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Ross Stores Reports Record Results for Fourth Quarter and Fiscal 2002Fiscal 2002 and 2001 Quarterly Income Statement

NEWARK, Calif., Mar 19, 2003 /PRNewswire-FirstCall via COMTEX/ -- Ross Stores, Inc. (ROST) today reported that earnings per share for the 13 weeks ended February 1, 2003 rose 19% to $.74, from $.62 for the 13 weeks ended February 2, 2002. Net earnings for the 13 weeks ended February 1, 2003 totaled $58.7 million, up 18% over net earnings of $50.0 million for the 13 weeks ended February 2, 2002. Sales for the fourth quarter of 2002 increased 14% to $965 million with comparable store sales up 3% over the prior year.

For the 52 weeks ended February 1, 2003, earnings per share grew 32% to $2.52, from $1.91 for the 52 weeks ended February 2, 2002. Net earnings for the 52 weeks ended February 1, 2003 increased 30% to a record $201.2 million, compared to $155.0 million for the 52 weeks ended February 2, 2002. Sales for the 2002 fiscal year rose 18% to $3.531 billion, with comparable store sales up 7% over the prior year.

Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, "We are very pleased with the solid sales and earnings gains we posted during the fourth quarter and fiscal 2002, especially considering today's challenging retail climate. Geographically, sales trends in the fourth quarter were relatively broadbased with positive comparable store sales gains in all major markets including California, where same store sales rose 3%. The strongest merchandise departments were Home and Shoes, with same store sales gains in the high single to low double digit range for the quarter."

Mr. Balmuth continued, "Fourth quarter results benefited from a 31 basis point expansion in operating margin. A slight decline in gross margin due to the combination of a sharper pricing strategy and higher freight costs was partially offset by improved shortage results and lower markdowns and distribution costs as a percent of sales. Lower general, selling and administrative costs as a percentage of sales more than offset the slight decrease in gross margin, due to a relative reduction in benefit and incentive plan costs compared to the prior year fourth quarter."

Mr. Balmuth continued, "I am pleased to report that the Company's financial position and cash flows remain strong. During fiscal 2002, we repurchased 3.8 million shares of common stock for an aggregate purchase price of $150 million, ending the year with 77.5 million shares of common stock outstanding. This buyback was affected under a two-year, $300 million stock repurchase program announced in early 2002, which we expect to complete in 2003."

"Our accelerated expansion program also remains on track. We added 55 net new stores during 2002, or unit growth of 12%. Expansion into new geographic markets continued, with 21 of these additions in our new Southeast markets of Georgia, North Carolina, South Carolina and Alabama. During 2003, we expect to continue to add new stores at the rate of 12% annually, with about 62 net new locations planned to open in both new and existing markets," said Mr. Balmuth.

The Company's operating statements for the fourth quarter and fiscal 2002 reflect a reclassification of buying and distribution costs into cost of goods sold. The reclassification only relates to the allocation of these costs on the Company's operating statement and has no impact on reported sales, net earnings or earnings per share. "Cost of goods sold including related buying, distribution and occupancy costs" now includes: cost of goods sold, store occupancy and depreciation costs, and all distribution and buying costs, including related depreciation and occupancy expense. "General, selling and administrative" now includes store operating costs and general and administrative costs, including related depreciation and occupancy. Buying costs were previously included in general, selling and administrative expenses, while elements of distribution costs were reported in several line items: (i) depreciation and amortization; (ii) cost of goods sold and occupancy; and (iii) general, selling and administrative costs. Adjustments to reflect these new line item classifications have been made to the 2001 fourth quarter and fiscal year operating statements, as well as the previously-reported operating statements for the first, second and third quarters of 2002 and 2001, which are available on the press release page of the Company's web site located at

Mr. Balmuth stated: "This reclassification should result in improved trend data by collecting all distribution costs in the same line item for each reporting period. We also expect this change to afford more meaningful comparisons of gross margin and expense ratios versus our industry peers."

The Company will host a conference call on Wednesday, March 19, 2003 at 11:00 a.m. eastern time to communicate additional details concerning the quarter's and year's results and management's outlook and plans for 2003. A real time audio webcast of the conference call will be available at An audio playback will be available at 402-220-5900, pin#2342 through March 26, 2003.

