Increases 2018 Stock Repurchase Authorization and Raises Quarterly
Cash Dividend
Also Provides First Quarter and Fiscal 2018 Guidance
DUBLIN, Calif.--(BUSINESS WIRE)--Mar. 6, 2018--
Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for
the 14 weeks ended February 3, 2018 of $1.19, up from $.77 in the 13
weeks ended January 28, 2017. Net earnings for the 14 weeks ended
February 3, 2018 were $451 million, compared to $301 million in the 13
weeks ended January 28, 2017. Sales for the 2017 fourth quarter were up
16% to $4.1 billion. Comparable store sales for the 13 weeks ended
January 27, 2018 rose 5% versus a 4% gain for the same period in the
prior year.
For the 53 weeks ended February 3, 2018, earnings per share grew to
$3.55, compared to $2.83 in the 52 weeks ended January 28, 2017. Net
earnings for the 53 weeks ended February 3, 2018 were $1.4 billion,
compared to $1.1 billion in the 52 weeks ended January 28, 2017. Sales
for the 53-week 2017 fiscal year grew 10% to $14.1 billion. Comparable
store sales for the 52 weeks ended January 27, 2018 were up 4% on top of
a 4% increase in 2016.
The aforementioned earnings results for both the 2017 fourth quarter and
fiscal year are inclusive of a per share benefit of approximately $.10
from the 53rd week and $.21 from the recently enacted tax
reform legislation. Excluding these items, earnings per share on a
52-week basis increased 14% for both the quarter and fiscal 2017
compared to the prior year.
Barbara Rentler, Chief Executive Officer, commented, “Despite our own
difficult multi-year comparisons and a very competitive retail climate,
sales and earnings were well ahead of our expectations for both the
fourth quarter and the full year. We are pleased with these results,
which reflect our ongoing success in delivering broad assortments of
compelling bargains to today’s value-driven shoppers.”
Ms. Rentler continued, “Fourth quarter operating margin grew 95 basis
points to 14.6%, up from 13.6% in the prior year. This improvement was
driven by a combination of strong merchandise margin, expense leverage
from solid gains in same store sales, and the impact of the 53rd
week. For the 2017 fiscal year, operating margin increased 50 basis
points to a record 14.5%.”
Board Approves Increases to 2018 Stock
Repurchase Authorization and Quarterly Cash Dividend
The Company’s Board of Directors has approved an increase in the stock
repurchase authorization for 2018 to $1.075 billion, up from the
previous $875 million. The Board also approved a higher quarterly cash
dividend of $.225 per share, up 41% over the prior year. This quarterly
dividend is payable on March 30, 2018 to stockholders of record as of
March 19, 2018.
A total of 13.5 million shares of common stock were repurchased during
fiscal 2017, for an aggregate purchase price of $875 million. During the
recently completed fourth quarter, 3.0 million shares were repurchased
for a total price of $226 million.
Ms. Rentler noted, “The increases to our stock repurchase and dividend
programs for 2018 reflect the current strength of our balance sheet and
our ongoing ability to generate significant amounts of cash after
funding growth and other capital needs of the business. We have
repurchased stock as planned every year since 1993 and also raised our
cash dividend annually since 1994. This consistent record reflects our
ongoing commitment to enhancing stockholder value and returns.”
Fiscal 2018 Guidance
Looking ahead, Ms. Rentler said, “While we are encouraged by our recent
strong sales and earnings results, we again face our own challenging
multi-year comparisons as well as a very competitive retail environment.
As a result, although we hope to do better, we continue to take a
prudent approach to forecasting our business in 2018.”
For the 52 weeks ending February 2, 2019, the Company is forecasting
same store sales to grow 1% to 2% on top of 4% gains in each of the past
three years. We also plan to open about 100 new stores this year,
consisting of 75 Ross Dress for Less and 25 dd’s DISCOUNTS locations.
Fiscal 2018 earnings per share are projected to be $3.86 to $4.03, up
from $3.55 for the 53 weeks ended February 3, 2018.
For the 13 weeks ending May 5, 2018, comparable store sales are forecast
to be up 1% to 2%, with earnings per share projected to be $1.03 to
$1.07, up from $.82 for the first quarter ended April 29, 2017.
Ms. Rentler noted, “Our fiscal year and first quarter 2018 guidance
ranges include a per share benefit of approximately $.69 and $.16,
respectively, from the recently enacted tax legislation. In addition,
our 2018 ranges reflect our plans to make competitive wage and
benefit-related investments, including raising our minimum wage to
$11.00 per hour. We believe these actions will allow us to continue to
attract and retain talented associates.”
The Company will host a conference call on Tuesday, March 6, 2018 at
4:15 p.m. Eastern time to provide additional details concerning its
fourth quarter and fiscal year 2017 results, and management’s outlook
and guidance for fiscal 2018. A real-time audio webcast of the
conference call will be available in the Investors section of the
Company’s website, located at www.rossstores.com.
