Ross Stores Reports Record Second Quarter Results
Ross Stores Reports Record Second Quarter Results
NEWARK, Calif., Aug. 18 /PRNewswire/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported that net earnings for the 13 weeks ended July 31, 1999 grew to a record $38.6 million, compared to net earnings of $32.4 million for the 13 weeks ended August 1, 1998. Earnings per share increased 24% to $.83 for the quarter, compared to earnings per share of $.67 for the same period in 1998. Current year second quarter sales totaled $615 million, up 15% from the $537 million in sales for the quarter ended August 1, 1998. Comparable store sales for the 13 weeks ended July 31, 1999 rose 7% over the prior year. For the 26 weeks ended July 31, 1999, net earnings grew to a record $72.8 million, compared to net earnings of $60.3 million, for the 26 weeks ended August 1, 1998. Earnings per share for the first six months increased 26% to $1.56, compared to earnings per share of $1.24 for the first half of 1998. Sales for the 26 weeks ended July 31, 1999 increased 14% to $1.165 billion, from $1.021 billion in the prior year. Same store sales for the first six months of 1999 increased 7% over the same period in 1998. In commenting, Michael Balmuth, Vice Chairman and Chief Executive Officer, stated, "We are pleased with the record sales and earnings achieved in the second quarter and first six months of 1999. This performance indicates that our value-driven strategies remain on track. During the second quarter, our focus on more opportunistic buying, along with ongoing strict controls of both inventories and expenses, contributed to a 41 basis point increase over the prior year period in operating margin, which grew to 10.4% of sales. As a percent of sales, gross margin increased by 27 basis points while general, selling and administrative expenses declined by 10 basis points. "We also remained on track during the period with our expansion plans, opening nine new stores during the quarter, all in existing markets. Another 19 stores are expected to open in the second half, for a total of 34 new locations in 1999. We expect to end the year with 378 stores in 17 states," said Mr. Balmuth. In conclusion, Mr. Balmuth said, "Delivering value to stockholders remains a top priority at Ross as evidenced by our share repurchase program. During the first six months, we have repurchased common stock for an aggregate investment of $72 million, representing about 60% of the total $120 million repurchase program authorization announced early in the year." Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This press release contains certain forward-looking statements which are subject to risks and uncertainties that could cause the company's actual results to differ materially from management's current expectations. The words "expect," "anticipate," "estimate," "believe" and similar expressions identify forward-looking statements. Risk factors include competitive pressures in the apparel industry, changes in the level of consumer spending on or preferences in apparel or home-related merchandise, obtaining acceptable store locations, the company's ability to continue to purchase attractive name brand merchandise at desirable discounts, unseasonable weather trends, and larger than planned operating costs including those that could be related to necessary modifications to the company's computer hardware and software systems to enable them to process information with dates or date ranges spanning the year 2000 and beyond. The company presently believes that, with modifications to existing software and conversions to new software, the year 2000 issue will not pose significant operational problems for the company's computer systems as so modified and converted. However, if unforeseen difficulties arise or such modifications and conversions are not completed timely, or if the company's vendors' or suppliers' systems are not modified to become year 2000 compliant, then the year 2000 issue may have a material impact on the operations of the company. Other risk factors are detailed in the company's Form 10-K for fiscal 1998. Ross Stores, Inc. operates a national 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 363 stores at July 31, 1999, compared to 339 stores at the end of the same period last year. ROSS STORES, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS ($000, except per data share. unaudited) Three Months Ended Six Months Ended July 31, August 1, July 31, August 1, 1999 1998 1999 1998 Sales $614,576 $536,975 $1,165,401 $1,021,251 Costs and Expenses Cost of goods sold and occupancy 424,143 371,996 803,521 708,812 General, selling and administrative 117,677 103,355 223,869 197,412 Depreciation and amortization 9,132 8,230 18,452 16,112 Interest expense 182 265 20 130 551,134 483,846 1,045,862 922,466 Earnings before income taxes 63,442 53,129 119,539 98,785 Provision for taxes on earnings 24,806 20,720 46,740 38,526 Net earnings $38,636 $32,409 $72,799 $60,259 Earnings per share Basic $0.85 $0.68 $1.59 $1.26 Diluted $0.83 $0.67 $1.56 $1.24 Weighted average shares outstanding Basic 45,566 47,455 45,765 47,652 Diluted 46,367 48,358 46,551 48,582 Stores open end of period 363 339 363 339 ROSS STORES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ($000, unaudited) July 31, August 1, 1999 1998 ASSETS Current Assets Cash and cash equivalents $30,119 $31,972 Accounts receivable 14,824 11,722 Merchandise inventory 522,904 468,952 Other current assets 16,177 15,440 Total Current Assets $584,024 $528,086 Property and equipment, net 255,019 234,318 Lease rights, deferred income taxes and other assets 51,772 40,318 $890,815 $802,722 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable, accrued expenses and other $385,370 $352,896 Income taxes payable 21,803 12,620 Total Current Liabilities $407,173 $365,516 Long-term debt 0 10,000 Other liabilities 47,703 41,119 Stockholders' Equity 435,939 386,087 $890,815 $802,722 SOURCE Ross Stores, Inc.