Ross Stores Reports Record Third Quarter Results
Ross Stores Reports Record Third Quarter Results
NEWARK, Calif., Nov. 17 /PRNewswire/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported that net earnings for the 13 weeks ended October 30, 1999 grew to a record $34.6 million, from $28.0 million for the 13 weeks ended October 31, 1998. Earnings per share increased 27% to $.38 for the quarter, from $.30 for the same period in 1998. Current year third quarter sales totaled $609 million, up 15% from $531 million for the quarter ended October 31, 1998. Comparable store sales for the 13 weeks ended October 30, 1999 rose 7% over the prior year. For the nine months ended October 30, 1999, net earnings grew to a record $107.4 million, from $88.3 million for the nine months ended October 31, 1998. Earnings per share for the first nine months increased 26% to $1.16, from $.92 for the comparable 1998 period. Sales for the nine months ended October 30, 1999 increased 14% to $1.774 billion, from $1.552 billion in the prior year. Same store sales for the first nine months of 1999 increased 7% over the same period in 1998. On September 22, 1999, the company effected a two-for-one stock split in the form of a 100 percent stock dividend paid to stockholders of record as of September 7, 1999. All share price and earnings per share data reflect the effect of that action. Commenting on these results, Michael Balmuth, Vice Chairman and Chief Executive Officer, stated, "We are pleased with the record sales and earnings achieved in the third quarter and first nine months of 1999. This performance indicates that our value-driven strategies remain on track. Our ongoing focus on more opportunistic buying, along with strict controls of both inventories and expenses, contributed to a 65 basis point increase in operating margin, which grew to a record 9.4% of sales in the third quarter compared to 8.7% in the prior year period. As a percent of sales, gross margin increased by 43 basis points while general, selling and administrative expenses declined by 15 basis points. " "We also remained on track with our expansion plans, opening 18 new stores during the quarter, all in existing markets. Another store has opened in November, for a total of 34 new locations in 1999. We expect to end the year with 378 stores in 17 states," said Mr. Balmuth. Mr. Balmuth continued, "Delivering value to stockholders remains a top priority at Ross as evidenced by our share repurchase program. I am pleased to announce that we recently completed the $120 million repurchase authorization announced at the beginning of 1999." Mr. Balmuth also said, "Like other retailers in the apparel industry, our sales month to date in November are below plan, with same store sales currently flat to last year. However, it is very early in the quarter, and holiday shopping patterns are difficult to predict." 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 new 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 381 stores at October 30, 1999, compared to 350 stores at the end of the same period last year. ROSS STORES, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS Three Months Ended Nine Months Ended October 30, October 31, October 30, October 31, ($000, except per 1999 1998 1999 1998 data share, unaudited) Sales $608,720 $531,139 $1,774,121 $1,552,390 Costs and Expenses Cost of goods sold and occupancy 416,442 365,654 1,219,963 1,074,466 General, selling and administrative 125,833 110,593 349,702 308,005 Depreciation and amortization 9,459 8,653 27,911 24,765 Interest expense 147 329 167 459 551,881 485,229 1,597,743 1,407,695 Earnings before income taxes 56,839 45,910 176,378 144,695 Provision for taxes on earnings 22,224 17,905 68,964 56,431 Net earnings $34,615 $28,005 $107,414 $88,264 Earnings per share Basic $0.38 $0.30 $1.18 $0.93 Diluted $0.38 $0.30 $1.16 $0.92 Weighted average shares outstanding Basic 89,986 93,466 91,015 94,692 Diluted 91,138 94,872 92,444 96,398 Stores open end of period 381 350 381 350 ROSS STORES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS October 30, October 31, ($000, unaudited) 1999 1998 ASSETS Current Assets Cash and cash equivalents $31,645 $26,657 Accounts receivable 15,884 12,212 Merchandise inventory 570,965 511,484 Other current assets 16,591 16,371 Total Current Assets $635,085 $566,724 Property and equipment, net 266,672 239,837 Lease Rights, deferred income taxes and other assets 51,723 37,839 $953,480 $844,400 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable, accrued expenses and other $435,952 $402,686 Income taxes payable 20,579 3,080 Total Current Liabilities $456,531 $405,766 Long-term debt 24,000 30,000 Other liabilities 47,200 38,347 Stockholders' Equity 425,749 370,287 $953,480 $844,400 SOURCE Ross Stores, Inc.