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Ross Stores Reports Third Quarter Earnings And Reiterates Fourth Quarter Guidance

PLEASANTON, Calif., Nov. 20 /PRNewswire-FirstCall/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported that earnings per share for the 13 weeks ended November 3, 2007 grew 16% to $.36, compared to $.31 for the 13 weeks ended October 28, 2006. Net earnings for the fiscal 2007 third quarter totaled $48.7 million, compared to $43.9 million in the comparable prior year period. Fiscal 2007 third quarter sales increased 8% to $1.468 billion, with same store sales for the period up 1% on top of a 4% gain in the prior year.

For the nine months ended November 3, 2007, earnings per share increased 16% to $1.21, compared to $1.04 for the nine months ended October 28, 2006. Net earnings for the first nine months of fiscal 2007 totaled $166.6 million, compared to $148.5 million for the same period in the prior year. Sales for the first nine months of 2007 increased 9% to $4.324 billion, with comparable store sales up 1% on top of a 5% gain in the prior year.

Michael Balmuth, Vice Chairman, President and Chief Executive Officer, commented, "Comparable store sales for the third quarter were within our forecasted range, despite the challenging macroeconomic climate and unseasonably warm weather across the country in September and October. The strongest regions during the period were the Northwest and Texas, while Dresses, Home and Shoes were the best-performing merchandise categories."

Mr. Balmuth continued, "Operating margin for the quarter grew about 15 basis points, as a 45 basis point gain in gross margin was partially offset by a 30 basis point increase in selling, general and administrative costs as a percent of sales. These results were driven mainly by improvements in corporate, distribution and freight expenses as a percent of sales that more than offset increases in store and occupancy costs."

Mr. Balmuth also noted, "Our balance sheet and cash flows remained healthy as we ended the third quarter. We continued to return capital to stockholders through our stock repurchase and dividend programs. During the first nine months of 2007, we repurchased 5.0 million shares of common stock for an aggregate of $153 million. We are on track to complete by year end the remaining $47 million of our two-year $400 million stock repurchase program authorized by our Board of Directors."

Mr. Balmuth continued, "Looking ahead, for the 13 weeks ending February 2, 2008, we continue to project same store sales growth of 1% to 3% and earnings per share in the range of $.62 to $.68. Based on these projections, earnings per share for the fiscal year ending February 2, 2008 are forecast to be in the range of $1.83 to $1.89. This compares to $.66 and $1.70 of earnings per share for the 2006 fourth quarter and fiscal year, respectively. Last year's fourth quarter and fiscal year results included income equivalent to about $.07 per share related to the 53rd week in fiscal 2006. On a comparable 52-week basis, our annual forecast represents 12% to 16% earnings per share growth over the prior year."

The Company will provide additional details concerning its third quarter results and projected fourth quarter and full year outlook on a conference call to be held on Tuesday, November 20, 2007 at 11:00 a.m. Eastern Time. Participants may listen to a real time audio webcast of the conference call by visiting the Company's website located at A recorded version of the call will also be available through February 2, 2008 at the website address and through November 30, 2007 via a telephone recording at 402-220-5900, PIN #2342.

Forward-Looking Statements: This press release and the recorded conference call comments on our website contain forward-looking statements regarding expected sales and earnings levels 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," "anticipate," "estimate," "believe," "forecast," "projected," "guidance," "looking ahead" and similar expressions identify forward-looking statements. Risk factors for Ross Dress for Less(R) ("Ross") and dd's DISCOUNTS(R) include, without limitation, our ability to convert certain Albertsons LLC real estate sites to the Ross and dd's DISCOUNTS formats in a timely and cost effective manner and on acceptable terms, and the ability to achieve targeted levels of sales, profits and cash flows from these acquired store locations; our ability to effectively operate our various supply chain, core merchandising and other information systems; our ability to improve our merchandising capabilities through the implementation of new processes and systems enhancements; achieving and maintaining targeted levels of productivity and efficiency in our distribution centers; potential pressure on freight costs from higher-than-expected fuel surcharges; obtaining acceptable new store locations; competitive pressures in the apparel industry; changes in the level of consumer spending on or preferences for apparel or home-related merchandise, including the potential impact from uncertainty in mortgage credit markets and higher gas prices; changes in geopolitical and general economic conditions; unseasonable weather trends; disruptions in supply chain; lower than planned gross margin, including higher than planned markdowns and higher than expected inventory shortage; greater than planned operating costs; our ability to continue to purchase attractive brand-name merchandise at desirable discounts; our ability to identify and successfully enter new geographic markets; and our ability to attract and retain personnel with the retail talent necessary to execute our strategies. Other risk factors are detailed in our SEC filings including, without limitation, the Form 10-K for fiscal 2006 and Form 10-Q's and 8-K's for fiscal 2007. 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 our outlook at any other point in time. We do not undertake to update or revise these forward-looking statements.

