expectations. The strongest major markets during the quarter were Florida and Texas, and the best performing merchandise categories were Juniors, Accessories and Shoes. As expected, a combination of higher markdowns and higher distribution center costs contributed to lower gross margin, which declined about 75 basis points during the quarter."

Mr. Balmuth continued, "Our balance sheet and cash flows remain strong and healthy. We continue to return capital to stockholders through our stock repurchase and dividend programs. During the first three months of 2005, we repurchased 1.5 million shares of common stock for an aggregate of $42.6 million under the two-year $350 million program authorized by our Board of Directors in early 2004. Approximately $132 million remains available for future repurchases under the program, which we expect to complete by the end of 2005."

The Company will provide additional details concerning its first quarter results and management's outlook for the balance of 2005 on a conference call to be held on Wednesday, May 18, 2005 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 website located at A recorded version of the call will also be available until the end of June at the website address and via a telephone recording through Thursday, June 2, 2005 at 402-220-5900, PIN #2342.

Forward-Looking Statements: This press release and the recorded comments and transcript on the Company's website contain forward-looking statements regarding planned new store growth and expected sales and earnings levels and forward-looking statements concerning the Company's distribution centers and information systems, all of 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 "plan," "expect," "anticipate," "estimate," "believe," "forecast," "projected," "guidance," "looking ahead" and similar expressions identify forward-looking statements. Risk factors for Ross Stores and dd's DISCOUNTS(SM) include, without limitation, the Company's ability to effectively operate and integrate various new supply chain and core merchandising systems, including generation of all necessary information in a timely and cost effective manner; migrating the Company's data center from Newark, California to Pleasanton, California in the first half of 2005 without unexpected delays or interruption in system availability; achieving and maintaining targeted levels of productivity and efficiency in its distribution centers; obtaining acceptable new store locations; competitive pressures in the apparel industry; changes in the level of consumer spending on or preferences for apparel or home-related merchandise; changes in geopolitical and general economic conditions; unseasonable weather trends; disruptions in supply chain; lower than planned gross margin and greater than planned operating costs. Other risk factors are detailed in the Company's Form 10-K for fiscal 2004. 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., a Fortune 500 and Nasdaq 100 (ROST) company headquartered in Pleasanton, California, is the nation's second largest off-price company with fiscal 2004 revenues of $4.2 billion. As of April 30, 2005, the Company operated 663 Ross stores and ten dd's DISCOUNTS(SM) stores, compared to 599 Ross locations at the end of the same period last year. Ross Stores 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(SM) 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


                                                      Three Months Ended
                                                   April 30,         May 1,
                                                     2005             2004
    ($000, except stores and per share data,                      As Restated
    Sales                                        $1,123,937         $991,892

    Costs and Expenses
           Cost of goods sold, including
            related buying, distribution
            and occupancy costs                     859,316         751,166
           Selling, general and administrative      182,736         161,496
           Interest (income) expense, net              (298)            170
              Total costs and expenses            1,041,754         912,832

    Earnings before taxes                            82,183          79,060

    Provision for taxes on earnings                  32,133          30,913
    Net earnings                                    $50,050         $48,147

    Earnings per share
           Basic                                      $0.34           $0.32
           Diluted                                    $0.34           $0.31

    Weighted average shares outstanding (000)
           Basic                                    146,007         149,890
           Diluted                                  148,464         153,371

    Stores open end of period                           673             599

                                ROSS STORES, INC.

                                                   April 30,         May 1,
                                                     2005             2004
    ($000, unaudited)                                             As Restated


    Current Assets
           Cash and cash equivalents              $144,381          $184,951
           Short-term investments                   84,350                --
           Accounts receivable                      35,277            32,242
           Merchandise inventory                   964,694           859,379
           Prepaid expenses and other               38,098            35,477
           Deferred income taxes                     8,968            24,815
               Total current assets             $1,275,768        $1,136,864

    Property and equipment, net                    550,581           526,207
    Other long-term assets                          54,080            58,126
           Total assets                         $1,880,429        $1,721,197


    Current Liabilities
           Accounts payable, accrued
            expenses and other                    $809,363          $708,766
           Income taxes payable                      4,773            20,981
                Total current liabilities         $814,136          $729,747

    Long-term debt                                  50,000            50,000
    Other long-term liabilities                    114,381           105,067
    Deferred income taxes                           94,510            82,119

    Stockholders' equity                           807,402           754,264
            Total liabilities and
             stockholders' equity               $1,880,429        $1,721,197

                                ROSS STORES, INC.

                                                      Three Months Ended
                                                  April 30,          May 1,
                                                     2005             2004
     ($000, unaudited)                                            As Restated

     Net earnings                                  $50,050           $48,147
     Adjustments to reconcile net earnings to
      net cash provided by operating activities:
          Depreciation and amortization             26,053            21,227
          Deferred income taxes                      2,309             2,172
          Tax benefit from equity issuance          13,708             6,638
     Change in assets and liabilities:
          Merchandise inventory                   (111,582)          (17,888)
          Other current assets, net                  4,535           (12,960)
          Accounts payable                         110,408            21,967
          Other current liabilities                   (498)            1,340
          Other long-term, net                         263             1,373
          Net cash provided by operating
           activities                               95,246            72,016

     Additions to property and equipment           (16,025)          (25,503)
     Purchases of short-term investments, net      (16,950)               --
          Net cash used in investing activities    (32,975)          (25,503)

     Issuance of common stock related to
      stock plans                                   22,630             6,051
     Treasury stock related to tax withholding      (5,833)           (3,750)
     Repurchase of common stock                    (42,637)          (58,988)
     Dividends paid                                 (7,381)           (6,421)
          Net cash used in financing activities    (33,221)          (63,108)
     Net increase (decrease) in cash and
      cash equivalents                              29,050           (16,595)
     Cash and cash equivalents:
          Beginning of period                      115,331           201,546
          End of period                           $144,381          $184,951

     Straight-line rent capitalization in
      build-out period                                $611            $2,023

SOURCE Ross Stores, Inc.

John G. Call, Senior Vice President, Chief Financial Officer, +1-925-965-4315, or
Katie Loughnot, Vice President, Investor Relations, +1-925-965-4509, or, both of Ross Stores, Inc.