<<  Back

Ross Stores Second Quarter Earnings Per Share Up 13% to $.70

NEWARK, Calif., Aug 20, 2003 /PRNewswire-FirstCall via COMTEX/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported that earnings per share for the 13 weeks ended August 2, 2003 grew 13% to $.70, from $.62 in the prior year. Net earnings for the same period were $54.6 million, compared to $49.7 million for the 13 weeks ended August 3, 2002. Current year second quarter sales rose 10% to $966 million, from $877 million for the quarter ended August 3, 2002. Comparable store sales for the period were flat on top of a 9% increase in the prior year.

For the six months ended August 2, 2003, earnings per share increased 10% to $1.33, from $1.21 in the prior year. Net earnings for the same period totaled $103.9 million, compared to $97.4 million for the same period in 2002. Sales for the first six months rose 9% to $1.845 billion, with same store sales down 1% on top of a 10% gain in the prior year period.

Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, "We are pleased to report that sales during the second quarter performed in line with our expectations versus very strong increases in 2002. Effective control of both inventories and expenses throughout the second quarter also contributed to respectable earnings growth for the period. Lower benefit and incentive plan costs as a percent of sales, along with improved distribution and advertising expenses helped to offset a slight decline in merchandise margins and higher occupancy costs as a percent of sales compared to the second quarter of 2002. As a result, operating margin was relatively flat to the prior year at 9.3%.

"Consistent with our long-term plan for 12% annual unit growth, we expect to add about 61 locations in 2003 to end the current year with 568 stores in 25 states. A total of 46 locations opened during the first six months of 2003, including our initial entry into the states of Tennessee and Louisiana. We are also pleased to note that our new Perris, Calif., Distribution Center is expected to open as planned in September 2003. This new facility is projected to gradually ramp up to targeted production levels by the end of 2003, as we transition our West Coast distribution function from Newark to Perris, Calif. We expect this process to be complete by the end of the fiscal year," noted Mr. Balmuth.

Mr. Balmuth continued, "We remain committed to returning capital to stockholders through our stock repurchase and dividend programs. During the first six months of 2003, we repurchased 2.1 million shares of common stock for an aggregate of $83.6 million under the two-year $300 million program authorized by our Board of Directors in early 2002. We ended the quarter with 76.1 million shares of common stock outstanding and approximately $66.4 million remaining under this repurchase authorization, which we expect to complete in fiscal 2003."

The Company will provide additional details concerning its second quarter results and business outlook on a conference call to be held on Wednesday, August 20, 2003 at 11:00 a.m. Eastern Daylight Time. Participants may listen to a real time audio webcast of the conference call by visiting the Company's web site located at A recorded version of the call will also be available until the end of the month at the web site address and via a telephone recording through August 27, 2003 at 402-220-5900, PIN #2342.

Forward-Looking Statements: This press release contains certain forward-looking statements regarding expected annual unit growth and new store locations, 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," "forecast," "project" and similar expressions identify forward-looking statements. Risk factors include obtaining acceptable new store locations, competitive pressures in the apparel industry, changes in geopolitical and general economic conditions, changes in the level of consumer spending on or preferences in apparel or home-related merchandise and the Company's ability to successfully implement various new supply chain and merchandising systems in a timely and cost effective manner. Other risk factors are detailed in the Company's Form 10-K for fiscal 2002. 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 or revise these forward-looking statements.

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 553 stores in operation as of August 2, 2003, compared to 487 stores at the end of the same period last year. Additional information on the Company is available at

                              ROSS STORES, INC.

     ($000, except          Three Months Ended         Six Months Ended
     per share data,      August 2,    August 3,    August 2,     August 3,
     unaudited)             2003          2002         2003         2002

    Sales                 $965,610      $876,932   $1,844,894    $1,696,542

    Costs and Expenses
     Cost of goods
      sold, including
      related buying,
      and occupancy
      costs                724,206       656,577    1,377,454     1,258,434
     Selling, general
      and administrative   151,832       138,582      296,971       277,837
     Interest (income)
      expense                 (61)           184        (131)           408
                           875,977       795,343    1,674,294     1,536,679

    Earnings before
     income taxes           89,633        81,589      170,600       159,863

    Provision for
     taxes on earnings      35,047        31,901       66,705        62,506
    Net earnings           $54,586       $49,688     $103,895       $97,357

    Earnings per share
     Basic                   $0.72         $0.63        $1.36         $1.24
     Diluted                 $0.70         $0.62        $1.33         $1.21

    Weighted average shares
     outstanding (000)
     Basic                  76,270        78,434       76,662        78,650
     Diluted                77,692        80,129       77,962        80,360

    Stores open
     end of period             553           487          553           487

                              ROSS STORES, INC.

                                                    August 2,      August 3,
    ($000, unaudited)                                 2003           2002

    Current Assets
     Cash and cash equivalents                      $176,860        $95,322
     Accounts receivable                              27,041         25,867
     Merchandise inventory                           815,495        713,454
     Other current assets                             31,420         27,362
      Total Current Assets                        $1,050,816       $862,005

     Property and equipment, net                     443,084        356,177
     Other long-term assets                           50,327         37,626
                                                  $1,544,227     $1,255,808


    Current Liabilities
     Accounts payable, accrued expenses and other   $697,334       $593,587
     Income taxes payable                             40,199         30,095
      Total Current Liabilities                     $737,533       $623,682

     Long-term debt                                   50,000             --
     Other liabilities                                56,250         42,195
     Deferred income taxes                            25,021          7,646

    Stockholders' Equity                             675,423        582,285
                                                  $1,544,227     $1,255,808

                              ROSS STORES, INC.

                                                       Six Months Ended
                                                    August 2,      August 3,
    ($000, unaudited)                                 2003           2002

    Net earnings                                    $103,895        $97,357
    Adjustments to reconcile net earnings
     to net cash provided by
     operating activities:
     Depreciation and amortization of
      property and equipment                          28,321         25,628
     Other amortization                                7,412          6,322
    Change in assets and liabilities:
     Merchandise inventory                          (98,977)       (90,064)
     Other current assets, net                       (3,208)        (1,979)
     Accounts payable                                 74,389         87,560
     Other current liabilities                        42,560         59,499
     Other                                               437        (5,988)
     Net cash provided by operating activities       154,829        178,335

    Additions to property and equipment             (70,366)       (54,088)
     Net cash used in investing activities          (70,366)       (54,088)

    Proceeds from long-term debt                      25,000             --
    Issuance of common stock related to
     stock plans                                       9,193         17,619
    Repurchase of common stock                      (83,593)       (79,426)
    Dividends paid                                   (8,852)        (7,469)
     Net cash used in financing activities          (58,252)       (69,276)
    Net increase in cash and cash equivalents         26,211         54,971
    Cash and cash equivalents:
     Beginning of period                             150,649         40,351
     End of period                                  $176,860        $95,322

SOURCE Ross Stores, Inc.

John G. Call, Senior Vice President and Chief Financial
Officer, +1-510-505-4315, or Katie Loughnot, Vice President of Investor
Relations, +1-510-505-4509, or, both of
Ross Stores, Inc.