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Ross Stores Reports Record Fourth Quarter and Fiscal Year 2008 Earnings
For the 52 weeks ended January 31, 2009, earnings per share grew 23% to $2.33, from $1.90 for the 52 weeks ended February 2, 2008. Net earnings for the 52 weeks ended January 31, 2009 grew to a record $305.4 million, from $261.1 million for the 52 weeks ended February 2, 2008. Sales for the 2008 fiscal year increased 9% to $6.486 billion, with comparable store sales up 2% over the prior year.
Michael Balmuth, Vice Chairman, President and Chief Executive Officer, commented, "We are very pleased with our solid earnings per share growth for both the fourth quarter and fiscal 2008. Our results are especially noteworthy considering the extremely challenging macro-economic and retail environment that became increasingly difficult as the year progressed. A key driver of this performance was the efficient execution of our resilient and flexible off-price strategies, which included taking advantage of the huge amount of close-out opportunities in the marketplace. This enabled us to deliver fresh and exciting assortments of sharply priced name brand bargains to our customers. More importantly, we accomplished this while also operating the business with leaner in-store inventories, which drove faster turns and reduced markdowns, resulting in higher merchandise gross margin."
Mr. Balmuth continued, "Operating margin for the 2008 fourth quarter was 9.1%, up about five basis points over the prior year, as stronger merchandise gross margin was partially offset by some deleveraging of occupancy and store operating costs as well as higher distribution expenses as a percent of sales. For the 2008 fiscal year, operating margin increased about 60 basis points over the prior year to 7.6%. As a percent of sales, key drivers of our improved profitability for the year were higher merchandise gross margin and lower distribution and shortage costs, partially offset by an increase in occupancy, store operating and incentive plan expenses."
"Solid operating cash flows during fiscal 2008 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 fiscal 2008, we repurchased a total of 9.3 million shares of common stock for an aggregate purchase price of $300 million and we plan to complete the remaining $300 million repurchase authorization in 2009. In January 2009, our Board of Directors also approved a 16% increase in our quarterly cash dividend to $.11 per common share. On an annual basis, this represents our 15th consecutive dividend increase," Mr. Balmuth concluded.
The Company will host a conference call on Thursday, March 19, 2009 at 11:00 a.m. Eastern time to communicate additional details concerning the fourth quarter and fiscal year 2008 results and management's outlook and plans for 2009. A real time audio webcast of the conference call will be available at www.rossstores.com. An audio playback will be available at 706-645-9291, ID #86369590 through March 26, 2009.
Forward-Looking Statements: This press release and the recorded conference call on our 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 2007, Form 10-Q's for fiscal 2008 and Form 8-K's for fiscal 2008 and 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.
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 February 28, 2009 the Company operated 904 Ross Dress for Less(R) ("Ross") stores and 53 dd's DISCOUNTS(R) locations, compared to 838 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 www.rossstores.com.
Ross Stores, Inc.
Condensed Consolidated Statements of Earnings
Three Months Ended Twelve Months Ended
($000, except stores ------------------ -------------------
and per share data, January 31, February 2, January 31, February 2,
unaudited) 2009 2008 2009 2008
-------------------- ---- ---- ---- ----
Sales $1,734,112 $1,651,702 $6,486,139 $5,975,212
Costs and expenses
Cost of goods sold 1,321,346 1,264,902 4,956,576 4,618,220
Selling, general and
administrative 255,312 237,525 1,034,357 935,901
Interest expense
(income), net 2,531 (2,691) (157) (4,029)
----- ------ ---- ------
Total costs and
expenses 1,579,189 1,499,736 5,990,776 5,550,092
Earnings before taxes 154,923 151,966 495,363 425,120
Provision for taxes
on earnings 57,536 57,504 189,922 164,069
------ ------ ------- -------
Net earnings $97,387 $94,462 $305,441 $261,051
======= ======= ======== ========
Earnings per share
Basic $0.77 $0.71 $2.36 $1.93
Diluted $0.76 $0.70 $2.33 $1.90
Weighted average shares
outstanding (000)
Basic 126,580 132,805 129,235 135,093
Diluted 128,175 134,447 131,315 137,142
Dividends per share
Cash dividends
declared per share $0.205 $0.170 $0.395 $0.320
Stores open at end of
period 956 890 956 890
Ross Stores, Inc.
Condensed Consolidated Balance Sheets
January 31, February 2,
($000, unaudited) 2009 2008
----------------- ---- ----
Assets
Current Assets
Cash and cash equivalents $321,355 $257,580
Short-term investments 798 6,098
Accounts receivable 41,170 37,468
Merchandise inventory 881,058 1,025,295
Prepaid expenses and other 55,241 51,921
Deferred income taxes 14,093 19,639
------ ------
Total current assets 1,313,715 1,398,001
Property and equipment, net 951,656 868,315
Long-term investments 38,014 40,766
Other long-term assets 52,126 64,240
------ ------
Total assets $2,355,511 $2,371,322
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $536,745 $637,158
Accrued expenses and other 238,516 217,923
Accrued payroll and benefits 170,878 133,706
Income taxes payable 9,120 21,818
----- ------
Total current liabilities 955,259 1,010,605
Long-term debt 150,000 150,000
Other long-term liabilities 156,726 161,169
Deferred income taxes 97,157 78,899
Commitments and contingencies
Stockholders' Equity 996,369 970,649
------- -------
Total liabilities and stockholders'
equity $2,355,511 $2,371,322
========== ==========
Ross Stores, Inc.
Condensed Consolidated Statements of Cash Flows
Year ended
----------
January 31, February 2,
($000, unaudited) 2009 2008
----------------- ---- ----
Cash Flows From Operating Activities
Net earnings $305,441 $261,051
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 141,802 122,801
Stock-based compensation 22,575 25,165
Deferred income taxes 23,804 (10,699)
Tax benefit from equity issuance 8,532 6,535
Excess tax benefit from stock-based
compensation (5,973) (5,140)
Change in assets and liabilities:
Merchandise inventory 144,237 26,434
Other current assets, net (6,089) (15,039)
Accounts payable (101,682) (63,199)
Other current liabilities 43,249 (18,716)
Other long-term, net 7,543 24,366
----- ------
Net cash provided by operating activities 583,439 353,559
------- -------
Cash Flows From Investing Activities
Additions to property and equipment (224,418) (236,121)
Proceeds from sale of property and equipment 117 356
Purchases of investments (36,984) (146,082)
Proceeds from investments 42,522 137,104
------ -------
Net cash used in investing activities (218,763) (244,743)
-------- --------
Cash Flows From Financing Activities
Excess tax benefit from stock-based compensation 5,973 5,140
Issuance of common stock related to stock plans 47,873 20,753
Treasury stock purchased (4,909) (3,879)
Repurchase of common stock (300,000) (200,000)
Dividends paid (49,838) (40,638)
------- -------
Net cash used in financing activities (300,901) (218,624)
-------- --------
Net increase (decrease) in cash and cash
equivalents 63,775 (109,808)
Cash and cash equivalents:
Beginning of year 257,580 367,388
------- -------
End of year $321,355 $257,580
======== ========
Supplemental Cash Flow Disclosures
Interest paid $9,676 $9,668
Income taxes paid 167,478 164,223
Non-Cash Investing Activities
Change in fair value of investment securities -
unrealized (loss) gain $(2,514) $1,503
SOURCE Ross Stores, Inc.
http://www.rossstores.com