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Ross Stores Reports Fourth Quarter and Fiscal 2005 Results
PLEASANTON, Calif., March 15 /PRNewswire-FirstCall/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported that net earnings for the 13 weeks ended January 28, 2006 increased 37% to $71.0 million, compared to $51.8 million for the 13 weeks ended January 29, 2005. Earnings per share for the 13 weeks ended January 28, 2006 grew 40% to $.49, compared to earnings per share of $.35 for the prior year period.
For the 2005 fiscal year ended January 28, 2006, net earnings totaled $199.6 million, and earnings per share were $1.36, compared to net earnings of $169.9 million and earnings per share of $1.13 for the 2004 fiscal year ended January 29, 2005. Fiscal 2004 results include a non-cash pre-tax charge of approximately $15.8 million, or $.06 per share, to write-down the value of the Company's former headquarters and distribution center in Newark, California to its estimated fair market value.
Sales for the fourth quarter ended January 28, 2006 increased 16% to $1.411 billion, with comparable store sales up 6% over the prior year. For the 2005 fiscal year ended January 28, 2006, sales increased 17% to $4.944 billion, with comparable store sales up 6% over the prior year.
Michael Balmuth, Vice Chairman, President and Chief Executive Officer, commented, "We are pleased with the solid earnings growth we realized in the fourth quarter of 2005, which was driven by a combination of strong sales gains and expansion in operating margin. Gross profit margin for the quarter rose about 185 basis points, partially offset by an approximate 70 basis point increase in selling, general and administrative expenses mainly related to higher incentive plan costs."
Mr. Balmuth continued, "For the full 2005 fiscal year, earnings benefited from a solid rebound in sales, partially offset by a combination of higher- than-expected markdowns related to transitional systems and distribution issues earlier in the year, higher expenses related to inventory shortage, and higher incentive plan and information technology costs compared to fiscal 2004."
"We are pleased to report that healthy operating cash flows during 2005 continued to provide the resources to fund capital investments in new store growth and infrastructure. During fiscal 2005, $176 million in capital expenditures supported the addition of 75 net new Ross locations, ten dd's DISCOUNTS(R) stores, the purchase of a new warehouse facility in Moreno Valley, California, and other various information technology and infrastructure investments," said Mr. Balmuth.
"We also continued to enhance stockholder value through our share repurchase and dividend programs. During 2005, we completed the two-year $350 million stock repurchase program authorized by our Board of Directors in 2004, buying back a total of 6.4 million shares of common stock in 2005, for an aggregate purchase of $175 million. In addition, in November 2005, our Board of Directors authorized a new $400 million two-year stock repurchase program for 2006 and 2007 and approved a 20% increase in our quarterly cash dividend," Mr. Balmuth concluded.
The Company will host a conference call on Wednesday, March 15, 2006 at 11:00 a.m. Eastern time to communicate additional details concerning the fourth quarter and fiscal year 2005 results and management's outlook and plans for 2006. A real time audio webcast of the conference call will be available at www.rossstores.com. An audio playback will be available at (402) 220-5900, PIN #2342 through March 22, 2006.
Forward-Looking Statements: This press release and the recorded comments and transcript on the Company's website contain forward-looking statements regarding expected sales and earnings levels that are subject to risks and uncertainties which 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(R) include, without limitation, the Company's ability to effectively operate its various supply chain, core merchandising and other information systems, including generation of all necessary data and reports in a timely and cost effective manner; its ability to improve its micro-merchandising capabilities through the implementation of new processes and systems enhancements; 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, including higher than planned markdowns and higher than expected inventory shortage; greater than planned operating costs; the Company's ability to continue to purchase attractive brand-name merchandise at desirable discounts; the Company's ability to identify and successfully enter new geographic markets; and the Company's ability to attract and retain personnel with the talent necessary to execute its strategies. Other risk factors are detailed in the Company's SEC filings including, without limitation, the Form 10-K for fiscal 2004, the Form 10-Q's for fiscal 2005, and the Form 8-K's for fiscal 2005 and 2006. 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 2005 revenues of $4.9 billion. As of January 28, 2006, the Company operated 714 Ross stores and 20 dd's DISCOUNTS(R) locations, compared to 639 Ross stores and 10 dd's DISCOUNTS(R) 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(R) 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 www.rossstores.com.
