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Ross Stores Reports Record First Quarter 2009 Results, Provides Second Quarter and Updated Fiscal 2009 Guidance

PLEASANTON, Calif., May 21 /PRNewswire-FirstCall/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported that earnings per share for the 13 weeks ended May 2, 2009 rose 20% to $.72, from $.60 for the 13 weeks ended May 3, 2008. First quarter 2008 results included a real estate settlement that increased earnings per share by about $.02 during the period. Net earnings for the first quarter of 2009 rose to a record $91.4 million, compared to $79.5 million in the first quarter of 2008. Sales for the 13 weeks ended May 2, 2009 grew 9% to $1.692 billion, with comparable store sales up 3% on top of a 3% gain in the prior year.

Michael Balmuth, Vice Chairman, President and Chief Executive Officer, commented, "We are very pleased with our strong sales and earnings results in the first quarter, which were well ahead of plan. This performance is especially noteworthy considering that it was achieved in one of the most challenging economic and retail environments on record. Our business benefited mainly from our ability to offer customers fresh and exciting name brand bargains, as we continue to take advantage of the substantial amount of close-out opportunities in the marketplace. The best performing merchandise categories during the period were Dresses and Shoes, while the strongest region was the Mid-Atlantic."

Mr. Balmuth continued, "Operating margin for the quarter grew about 75 basis points to 8.9%, primarily driven by a 90 basis point improvement in gross margin. Partially offsetting this gain was a 15 basis point increase in selling, general and administrative costs versus the prior year. Last year benefited by about 30 basis points from income related to the previously mentioned real estate settlement."

Mr. Balmuth also noted, "Our balance sheet and cash flows remain healthy. We continued to return capital to stockholders during the quarter through our stock repurchase and dividend programs. During the first three months of fiscal 2009, we repurchased 2.2 million shares of common stock for an aggregate purchase price of $77 million. We remain on track to complete the remaining $223 million stock repurchase authorization by the end of fiscal 2009."

Looking ahead, Mr. Balmuth said, "While the external environment remains challenging, our much better-than-expected results year-to-date reflect that consumers are continuing to respond very favorably to the compelling values we offer. As a result, we have increased our sales and earnings outlook for the second quarter and the back half of 2009."

"For the second quarter ending August 1, 2009, we are now forecasting same store sales to be flat to down 1%, on top of a strong 6% gain in the prior year. This compares to our previous second quarter guidance for a mid single digit percentage decline in comparable store sales. We also are raising our same store sales guidance for the second half of this year from relatively flat to up 2% to 3%, compared to a 1% decline in the same period last year," said Mr. Balmuth.

Based on these updated sales targets, the Company is projecting second quarter earnings per share to be in the range of $.60 to $.63, versus $.54 in the prior year period. For the 52 weeks ending January 30, 2010, earnings per share are now forecast to be in the range of $2.62 to $2.72. This compares to the Company's initial fiscal 2009 earnings per share guidance of $2.25 to $2.45 and reported EPS of $2.33 in fiscal 2008.

The Company will provide additional details concerning its first quarter results and management's outlook for the second quarter and the full year on a conference call to be held on Thursday, May 21, 2009 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 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 Thursday, May 28, 2009 at (706) 645-9291, PIN # 86370005.

                                      * * * * *

Forward-Looking Statements: This press release and the recorded conference call on our corporate website contain forward-looking statements regarding expected sales and earnings levels in future periods 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," "target," "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 or home-related merchandise industry; changes in the level of consumer spending on or preferences for apparel or home-related merchandise, including the potential impact from uncertainty in financial and credit markets and the severity and duration of the current recession; 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; and obtaining acceptable new store locations. Other risk factors are detailed in our SEC filings including, without limitation, the Form 10-K for fiscal 2008 and Form 8-K's for fiscal 2009. 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.

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Ross Stores, Inc., a Fortune 500 and Nasdaq 100 (ROST) company headquartered in Pleasanton, California, is the nation's second largest off-price retailer with fiscal 2008 revenues of $6.5 billion. As of May 2, 2009 the Company operated 922 Ross Dress for Less(R) ("Ross") stores and 52 dd's DISCOUNTS(R) locations, compared to 864 Ross and 54 dd's DISCOUNTS locations at the end of the same period last year. 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 at

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                            Ross Stores, Inc.
              Condensed Consolidated Statements of Earnings

                                                Three Months Ended
     ($000, except stores and per share data,     May 2,     May 3,
      unaudited)                                  2009       2008
    ----------------------------------------      ----       ----

    Sales                                     $1,691,599 $1,556,328

    Costs and expenses
           Cost of goods sold                  1,268,709  1,181,557
           Selling, general and
            administrative                       272,030    247,672
           Interest expense (income), net          1,656     (1,621)
                                                   -----     ------
              Total costs and expenses         1,542,395  1,427,608