An audio playback will be available at 404-537-3406, PIN #5783629 until
8:00 p.m. Eastern time on March 13, 2018, as well as on the Company’s
website.
Forward-Looking Statements: This
press release contains forward-looking statements regarding expected
sales, earnings levels, and other financial results 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,” “outlook,” “looking ahead” and
similar expressions identify forward-looking statements. Risk factors
for Ross Dress for Less® (“Ross”) and dd’s
DISCOUNTS® include without limitation,
competitive pressures in the apparel or home-related merchandise
retailing industry; changes in the level of consumer spending on or
preferences for apparel and home-related merchandise; market
availability, quantity, and quality of attractive brand name merchandise
at desirable discounts and our buyers’ ability to purchase merchandise
that enables us to offer customers a wide assortment of merchandise at
competitive prices; impacts from the macro-economic environment,
financial and credit markets, and geopolitical conditions that affect
consumer confidence and consumer disposable income; our ability to
continually attract, train, and retain associates to execute our
off-price strategies; unseasonable weather that may affect shopping
patterns and consumer demand for seasonal apparel and other merchandise,
and may result in temporary store closures and disruptions in deliveries
of merchandise to our stores; potential information or data security
breaches, including cyber-attacks on our transaction processing and
computer information systems, which could result in theft or
unauthorized disclosure of customer, credit card, employee, or other
private and valuable information that we handle in the ordinary course
of our business; potential disruptions in our supply chain or
information systems; issues involving the quality, safety, or
authenticity of products we sell, which could harm our reputation,
result in lost sales, and/or increase our costs; our ability to
effectively manage our inventories, markdowns, and inventory shortage to
achieve planned gross margin; changes in U.S. tax or tariff policy
regarding apparel and home-related merchandise produced in other
countries that could adversely affect our business; volatility in
revenues and earnings; an adverse outcome in various legal, regulatory,
or tax matters; a natural or man-made disaster in California or in
another region where we have a concentration of stores, offices, or a
distribution center; unexpected issues or costs from expanding in
existing markets and entering new geographic markets; obtaining
acceptable new store sites with favorable consumer demographics; damage
to our corporate reputation or brands; effectively advertising and
marketing our brands; issues from selling and importing merchandise
produced in other countries; and maintaining sufficient liquidity to
support our continuing operations, new store and distribution center
growth plans, and stock repurchase and dividend programs. Other risk
factors are set forth in our SEC filings including without limitation,
the Form 10-K for fiscal 2016, and Form 10-Qs and 8-Ks for fiscal 2017.
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.
Ross Stores, Inc. is an S&P 500, Fortune 500, and Nasdaq 100 (ROST)
company headquartered in Dublin, California, with fiscal 2017 revenues
of $14.1 billion. The Company operates Ross Dress for Less®
(“Ross”), the largest off-price apparel and home fashion chain in the
United States with 1,409 locations in 37 states, the District of
Columbia, and Guam at fiscal 2017 year end. Ross offers first-quality,
in-season, name brand and designer apparel, accessories, footwear, and
home fashions for the entire family at savings of 20% to 60% off
department and specialty store regular prices every day. The Company
also operates 213 dd’s DISCOUNTS® in 16 states at the end of
fiscal 2017 that feature a more moderately-priced assortment of
first-quality, in-season, name brand apparel, accessories, footwear, and
home fashions for the entire family at savings of 20% to 70% off
moderate department and discount store regular prices every day.
Additional information is available at www.rossstores.com.
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Ross Stores, Inc.
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Condensed Consolidated Statements of Earnings
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Three Months Ended
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Twelve Months Ended
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($000, except stores and per share data, unaudited)
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February 3, 2018
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January 28, 2017
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February 3, 2018
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January 28, 2017
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Sales
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$
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4,067,806
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$
|
3,510,158
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$
|
14,134,732
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$
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12,866,757
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Costs and Expenses
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Cost of goods sold
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2,922,582
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2,539,563
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|
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10,042,638
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9,173,705
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Selling, general and administrative
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553,306
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493,802
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2,043,698
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|
|
1,890,408
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Interest expense, net
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|
|
386
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|
|
3,755
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|
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7,676
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|
|
16,488
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Total costs and expenses
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3,476,274
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3,037,120
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12,094,012
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11,080,601
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Earnings before taxes
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591,532
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|
|
473,038
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|
|
2,040,720
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|
|
1,786,156
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Provision for taxes on earnings
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|
|
140,785
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|
|
172,470
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|
|
677,967
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|
|
668,502
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Net earnings
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$
|
450,747
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|
$
|
300,568
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$
|
1,362,753
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$
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1,117,654
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Earnings per share
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Basic
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$
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1.20
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$
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0.77
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$
|
3.58
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$
|
2.85
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Diluted
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$
|
1.19
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$
|
0.77
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$
|
3.55
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$
|
2.83
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Weighted average shares outstanding (000)
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Basic
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376,204
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388,258
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381,174
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392,124
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Diluted
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379,734
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391,139
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384,329
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394,958
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Dividends
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Cash dividends declared per share
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$
|
0.160
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$
|
0.135
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$
|
0.640
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$
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0.540
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Stores open at end of period
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1,622
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|
|
1,533
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|
|
1,622
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|
1,533
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Ross Stores, Inc.
