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Ross Stores Reports Record Fourth Quarter and Fiscal Year 2007 Results

PLEASANTON, Calif., March 19 /PRNewswire-FirstCall/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for the 13 weeks ended February 2, 2008 of $.70, compared to $.66 for the 14 weeks ended February 3, 2007. Net earnings for the 13 weeks ended February 2, 2008 totaled $94.5 million, compared to net earnings for the 14 weeks ended February 3, 2007 of $93.1 million. Sales for the 13 weeks ended February 2, 2008 increased 3% to $1.652 billion compared to $1.608 billion for the 14 weeks ended February 3, 2007. Comparable store sales for the 13 weeks ended February 2, 2008 rose 2% over the 13 weeks ended February 3, 2007.

For the 52 weeks ended February 2, 2008, earnings per share were $1.90, compared to $1.70 for the 53 weeks ended February 3, 2007. Net earnings for the 52 weeks ended February 2, 2008 totaled $261.1 million, compared to $241.6 million for the 53 weeks ended February 3, 2007. Sales for the 2007 fiscal year increased 7% to $5.975 billion, with comparable store sales up 1% on top of a 4% gain in the prior year.

Adjusting for the extra week in fiscal 2006, these results represent earnings per share increases of 19% and 17% for the fourth quarter and fiscal year, respectively, on a 52-week basis. The 53rd week in fiscal 2006 added approximately $88 million in sales and earnings equivalent to approximately $.07 per share to both the fourth quarter and the year.

Michael Balmuth, Vice Chairman, President and Chief Executive Officer, commented, "We realized solid earnings growth for both the fourth quarter and the full year. Our ability to deliver compelling bargains to customers allowed us to successfully navigate the challenging retail climate, reflecting the resiliency of our off-price business model. The strongest regions for both the fourth quarter and the year were the Northwest and Texas, while Dresses, Home and Shoes were the best performing merchandise categories."

Mr. Balmuth continued, "For the 13-week fourth quarter of 2007, operating margin was 9.0% compared to 9.3% for the 14-week period in the prior year, as improvement in merchandise gross margin was offset mainly by increases in occupancy and store operating costs as a percent of sales. For the 2007 fiscal year, operating margin of 7.0% increased about 5 basis points over the prior year. Comparisons to last year are impacted by the 53rd week, which we estimate benefited the 2006 fourth quarter and fiscal year operating margin by about 55 and 20 basis points, respectively."

"Strong operating cash flows during 2007 continued to provide the resources to make capital investments in new store growth and infrastructure, and fund our ongoing stock repurchase and dividend programs. During the year, we invested $236 million in capital, which supported the addition of 67 net new Ross locations, 26 dd's DISCOUNTS(R) stores, distribution network projects and other various information technology and infrastructure investments," said Mr. Balmuth.

"We also repurchased a total of 6.9 million shares of common stock in 2007, for an aggregate purchase price of $200 million, completing our two-year program. In January 2008, our Board of Directors approved a new two-year $600 million stock repurchase program for 2008 and 2009. This represents a 50% increase over the prior authorization, reflecting our ongoing confidence in the future growth prospects of the business. The Board also approved a 27% increase in our quarterly cash dividend to $.095 per share, our fourteenth consecutive annual dividend increase," Mr. Balmuth concluded.

The Company will host a conference call on Wednesday, March 19, 2008 at 11:00 a.m. Eastern time to communicate additional details concerning the fourth quarter and fiscal year 2007 results and management's outlook and plans for 2008. A real time audio webcast of the conference call will be available at An audio playback will be available at 706-645-9291, ID # 34935291 through March 26, 2008.

Forward-Looking Statements: This press release and the recorded comments and transcript on our website contain forward-looking statements regarding expected sales and earnings levels 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," "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 industry; changes in the level of consumer spending on or preferences for apparel or home-related merchandise, including the potential impact from uncertainty in mortgage credit markets and higher gas prices; 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; potential pressure on freight costs from higher-than-expected fuel surcharges; and obtaining acceptable new store locations. Other risk factors are detailed in our SEC filings including, without limitation, the Form 10-K for fiscal 2006, Form 10-Q's for fiscal 2007 and Form 8-K's for fiscal 2007 and 2008. 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., a Fortune 500 company headquartered in Pleasanton, California, is the nation's second largest off-price retailer with fiscal 2007 revenues of $6.0 billion. As of March 1, 2008, the Company operated 838 Ross Dress for Less(R) ("Ross") stores and 54 dd's DISCOUNTS(R) locations, compared to 771 Ross and 26 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

                              Ross Stores, Inc.
                Condensed Consolidated Statements of Earnings

                                 Three Months Ended     Twelve Months Ended
                               February 2, February 3, February 2, February 3,
    ($000, except stores and       2008        2007        2008        2007
     per share data, unaudited)

