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Ross Stores Reports Second Quarter Earnings

NEWARK, Calif., Aug. 16 /PRNewswire/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported net earnings for the 13 weeks ended July 29, 2000 of $35.9 million, compared to $38.6 million for the 13 weeks ended July 31, 1999. Earnings per share for the same period increased 2% to $.43, from $.42 in the prior year. Current year second quarter sales totaled $657 million, up 7% from the $615 million in sales for the quarter ended July 31, 1999. Comparable store sales for the period were even with the prior year.

For the six months ended July 29, 2000, net earnings totaled $76.8 million, compared to $72.8 million for the same period in 1999. Earnings per share for the first six months increased 15% to $.90, up from $.78 in the prior year. Sales for the first six months grew 11% to $1.290 billion, with same store sales up 3% for the period.

Michael Balmuth, Vice Chairman and Chief Executive Officer, said, "As anticipated, sales and earnings growth in the second quarter showed a marked slowdown from our first quarter performance due mainly, we believe, to a softening in consumer spending and a more promotional climate compared to last year, particularly in the department store sector. Looking ahead, our outlook for the back half of the year remains cautious, as the environment continues to be difficult. Same store sales for the first two weeks of August are down 4%. Although it is too early to accurately predict third quarter results, if this trend continues, we believe that earnings per share for the third quarter of 2000 would fall below last year's level of $.38. On a more positive note, we are seeing increased opportunities in the marketplace to purchase name brand merchandise at very compelling values, which should enhance our prospects for the longer term.

"I am pleased to report that Jim Peters joined Ross on August 14th as President and Chief Operating Officer and a Director of our company," continued Mr. Balmuth. "He replaces Mel Wilmore, who retired earlier this year. Prior to joining Ross, Jim was President of U.S. Stores for Staples, directing a network of approximately 900 locations. We believe that his in-depth operating experience and business acumen will be valuable resources in addressing the challenges we face in today's tough retail environment."

Mr. Balmuth continued, "The company's strong financial position and cash flows have enabled us to make significant progress with our stock repurchase program. During the first six months of 2000, we repurchased a total of 7.5 million shares for an aggregate purchase price of $128 million. We ended the quarter with 82.0 million shares of common stock outstanding. We believe that our repurchase program is an excellent use of cash and currently expect to buy back more than half of the two-year $300 million authorization we announced in February during this fiscal year.

"Our expansion program remains on schedule. During the first six months of the year, we opened 14 new stores, all in existing markets. We expect to add 20 new stores in the third quarter, our largest group of store openings this year. After closing four older locations, we plan to end fiscal 2000 with about 408 stores in 17 states," said Mr. Balmuth.

The company will provide additional details concerning its second quarter results and business outlook on a conference call to be held on Wednesday, August 16, 2000 at 11:00 a.m. EDT. Participants may listen to a real time audio webcast of the conference call by visiting the company's newly renovated web site located at A recorded version of the call will remain available at the same location through Wednesday, August 23, 2000.

Forward-Looking Statements: 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 obtaining acceptable new store locations, competitive pressures in the apparel industry, 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 1999. The company does not undertake to publicly update or revise these forward-looking statements even if experience or future changes indicate that any projected results expressed or implied therein will not be realized.

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 392 stores in operation July 29, 2000, compared to 363 stores at the end of the same period last year.

                              ROSS STORES, INC.

                            Three Months Ended           Six Months Ended

                          July 29,      July 31,      July 29,     July 31,
                            2000          1999          2000         1999
    ($000, except per
     share data, unaudited)
    Sales                 $657,035      $614,576   $1,290,463    $1,165,401

    Costs and Expenses
      Cost of goods sold
       and occupancy       455,797       424,143      890,222       803,521
      General, selling
       and administrative  130,646       117,677      252,092       223,869
      Depreciation and
       amortization         10,772         9,132       21,250        18,452
      Interest expense
       (income)                835           182          840            20
                           598,050       551,134    1,164,404     1,045,862

    Earnings before income
     taxes                  58,985        63,442      126,059       119,539

    Provision for taxes
     on earnings            23,063        24,806       49,289        46,740
    Net earnings           $35,922       $38,636      $76,770       $72,799

    Earnings per share
      Basic                  $0.43         $0.42        $0.91         $0.80
      Diluted                $0.43         $0.42        $0.90         $0.78

    Weighted average shares
      Basic                 82,753        91,132       84,020        91,530
      Diluted               83,530        92,734       84,853        93,102

    Stores open end
     of period                 392           363          392           363

                              ROSS STORES, INC.

                                                    July 29,       July 31,
    ($000, unaudited)                                 2000           1999
    Current Assets
      Cash and cash equivalents                      $41,948        $30,119
      Accounts receivable                             16,217         14,824
      Merchandise inventory                          577,569        522,904
      Other current assets                            19,061         16,177
        Total Current Assets                        $654,795       $584,024

      Property and equipment, net                    283,492        255,019
      Lease rights, deferred income taxes
       and other assets                               62,338         51,772
                                                  $1,000,625       $890,815

    Current Liabilities
      Accounts payable, accrued expenses
       and other                                    $419,403       $385,370
      Income taxes payable                            20,071         21,803
        Total Current Liabilities                   $439,474       $407,173

      Long-term debt                                  80,000              0
      Other liabilities                               53,704         47,703

    Stockholders' Equity                             427,447        435,939
                                                  $1,000,625       $890,815

SOURCE Ross Stores, Inc.

NOTE TO EDITORS: Ross Stores, Inc. press releases are available on the Internet via the company's home page at

CONTACT: John G. Call, Senior Vice President, Chief Financial Officer, 510-505-4315, or Katie Loughnot, Director, Investor Relations, 510-505-4509, or, both of Ross Stores, Inc.