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Condensed Consolidated Balance Sheets
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($000, unaudited)
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February 3, 2018
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January 28, 2017
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Assets
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Current Assets
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Cash and cash equivalents
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$
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1,290,294
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$
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1,111,599
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Short-term investments
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512
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-
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Accounts receivable
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87,868
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75,154
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Merchandise inventory
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1,641,735
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1,512,886
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Prepaid expenses and other
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130,748
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113,410
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Total current assets
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|
3,151,157
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|
|
2,813,049
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Property and equipment, net
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2,382,464
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|
|
2,328,048
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Long-term investments
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712
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|
1,288
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Other long-term assets
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|
187,718
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|
166,966
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Total assets
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$
|
5,722,051
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$
|
5,309,351
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Liabilities and Stockholders’ Equity
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Current Liabilities
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Accounts payable
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$
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1,059,844
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$
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1,021,735
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Accrued expenses and other
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431,706
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398,126
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Accrued payroll and benefits
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349,879
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|
316,492
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Income taxes payable
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-
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16,153
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Current portion of long-term debt
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84,973
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-
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Total current liabilities
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1,926,402
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1,752,506
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Long-term debt
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311,994
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396,493
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Other long-term liabilities
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|
348,541
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|
290,950
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Deferred income taxes
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85,806
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121,385
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Commitments and contingencies
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Stockholders’ Equity
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3,049,308
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2,748,017
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Total liabilities and stockholders’ equity
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$
|
5,722,051
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$
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5,309,351
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Ross Stores, Inc.
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Condensed Consolidated Statements of Cash Flows
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Twelve Months Ended
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($000, unaudited)
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February 3, 2018
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January 28, 2017
|
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|
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|
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Cash Flows From Operating Activities
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|
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Net earnings
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$
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1,362,753
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|
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$
|
1,117,654
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|
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Adjustments to reconcile net earnings to net cash provided by
operating activities:
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Depreciation and amortization
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313,163
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|
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302,515
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Stock-based compensation
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87,417
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74,554
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Gain on sale of assets
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(6,328
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)
|
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|
-
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|
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Deferred income taxes
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|
|
(34,903
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)
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(8,703
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)
|
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Change in assets and liabilities:
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Merchandise inventory
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(128,849
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)
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(93,782
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)
|
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Other current assets
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(31,796
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)
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(928
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)
|
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Accounts payable
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41,322
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|
|
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83,085
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Other current liabilities
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49,068
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|
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76,676
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Other long-term, net
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29,431
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|
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7,780
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Net cash provided by operating activities
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|
1,681,278
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|
|
1,558,851
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Cash Flows From Investing Activities
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|
|
|
|
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Additions to property and equipment
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(371,423
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)
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(297,880
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)
|
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Proceeds from sale of property and equipment
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|
|
15,981
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|
|
-
|
|
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Decrease in restricted cash and investments
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|
|
2,310
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|
|
3,388
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Proceeds from investments
|
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|
40
|
|
|
|
1,729
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Net cash used in investing activities
|
|
|
(353,092
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)
|
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|
(292,763
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)
|
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Cash Flows From Financing Activities
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|
|
|
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Excess tax benefit from stock-based compensation
|
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|
-
|
|
|
|
23,331
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|
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Issuance of common stock related to stock plans
|
|
|
18,468
|
|
|
|
18,539
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|
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Treasury stock purchased
|
|
|
(45,433
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)
|
|
|
(43,321
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)
|
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Repurchase of common stock
|
|
|
(875,000
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)
|
|
|
(700,000
|
)
|
|
Dividends paid
|
|
|
(247,526
|
)
|
|
|
(214,640
|
)
|
|
Net cash used in financing activities
|
|
|
(1,149,491
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)
|
|
|
(916,091
|
)
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
178,695
|
|
|
|
349,997
|
|
|
|
|
|
|
|
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Cash and cash equivalents:
|
|
|
|
|
|
Beginning of period
|
|
|
1,111,599
|
|
|
|
761,602
|
|
|
End of period
|
|
$
|
1,290,294
|
|
|
$
|
1,111,599
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Disclosures
|
|
|
|
|
|
Interest paid
|
|
$
|
18,105
|
|
|
$
|
18,105
|
|
|
Income taxes paid
|
|
$
|
714,566
|
|
|
$
|
628,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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View source version on businesswire.com: http://www.businesswire.com/news/home/20180306006665/en/
Source: Ross Stores, Inc.
Ross Stores, Inc.
Michael Hartshorn, 925-965-4503
Group Senior
Vice President
Chief Financial Officer
or
Connie Kao,
925-965-4668
Vice President, Investor Relations
connie.kao@ros.com
