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Ross Stores Reports Record Fourth Quarter and Fiscal Year 2009 Earnings
PLEASANTON, Calif., March 18, 2010 /PRNewswire via COMTEX/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for the 13 weeks ended January 30, 2010 of $1.16, up 53% from $.76 for the 13 weeks ended January 31, 2009. Net earnings for the 13 weeks ended January 30, 2010 grew to a record $142.9 million, up 47% from $97.4 million for the 13 weeks ended January 31, 2009. Sales for the fourth quarter ended January 30, 2010 grew 14% to $1.980 billion, with comparable store sales up 10% over the prior year.
For the 52 weeks ended January 30, 2010, earnings per share grew 52% to $3.54, up from $2.33 for the 52 weeks ended January 31, 2009. Net earnings for the 2009 fiscal year ended January 30, 2010 grew 45% to a record $442.8 million, from $305.4 million for the 2008 fiscal year ended January 31, 2009. Sales for the 2009 fiscal year increased 11% to $7.184 billion, with comparable store sales up 6% on top of a 2% gain in the prior year.
Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, "We are exceptionally pleased with our outstanding sales and earnings results for the fourth quarter and full year. During one of the most challenging economic and retail environments, we not only generated stronger-than-planned revenues, but did so with record merchandise gross margins that drove double digit operating profits as a percent of sales. The best performing merchandise categories for both the quarter and the year were Shoes, Dresses and Home, while geographic trends were broadbased, with all regions posting healthy comparable store sales gains for both periods."
Mr. Balmuth continued, "Earnings before interest and taxes for the 2009 fourth quarter grew about 260 basis points to 11.7% of sales, up from 9.1% in the prior year period. This higher profit margin was mainly due to a 230 basis point improvement in cost of goods sold along with a 30 basis point decline in selling, general and administrative costs. For the 2009 fiscal year, operating margin increased about 250 basis points over the prior year to 10.1% of sales, driven by a 230 basis point decline in cost of goods sold combined with a 20 basis point reduction in selling, general and administrative expenses. Key drivers of our improved profitability for both the fourth quarter and the year were much higher merchandise gross margin, lower shortage costs and leverage on operating expenses from the strong gains in same store sales."
"Healthy operating cash flows during the year 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 2009, we repurchased a total of 7.4 million shares of common stock for an aggregate purchase price of $300 million, completing the two-year $600 million stock repurchase program announced in early 2008. In January 2010, our Board of Directors approved a new two-year $750 million stock repurchase program along with a 45% increase in our quarterly cash dividend to $.16 per common share. These actions reflect our confidence in the Company's ongoing ability to generate healthy amounts of excess cash and our commitment to enhancing stockholder returns," Mr. Balmuth said.
Looking ahead to 2010, Mr. Balmuth commented, "Our past results demonstrate that we can deliver consistent growth in both healthy and challenging economic climates if we execute our strategies well. This long-term record gives us the confidence to project strong cash flows from additional increases in both comparable store sales and earnings per share during 2010 and beyond."
The Company will host a conference call on Thursday, March 18, 2010 at 11:00 a.m. Eastern time to provide additional details concerning the fourth quarter and fiscal year 2009 results and management's outlook and plans for 2010. A real time audio webcast of the conference call will be available in the Investors section of the Company's website, located at http://www.rossstores.com/. An audio playback will be available at 706-645-9291, ID #55962140 until 8:00 p.m. Eastern time on March 25, 2010, as well as at the Company's website address.
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 the macro-economic environment, uncertainty in financial and credit markets, and changes in geopoliticalconditions; 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 recent 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, Form 10-Qs for fiscal 2009 and Form 8-Ks for fiscal 2009 and 2010. 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., an S&P 500, Fortune 500 and Nasdaq 100 (ROST) company headquartered in Pleasanton, California, is the nation's second largest off-price retailer with fiscal 2009 revenues of $7.2 billion. As of February 27, 2010 the Company operated 953 Ross Dress for Less(R) ("Ross") stores and 54 dd's DISCOUNTS(R) locations, compared to 904 Ross and 53 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 http://www.rossstores.com/.
Ross Stores, Inc.
Condensed Consolidated Statements of Earnings
Three Months Ended
------------------
January January
30, 31,
($000, except stores and per
share data, unaudited) 2010 2009
---------------------------- ---- ----
Sales $1,979,839 $1,734,112
Costs and Expenses
Costs of goods sold 1,462,581 1,321,346
Selling, general and
administrative 286,114 255,312
Interest expense (income), net 2,604 2,531
----- -----
Total costs and expenses 1,751,299 1,579,189
Earnings before taxes 228,540 154,923
Provision for taxes on earnings 85,657 57,536
Net earnings $142,883 $97,387
======== =======
Earnings per share
Basic $1.18 $0.77
Diluted $1.16 $0.76
Weighted average shares
outstanding (000)
Basic 121,013 126,580
Diluted 123,355 128,175
Dividends
Cash dividends declared per
share $0.270 $0.205
Stores open at end of period 1,005 956
Twelve Months Ended
-------------------
January January
30, 31,
($000, except stores and per
share data, unaudited) 2010 2009
---------------------------- ---- ----
Sales $7,184,213 $6,486,139
Costs and Expenses
Costs of goods sold 5,327,278 4,956,576
Selling, general and
administrative 1,130,813 1,034,357
Interest expense (income), net 7,593 (157)
----- ----
Total costs and expenses 6,465,684 5,990,776
Earnings before taxes 718,529 495,363
Provision for taxes on earnings 275,772 189,922
Net earnings $442,757 $305,441
======== ========
Earnings per share
Basic $3.60 $2.36
Diluted $3.54 $2.33
Weighted average shares
outstanding (000)
Basic 122,887 129,235
Diluted 125,014 131,315
Dividends
Cash dividends declared per
share $0.490 $0.395
Stores open at end of period 1,005 956
Ross Stores, Inc.
Condensed Consolidated Balance Sheets
January January
30, 31,
($000, unaudited) 2010 2009
----------------- ---- ----
Assets
Current Assets
Cash and cash equivalents $768,343 $321,355
Short-term investments 1,754 798
Accounts receivable 44,234 41,170
Merchandise inventory 872,498 881,058
Prepaid expenses and other 58,618 55,241
Deferred income taxes - 14,093
--- ------
Total current assets 1,745,447 1,313,715
Property and equipment, net 942,999 951,656
Long-term investments 16,848 38,014
Other long-term assets 63,339 52,126
Total assets $2,768,633 $2,355,511
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $658,299 $536,745
Accrued expenses and other 259,582 238,516
Accrued payroll and benefits 218,234 170,878
Income taxes payable 51,505 9,120
Deferred income taxes 2,894 -
----- ---
Total current liabilities 1,190,514 955,259
Long-term debt 150,000 150,000
Other long-term liabilities 174,543 156,726
Deferred income taxes 96,283 97,157
Commitments and contingencies
Stockholders' Equity 1,157,293 996,369
Total liabilities and stockholders'
equity $2,768,633 $2,355,511
========== ==========
Ross Stores, Inc.
Condensed Consolidated Statements of Cash Flows
Twelve Months Ended
-------------------
January January
30, 31,
($000, unaudited) 2010 2009
----------------- ---- ----
Cash Flows From Operating Activities
Net earnings $442,757 $305,441
Adjustments to reconcile net
earnings to net cash
provided by operating activities:
Depreciation and amortization 159,043 141,802
Stock-based compensation 25,746 22,575
Deferred income taxes 16,113 23,804
Tax benefit from equity issuance 8,582 8,532
Excess tax benefit from stock-based
compensation (7,291) (5,973)
Change in assets and liabilities:
Merchandise inventory 8,560 144,237
Other current assets (6,441) (6,089)
Accounts payable 115,893 (101,682)
Other current liabilities 118,980 43,249
Other long-term, net 6,442 7,543
----- -----
Net cash provided by operating
activities 888,384 583,439
------- -------
Cash Flows From Investing Activities
Additions to property and equipment (158,487) (224,418)
Proceeds from sales of property and
equipment 10 117
Purchases of investments (2,904) (36,984)
Proceeds from investments 24,548 42,522
------ ------
Net cash used in investing
activities (136,833) (218,763)
-------- --------
Cash Flows From Financing Activities
Excess tax benefit from stock-based
compensation 7,291 5,973
Issuance of common stock related to
stock plans 49,393 47,873
Treasury stock purchased (6,045) (4,909)
Repurchase of common stock (300,000) (300,000)
Dividends paid (55,202) (49,838)
------- -------
Net cash used in financing
activities (304,563) (300,901)
-------- --------
Net increase in cash and cash
equivalents 446,988 63,775
Cash and cash equivalents:
Beginning of year 321,355 257,580
------- -------
End of year $768,343 $321,355
======== ========
Supplemental Cash Flow Disclosures
Interest paid $9,668 $9,676
Income taxes paid $201,232 $167,478
Non-Cash Investing Activities
Increase (decrease) in fair value of
investment securities $1,435 $(2,514)
SOURCE Ross Stores, Inc.
CONTACT:John Call
Senior Vice President, Chief Financial Officer
+1-925-965-4315
or
Bobbi Chaville
Senior Director, Investor Relations
+1-925-965-4289
bobbi.chaville@ros.com
both of Ross Stores, Inc.