Ross Stores, Inc., a Fortune 500 and Nasdaq 100 (ROST) company headquartered in Pleasanton, California, is the nation's second largest off-price company with fiscal 2006 revenues of $5.6 billion. As of November 3, 2007, the Company operated 841 Ross Dress for Less(R) ("Ross") stores and 52 dd's DISCOUNTS(R) locations, compared to 772 Ross and 26 dd's DISCOUNTS locations at the end of the same period last year. Ross offers first-quality, in-season, name brand and designer apparel, accessories, footwear and home fashions for the entire family at everyday savings of 20 to 60 percent off department and specialty store regular prices. dd's DISCOUNTS features a more moderately-priced assortment of first-quality, in-season, name brand apparel, accessories, footwear and home fashions for the entire family at everyday savings of 20 to 70 percent off moderate department and discount store regular prices. Additional information is available at

                              Ross Stores, Inc.
                Condensed Consolidated Statements of Earnings

                                Three Months Ended      Nine Months Ended
                              November 3, October 28, November 3, October 28,
    ($000, except stores and
     per share data, unaudited)  2007        2006        2007        2006

    Sales                     $1,468,337  $1,362,045  $4,323,510  $3,961,773

    Costs and expenses
      Cost of goods sold       1,150,754   1,073,820   3,353,318   3,086,786
      Selling, general
       and administrative        238,847     217,586     698,376     635,388
      Interest income, net           (12)     (1,775)     (1,338)     (5,213)
        Total costs and
         expenses              1,389,589   1,289,631   4,050,356   3,716,961

    Earnings before taxes         78,748      72,414     273,154     244,812

    Provision for taxes on
     earnings                     30,066      28,481     106,565      96,285
    Net earnings                 $48,682     $43,933    $166,589    $148,527

    Earnings per share
      Basic                        $0.36       $0.32       $1.23       $1.06
      Diluted                      $0.36       $0.31       $1.21       $1.04

    Weighted average shares
     outstanding (000)
      Basic                      134,429     138,570     135,856     140,184
      Diluted                    136,215     140,887     138,172     142,672

    Dividends per share
      Cash dividends declared
       per share                   $0.08       $0.06       $0.15       $0.12

    Stores open at end of period     893         798         893         798

                              Ross Stores, Inc.
                    Condensed Consolidated Balance Sheets

                                                   November 3,    October 28,
    ($000, unaudited)                                 2007           2006


    Current Assets
      Cash and cash equivalents                      $151,548       $122,069
      Short-term investments                            6,177          4,857
      Accounts receivable                              47,515         36,823
      Merchandise inventory                         1,119,070      1,065,549
      Prepaid expenses and other                       57,392         51,326
      Deferred income taxes                            32,647         20,014
        Total current assets                        1,414,349      1,300,638

    Property and equipment, net                       828,487        740,385
    Other long-term assets                             67,979         60,267
    Long-term investments                              32,827         30,838
    Total assets                                   $2,343,642     $2,132,128

    Liabilities and Stockholders' Equity

    Current Liabilities
      Accounts payable, accrued expenses
       and other                                   $1,012,904     $1,047,526
        Total current liabilities                   1,012,904      1,047,526

    Long-term debt                                    150,000              -
    Other long-term liabilities                       170,214        128,503
    Deferred income taxes                              79,621         97,363

    Commitments and contingencies

    Stockholders' Equity                              930,903        858,736
      Total liabilities and stockholders'
       equity                                      $2,343,642     $2,132,128

                              Ross Stores, Inc.
                     Condensed Consolidated Statements of
                                  Cash Flows

                                                        Nine Months Ended
                                                      November 3, October 28,
     ($000, unaudited)                                   2007         2006

     Cash Flows From Operating Activities
     Net earnings                                     $166,589     $148,527
     Adjustments to reconcile net earnings to net
      cash provided by operating activities:
       Depreciation and amortization                    88,471       78,680
       Stock-based compensation                         19,535       20,121
       Deferred income taxes                           (22,987)        (496)
       Tax benefit from equity issuance                  5,601       11,943
       Excess tax benefits from stock-
        based compensation                              (4,697)      (4,509)
     Change in assets and liabilities:
       Merchandise inventory                           (67,341)    (127,458)
       Other current assets, net                       (30,557)     (21,937)
       Accounts payable                                (33,277)     204,604
       Other current liabilities                       (19,933)      15,145
       Other long-term, net                             31,001        5,629
       Net cash provided by operating activities       132,405      330,249

     Cash Flows Used in Investing Activities
     Purchase of assets under lease                          -      (87,329)
     Additions to property and equipment              (176,790)     (93,365)
     Purchases of investments                          (63,213)     (67,328)
     Proceeds from investments                          61,162       55,602
       Net cash used in investing activities          (178,841)    (192,420)

     Cash Flows Used in Financing Activities
     Payment of term debt                                    -      (50,000)
     Issuance of common stock related to
      stock plans                                       12,789       13,991
     Excess tax benefits from stock-based
      compensation                                       4,697        4,509
     Treasury stock purchased                           (3,638)      (2,935)
     Repurchase of common stock                       (152,598)    (147,726)
     Dividends paid                                    (30,654)     (25,366)
       Net cash used in financing activities          (169,404)    (207,527)
     Net decrease in cash and cash equivalents        (215,840)     (69,698)
     Cash and cash equivalents:
       Beginning of period                             367,388      191,767
       End of period                                  $151,548     $122,069

     Supplemental Cash Flow Disclosures
     Interest paid                                      $4,834         $759
     Income taxes paid                                $142,767     $125,522

     Non-Cash Investing Activities
     Change in fair value of investment securities        $570           $5

SOURCE Ross Stores, Inc.

CONTACT: John G. Call, Senior Vice President, Chief Financial Officer,
+1-925-965-4315, or Katie Loughnot, Vice President, Investor Relations,
+1-925-965-4509,, both of Ross Stores, Inc.