Forward-Looking Statements: This press release contains certain forward-looking statements relating to future stock repurchases and future plans to open new stores which are subject to risks and uncertainties that could cause the Company's actual results to differ materially from management's current expectations. Risk factors include obtaining acceptable new store locations, competitive pressures in the apparel industry, changes in economic or geo-political conditions, changes in the level of consumer spending on or preferences in apparel or home-related merchandise, unseasonable weather trends, and greater than planned operating costs. Other risk factors are detailed in the Company's Form 10-K for fiscal 2001. 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 the Company's outlook at any other point in time. The Company does not undertake to update or revise these forward-looking statements.

Ross Stores, Inc. operates a chain of off-price retail stores offering first quality, in-season, branded apparel and apparel-related merchandise for the entire family at prices that average 20% to 60% less than department and specialty stores, as well as merchandise for the home at similar savings. The Company had 507 stores in operation February 1, 2003, compared to 452 stores at the end of the same period last year.

                                ROSS STORES, INC.

                                   Three Months Ended   Twelve Months Ended
                                     Feb. 1     Feb. 2    Feb. 1      Feb. 2
    ($000, except per share data,
     unaudited)                       2003      2002       2003       2002

    Sales                          $964,610  $848,374  $3,531,349  $2,986,596

    Costs and Expenses
           Cost of goods sold,
            including related
               distribution and
                occupancy costs     720,284   633,104   2,628,412   2,243,384
           General, selling and
            administrative          148,081   133,218     572,316     485,455
           Interest (income)
            expense                    (214)      --          279       3,168
                                    868,151   766,322   3,201,007   2,732,007

    Earnings before taxes            96,459    82,052     330,342     254,589

    Provision for taxes on
     earnings                        37,716    32,082     129,164      99,544
    Net earnings                    $58,743   $49,970    $201,178    $155,045

    Earnings per share
           Basic                      $0.76     $0.63       $2.58       $1.94
           Diluted                    $0.74     $0.62       $2.52       $1.91

    Weighted average shares
     outstanding (000)
           Basic                     77,472    79,367      78,123      79,886
           Diluted                   79,043    80,923      79,746      81,210

    Stores open end of period           507       452         507         452

                                ROSS STORES, INC.

                                                 February 1,       February 2,
    ($000, unaudited)                               2003              2002


    Current Assets
           Cash and cash equivalents              $150,649           $40,351
           Accounts receivable                      18,349            20,540
           Merchandise inventory                   716,518           623,390
           Other current assets                     36,904            30,710
                Total Current Assets              $922,420          $714,991

           Property and equipment, net             402,683           331,550
           Other long-term assets                   36,242            36,184
                                                $1,361,345        $1,082,725


    Current Liabilities
           Accounts payable, accrued
            expenses and other                    $610,894          $477,703
           Income taxes payable                     15,790            11,885
                Total Current Liabilities         $626,684          $489,588

            Long-term debt                          25,000                --
            Other liabilities                       41,452            41,036
            Deferred Income Taxes                   25,021             7,646

    Stockholders' Equity                           643,188           544,455
                                                $1,361,345        $1,082,725

                                ROSS STORES, INC.

                                                 Year Ended        Year Ended
                                                February 1,       February 2,
     ($000, unaudited)                                2003              2002

     Net earnings                                 $201,178          $155,045
     Adjustments to reconcile net
      earnings to net
          cash provided by operating
          Depreciation and amortization
           of property and equipment                53,329            49,896
          Other amortization                        12,847            12,725
          Deferred income taxes                     17,375            12,633
     Change in assets and liabilities:
          Merchandise inventory                    (93,128)          (63,824)
          Other current assets _ net                (4,003)          (16,901)
          Accounts payable                          81,958            54,064
          Other current liabilities                 54,541            34,384
          Other                                      8,348             4,867
          Net cash provided by operating
           activities                              332,445           242,889

     Additions to property and equipment          (133,166)          (86,002)
          Net cash used in investing
           activities                             (133,166)          (86,002)

     Repayments under lines of credit                   --           (64,000)
     Proceeds from long-term debt                   25,000                --
     Issuance of common stock related to
      stock plans                                   50,863            54,581
     Repurchase of common stock                   (149,997)         (130,676)
     Dividends paid                                (14,847)          (13,595)
          Net cash used in financing
           activities                              (88,981)         (153,690)
     Net increase in cash and cash
      equivalents                                  110,298             3,197
     Cash and cash equivalents:
          Beginning of year                         40,351            37,154
          End of year                             $150,649           $40,351

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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