    Earnings before taxes                        149,204    128,720
    Provision for taxes on earnings               57,817     49,235
                                                  ------     ------
    Net earnings                                 $91,387    $79,485
                                                 =======    =======

    Earnings per share
           Basic                                   $0.73      $0.61
           Diluted                                 $0.72      $0.60

    Weighted average shares outstanding (000)
           Basic                                 124,692    131,319
           Diluted                               126,564    133,314

    Dividends per share
           Cash dividends declared per share          $-         $-

    Stores open at end of period                     974        918

                             Ross Stores, Inc.
                   Condensed Consolidated Balance Sheets

                                                      May 2,     May 3,
    ($000, unaudited)                                 2009       2008
    -----------------                                 ----       ----

    Current Assets
           Cash and cash equivalents                $459,302   $305,804
           Short-term investments                      1,033      2,237
           Accounts receivable                        50,098     48,892
           Merchandise inventory                     917,661  1,028,576
           Prepaid expenses and other                 65,557     61,263
           Deferred income taxes                      13,487     20,149
                                                      ------     ------
                Total current assets               1,507,138  1,466,921

    Property and equipment, net                      942,432    870,556
    Long-term investments                             33,411     40,430
    Other long-term assets                            59,139     66,486
                                                      ------     ------
    Total assets                                  $2,542,120 $2,444,393
                                                  ========== ==========

    Liabilities and Stockholders' Equity

    Current Liabilities
           Accounts payable                         $682,251   $661,847
           Accrued expenses and other                225,564    225,562
           Accrued payroll and benefits              134,571    118,094
           Income taxes payable                       46,333     42,672
                                                      ------     ------
                Total current liabilities          1,088,719  1,048,175

    Long-term debt                                   150,000    150,000
    Other long-term liabilities                      163,687    169,487
    Deferred income taxes                            103,956     82,506

    Commitments and contingencies

    Stockholders' Equity                           1,035,758    994,225
                                                   ---------    -------
            Total liabilities and stockholders'
             equity                               $2,542,120 $2,444,393
                                                  ========== ==========

                              Ross Stores, Inc.
               Condensed Consolidated Statements of Cash Flows

                                                     Three Months Ended
                                                        May 2,    May 3,
    ($000, unaudited)                                   2009      2008
    -----------------                                   ----      ----

    Cash Flows From Operating Activities
    Net earnings                                      $91,387   $79,485
    Adjustments to reconcile net earnings to net
     cash provided by operating activities:
         Depreciation and amortization                 37,556    33,048
         Stock-based compensation                       6,497     5,196
         Deferred income taxes                          7,405     3,097
         Tax benefit from equity issuance               2,821     3,149
         Excess tax benefit from stock-based
          compensation                                 (2,064)   (2,167)
    Change in assets and liabilities:
         Merchandise inventory                        (36,603)   (3,281)
         Other current assets, net                    (19,244)  (20,766)
         Accounts payable                             159,514    37,428
         Other current liabilities                     (6,455)   19,620
         Other long-term, net                             (82)    6,026
                                                          ---     -----
         Net cash provided by operating activities    240,732   160,835
                                                      -------   -------

    Cash Flows From Investing Activities
    Additions to property and equipment               (33,914)  (42,278)
    Proceeds from sale of property and equipment           10       108
    Net proceeds from investments                       4,577     2,838
                                                        -----     -----
         Net cash used in investing activities        (29,327)  (39,332)
                                                      -------   -------

    Cash Flows From Financing Activities
    Excess tax benefit from stock-based compensation    2,064     2,167
    Issuance of common stock related to stock plans    19,689    16,820
    Treasury stock purchased                           (4,073)   (2,542)
    Repurchase of common stock                        (77,171)  (77,192)
    Dividends paid                                    (13,967)  (12,532)
                                                      -------   -------
         Net cash used in financing activities        (73,458)  (73,279)
                                                      -------   -------
    Net increase in cash and cash equivalents         137,947    48,224
    Cash and cash equivalents:
         Beginning of period                          321,355   257,580
                                                      -------   -------
         End of period                               $459,302  $305,804
                                                     ========  ========

    Supplemental Cash Flow Disclosures
    Income taxes paid                                   9,866    21,961

    Non-Cash Investing Activities
    Increase (decrease) in fair value of investment
     securities                                          $209   $(1,359)

SOURCE Ross Stores, Inc.
John G. Call, Senior Vice President, Chief Financial Officer +1-925-965-4315
or Bobbi Chaville, Senior Director, Investor Relations, +1-925-965-4289,
Web Site: