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Ross Stores Reports Third Quarter Results

NEWARK, Calif., Nov. 15 /PRNewswire/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported net earnings for the 13 weeks ended October 28, 2000 of $29.7 million, compared to $34.6 million for the 13 weeks ended October 30, 1999. Earnings per share were $.36 for the quarter, compared to $.38 for the same period in 1999. Current year third quarter sales totaled $639 million, up 5% from $609 million for the quarter ended October 30, 1999. Comparable store sales for the 13 weeks ended October 28, 2000 declined 2% versus a 7% increase in the prior year.

For the nine months ended October 28, 2000, net earnings totaled $106.5 million, compared to $107.4 million for the nine months ended October 30, 1999. Earnings per share for the first nine months increased 9% to $1.27, from $1.16 for the comparable 1999 period. Sales for the nine months ended October 28, 2000 increased 9% to $1.930 billion, from $1.774 billion in the prior year. Same store sales for the first nine months of 2000 grew 1% on top of a 7% gain for the same period in 1999.

Michael Balmuth, Vice Chairman and Chief Executive Officer, said, "Clearly, we are disappointed in our third quarter results. A more difficult external environment combined with internal execution issues negatively impacted both sales and earnings growth. In response, we have been taking steps to strengthen our merchandise offerings with more compelling assortments of fresh and exciting name-brand fashions at competitive discounts for the family and the home."

Mr. Balmuth continued, "Tight inventory controls helped to maintain in-store turns and to minimize markdowns. Gross margin declined 30 basis points during the quarter, mainly due to loss of leverage on fixed occupancy costs that are included in cost of goods sold. General, selling and administrative costs rose 98 basis points, primarily due to higher store payroll, benefit and distribution expenses and loss of leverage from the decline in same store sales. As a result, operating margin for the third quarter fell to 7.9%, compared to 9.4% for the same period in 1999.

Mr. Balmuth continued, "The company's financial position and cash flows remain very healthy, enabling us to make significant progress with our stock repurchase program. During the first nine months of 2000, we repurchased a total of 9.0 million shares for an aggregate purchase price of $150 million. We ended the quarter with 81.1 million shares of common stock outstanding. We believe that our repurchase program is an excellent use of cash and expect to continue to buy back stock under the two-year $300 million authorization announced in February 2000."

"Our expansion program also remains on track. We just completed our largest grand opening event of the year and are very pleased with initial sales trends at our new fall stores. We added 19 locations in October and one in November, for a total of 34 new stores this year. We expect to end fiscal 2000 with about 408 locations in 17 states," said Mr. Balmuth.

The company will host a conference call on Wednesday, November 15, 2000 at 11:00 a.m. EST to communicate additional details concerning the quarter's results, insights from the company's recent business review and management's future outlook. Participants may listen to a real time audio webcast of the conference call by visiting the company's web site at In addition, a playback of the call can be accessed by dialing 706-645-9291, access code 961390, through Friday, November 17th. A recorded version of the call also will remain available on the company's web site through the end of November.

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 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 the company's outlook at any other point in time. The company does not undertake to update these forward-looking statements.

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 411 stores in operation October 28, 2000, compared to 381 stores at the end of the same period last year.

                              ROSS STORES, INC.

                               Three Months Ended       Nine Months Ended
                            October 28,  October 30, October 28, October 30,
    ($000, except per share
      data, unaudited)           2000      1999         2000         1999

    Sales                      $639,469  $608,720   $1,929,932   $1,774,121

    Costs and Expenses
     Cost of goods sold
      and occupancy             439,379   416,442    1,329,601    1,219,963
     General, selling and
      administrative            138,449   125,833      390,541      349,702
     Depreciation and
      amortization               11,279     9,459       32,529       27,911
     Interest expense (income)    1,531       147        2,371          167
                                590,638   551,881    1,755,042    1,597,743

    Earnings before income
     taxes                       48,831    56,839      174,890      176,378

    Provision for taxes on
     earnings                    19,093    22,224       68,382       68,964
    Net earnings                $29,738   $34,615     $106,508     $107,414

    Earnings per share
     Basic                        $0.36     $0.38        $1.28        $1.18
     Diluted                      $0.36     $0.38        $1.27        $1.16

    Weighted average shares
     Basic                       81,837    89,986       83,292       91,015
     Diluted                     82,389    91,138       84,025       92,444

    Stores open end of period       411       381          411          381

                                ROSS STORES, INC.

                                                   October 28,    October 30,
    ($000, unaudited)                                 2000            1999


    Current Assets
     Cash and cash equivalents                       $34,758        $31,645
     Accounts receivable                              18,748         15,884
     Merchandise inventory                           594,428        570,965
     Other current assets                             19,576         16,591
      Total Current Assets                          $667,510       $635,085

     Property and equipment, net                     292,126        266,672
     Lease rights, deferred income
      taxes and other assets                          60,953         51,723
                                                  $1,020,589       $953,480


    Current Liabilities

     Accounts payable, accrued expenses and other   $447,018       $435,952
     Income taxes payable                              7,879         20,579
      Total Current Liabilities                     $454,897       $456,531

     Long-term debt                                   80,000         24,000
     Other liabilities                                50,224         47,200

    Stockholders' Equity                             435,468        425,749
                                                  $1,020,589       $953,480

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 & Corporate Secretary, 510-505-4315, or Katie Loughnot, Director, Investor Relations, 510-505-4509, or, both of Ross Stores, Inc./