    Sales                      $1,651,702  $1,608,437  $5,975,212  $5,570,210

    Costs and expenses
        Cost of goods sold      1,264,902   1,230,741   4,618,220   4,317,527
        Selling, general
         and administrative       237,525     227,645     935,901     863,033
        Interest income, net       (2,691)     (3,414)     (4,029)     (8,627)
            Total costs and
             expenses           1,499,736   1,454,972   5,550,092   5,171,933

    Earnings before taxes         151,966     153,465     425,120     398,277

    Provision for taxes on
     earnings                      57,504      60,358     164,069     156,643
    Net earnings                  $94,462     $93,107    $261,051    $241,634

    Earnings per share
        Basic                       $0.71       $0.68       $1.93       $1.73
        Diluted                     $0.70       $0.66       $1.90       $1.70

    Weighted average shares
     outstanding (000)
        Basic                     132,805     137,550     135,093     139,488
        Diluted                   134,447     140,174     137,142     141,883

    Dividends per share
        Cash dividends
         declared per share         $0.17       $0.14       $0.32       $0.26

    Stores open at end of period      890         797         890         797

                              Ross Stores, Inc.
                    Condensed Consolidated Balance Sheets

                                                 February 2,       February 3,
    ($000, unaudited)                               2008              2007


      Current Assets
          Cash and cash equivalents               $257,580          $367,388
          Short-term investments                     6,098             5,247
          Accounts receivable                       37,468            30,105
          Merchandise inventory                  1,025,295         1,051,729
          Prepaid expenses and other                51,921            44,245
          Deferred income taxes                     19,639            16,242
              Total current assets               1,398,001         1,514,956

    Property and equipment, net                    868,315           748,233
    Other long-term assets                          64,240            64,266
    Long-term investments                           40,766            31,136
    Total assets                                $2,371,322        $2,358,591

    Liabilities and Stockholders' Equity

    Current Liabilities
        Accounts payable, accrued
         expenses and other                       $988,787        $1,049,680
        Income taxes payable                        21,818            33,577
            Total current liabilities            1,010,605         1,083,257

    Long-term debt                                 150,000           150,000
    Other long-term liabilities                    161,169           129,303
    Deferred income taxes                           78,899            86,201

    Commitments and contingencies

    Stockholders' Equity                           970,649           909,830
        Total liabilities and
         stockholders' equity                   $2,371,322        $2,358,591

                              Ross Stores, Inc.
               Condensed Consolidated Statements of Cash Flows

                                                      Twelve Months Ended
                                                 February 2,       February 3,
     ($000, unaudited)                              2008              2007

    Cash Flows From Operating Activities
    Net earnings                                  $261,051          $241,634
    Adjustments to reconcile net earnings to
     net cash provided by operating activities:
        Depreciation and amortization              120,699           108,135
        Stock-based compensation                    25,165            26,680
        Deferred income taxes                      (10,699)          (10,684)
        Tax benefit from equity issuance             6,535            12,090
        Excess tax benefits from
         stock-based compensation                   (5,140)           (9,599)
    Change in assets and liabilities:
        Merchandise inventory                       26,434          (113,638)
        Other current assets, net                  (15,039)           (8,138)
        Accounts payable                           (63,199)          221,644
        Other current liabilities                  (18,716)           34,417
        Other long-term, net                        26,468             4,326
        Net cash provided by operating activities  353,559           506,867

    Cash Flows Used in Investing Activities
     Purchase of assets under lease                      -           (87,329)
     Additions to property and equipment          (236,121)         (136,626)
     Proceeds from sales of property and
      equipment                                        356               615
     Purchases of investments                     (146,082)          (71,938)
     Proceeds from investments                     137,104            59,337
        Net cash used in investing activities     (244,743)         (235,941)

     Cash Flows Used in Financing Activities
     Payment of term debt                                -           (50,000)
     Proceeds from issuance of long-term debt            -           150,000
     Excess tax benefits from
      stock-based compensation                       5,140             9,599
     Issuance of common stock related to
      stock plans                                   20,753            32,517
     Treasury stock purchased                       (3,879)           (3,787)
     Repurchase of common stock                   (200,000)         (200,000)
     Dividends paid                                (40,638)          (33,634)
        Net cash used in financing activities     (218,624)          (95,305)
     Net decrease in cash and cash equivalents    (109,808)          175,621
     Cash and cash equivalents:
        Beginning of period                        367,388           191,767
        End of period                             $257,580          $367,388

     Supplemental Cash Flow Disclosures
     Interest paid                                  $9,668              $759
     Income taxes paid                            $164,223          $147,122

     Non-Cash Investing Activities
     Change in fair value of investment securities  $1,503             $(183)

SOURCE Ross Stores, Inc.

John G. Call,
Senior Vice President,
Chief Financial Officer,
Katie Loughnot,
Vice President,
Investor Relations,
both of Ross Stores, Inc.

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