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Ross Stores Reports Record Second Quarter 2009 Results, With Earnings Per Share Up 52%, Raises Third and Fourth Quarter 2009 Sales and EPS Targets
PLEASANTON, Calif.,
For the six months ended
Michael Balmuth, Vice Chairman, President and Chief Executive Officer, commented, "We are extremely pleased with our healthy sales and robust earnings gains in the second quarter and first six months, both of which were well ahead of plan. This outstanding performance is even more notable considering the ongoing difficult macro economic and retail climate. Our ability to deliver compelling bargains, while operating our business on much lower inventories, remains the primary driver of our strong results. The best performing merchandise categories during the second quarter and year to date periods were Dresses and Shoes, while the strongest regions were the Mid-Atlantic and Southeast."
Mr. Balmuth continued, "Second quarter operating margin grew about 260 basis points to 9.7%, driven by a 240 basis point improvement in gross margin and a 20 basis point decrease in selling, general and administrative costs versus the prior year. The gross margin improvement was mainly due to substantial gains in merchandise margin and much lower freight costs as a percent of sales."
Mr. Balmuth also noted, "As we ended the first half of the year, our
balance sheet and cash flows remained healthy. We continued to return capital
to stockholders through our stock repurchase and dividend programs. During
the first six months of fiscal 2009, we repurchased 4.2 million shares of
common stock for an aggregate purchase price of
Looking ahead, Mr. Balmuth said, "We are optimistic about the important back-to-school and holiday periods for a number of reasons. We delivered exceptional sales and earnings growth for the first six months on top of strong results the prior year and are up against much easier comparisons in the second half. More importantly, we are well positioned in the value retailing sector and excited about our merchandise offerings and the availability of great product as we enter the fall season. As a result, we are now forecasting same store sales gains of 5% to 6% for both the third and fourth quarters, up from our previous guidance for a 2% to 3% increase."
Based on these updated sales targets, the Company is projecting third and
fourth quarter earnings per share to be in the ranges of
The Company will provide additional details concerning its second quarter
results and management's outlook for the third and fourth quarters on a
conference call to be held
Forward-Looking Statements: This press release and the recorded comments
and transcript 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 Stores, Inc.
Condensed Consolidated Statements of Earnings
Three Months Ended Six Months Ended
--------------------- ------------------
($000, except stores and per August 1, August 2, August 1, August 2,
share data, unaudited) 2009 2008 2009 2008
---------------------------- ---- ---- ---- ----
Sales $1,768,636 $1,640,412 $3,460,235 $3,196,740
Costs and expenses
Costs of goods sold 1,311,136 1,255,222 2,579,845 2,436,779
Selling, general and
administrative 286,158 268,839 558,188 516,511
Interest expense (income),
net 1,390 (1,052) 3,046 (2,673)
----- ------ ----- ------
Total costs and expenses 1,598,684 1,523,009 3,141,079 2,950,617
Earnings before taxes 169,952 117,403 319,156 246,123
Provision for taxes on
earnings 66,545 46,104 124,362 95,339
------ ------ ------- ------
Net earnings $103,407 $71,299 $194,794 $150,784
======== ======= ======== ========
Earnings per share
Basic $0.84 $0.55 $1.57 $1.15
Diluted $0.82 $0.54 $1.55 $1.13
Weighted average shares
outstanding (000)
Basic 123,467 130,110 124,080 130,714
Diluted 125,658 132,433 126,063 132,914
Dividends per share
Cash dividends declared per
share $0.11 $0.10 $0.11 $0.10
Stores open at end of period 990 943 990 943
Ross Stores, Inc.
Condensed Consolidated Balance Sheets
August 1, August 2,
($000, unaudited) 2009 2008
----------------- ---- ----
Assets
Current Assets
Cash and cash equivalents $520,424 $309,554
Short-term investments 1,135 2,821
Accounts receivable 49,375 49,423
Merchandise inventory 926,244 1,018,726
Prepaid expenses and other 63,926 63,223
Deferred income taxes 13,669 20,883
------ ------
Total current assets 1,574,773 1,464,630
Property and equipment, net 942,745 906,533
Long-term investments 21,752 44,176
Other long-term assets 61,379 63,078
------ ------
Total assets $2,600,649 $2,478,417
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $702,977 $682,565
Accrued expenses and other 219,479 234,423
Accrued payroll and benefits 172,913 153,077
Income taxes payable 11,268 -
------ ---
Total current liabilities 1,106,637 1,070,065
Long-term debt 150,000 150,000
Other long-term liabilities 168,558 168,814
Deferred income taxes 106,032 83,418
Commitments and contingencies
Stockholders' Equity 1,069,422 1,006,120
--------- ---------
Total liabilities and
stockholders' equity $2,600,649 $2,478,417
========== ==========
Ross Stores, Inc.
Condensed Consolidated Statements of Cash Flows
Six Months Ended
----------------
August 1, August 2,
($000, unaudited) 2009 2008
----------------- ---- ----
Cash Flows From Operating Activities
Net earnings $194,794 $150,784
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 75,502 65,866
Stock-based compensation 13,017 11,330
Deferred income taxes 9,400 3,275
Tax benefit from equity issuance 5,256 6,608
Excess tax benefit from stock-based
compensation (4,008) (4,714)
Change in assets and liabilities:
Merchandise inventory (45,186) 6,569
Other current assets (16,890) (23,257)
Accounts payable 180,240 58,145
Other current liabilities (678) 23,200
Other long-term, net 2,521 8,750
----- -----
Net cash provided by operating activities 413,968 306,556
------- -------
Cash Flows From Investing Activities
Additions to property and equipment (80,731) (113,472)
Proceeds from sales of property and equipment 10 117
Net proceeds from (purchases of) investments 16,811 (1,950)
------ ------
Net cash used in investing activities (63,910) (115,305)
------- --------
Cash Flows From Financing Activities
Excess tax benefit from stock-based
compensation 4,008 4,714
Issuance of common stock related to stock
plans 31,745 36,470
Treasury stock purchased (4,546) (2,907)
Repurchase of common stock (154,371) (152,631)
Dividends paid (27,825) (24,923)
------- -------
Net cash used in financing activities (150,989) (139,277)
-------- --------
Net increase in cash and cash equivalents 199,069 51,974
Cash and cash equivalents:
Beginning of period 321,355 257,580
------- -------
End of period $520,424 $309,554
======== ========
Supplemental Cash Flow Disclosures
Interest paid $4,834 $4,834
Income taxes paid $105,012 $109,099
Non-Cash Investing Activities
Increase (decrease) in fair value of
investment securities $886 $(1,817)
SOURCE
CONTACT:
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
Web Site: http://www.rossstores.com