ROSS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
($000, except stores and Three Months Ended Twelve Months Ended
per share data, January 28, January 29, January 28, January 29,
unaudited) 2006 2005 2006 2005
Sales $1,411,488 $1,211,754 $4,944,179 $4,239,990
Costs and Expenses
Cost of goods sold 1,080,443 949,869 3,832,296 3,279,877
Selling, general
and administrative 215,795 176,767 786,439 664,395
Impairment of long-
lived assets -- -- -- 15,818
Interest (income)
expense, net (1,559) 18 (2,898) 915
Total costs and
expenses 1,294,679 1,126,654 4,615,837 3,961,005
Earnings before taxes 116,809 85,100 328,342 278,985
Provision for taxes on
earnings 45,831 33,274 128,710 109,083
Net earnings $70,978 $51,826 $199,632 $169,902
Earnings per share
Basic $0.50 $0.36 $1.38 $1.15
Diluted $0.49 $0.35 $1.36 $1.13
Weighted average shares
outstanding (000)
Basic 142,439 145,662 144,325 147,468
Diluted 144,665 148,563 146,532 150,380
Dividends per share
Cash dividends
declared per share $0.120 $0.093 $0.220 $0.178
Stores open at end of period 734 649 734 649
ROSS STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
January 28, January 29,
($000, unaudited) 2006 2005
ASSETS
Current Assets
Cash and cash equivalents $191,767 $115,331
Short-term investments 12,763 67,400
Accounts receivable 29,122 31,154
Merchandise inventory 938,091 853,112
Prepaid expenses and other 37,090 46,756
Deferred income taxes 20,014 14,184
Total current assets 1,228,847 1,127,937
Property and equipment, net 639,852 556,178
Other long-term assets 58,837 57,100
Long-term investments 11,202 --
Total assets $1,938,738 $1,741,215
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, accrued
expenses and other $803,397 $711,561
Income taxes payable 25,586 --
Short-term debt 50,000 --
Total current liabilities 878,983 711,561
Long-term debt -- 50,000
Other long-term liabilities 122,926 116,668
Deferred income taxes 100,657 97,417
Commitments and contingencies
Stockholders' equity 836,172 765,569
Total liabilities and
stockholders' equity $1,938,738 $1,741,215
ROSS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended
January 28, January 29,
($000, unaudited) 2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $199,632 $169,902
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 110,848 94,593
Impairment of long-lived assets -- 15,818
Deferred income taxes (2,590) 28,101
Tax benefit from equity issuance 21,947 14,802
Change in assets and liabilities:
Merchandise inventory (84,979) (11,621)
Other current assets, net 11,698 (23,151)
Accounts payable 21,448 2,908
Other current liabilities 94,670 (5,123)
Other long-term, net 2,517 11,928
Net cash provided by operating
activities 375,191 298,157
CASH FLOWS USED IN INVESTING ACTIVITIES
Additions to property and equipment (175,851) (149,541)
Sales (purchases) of investments 43,455 (67,400)
Proceeds from sale of Newark Facility -- 17,400
Net cash used in investing
activities (132,396) (199,541)
CASH FLOWS USED IN FINANCING ACTIVITIES
Issuance of common stock related to
stock plans 45,982 23,391
Treasury stock purchased (6,626) (7,962)
Repurchase of common stock (175,000) (175,000)
Dividends paid (30,715) (25,260)
Net cash used in financing
activities (166,359) (184,831)
Net increase (decrease) in cash and
cash equivalents 76,436 (86,215)
Cash and cash equivalents:
Beginning of year 115,331 201,546
End of year $191,767 $115,331
NON-CASH INVESTING ACTIVITIES
Straight-line rent capitalized in
build-out period $3,290 $4,277
Change in fair value of investment
securities $20 $--
SOURCE Ross Stores, Inc.
03/15/2006
CONTACT: 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 katie.loughnot@ros.com, both of Ross Stores, Inc.
Web site: http://www.rossstores.com
(ROST)