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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 www.rossstores.com. 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 www.rossstores.com.
ROSS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
($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,
distribution
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.
CONDENSED CONSOLIDATED BALANCE SHEETS
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
LIABILITIES AND STOCKHOLDERS' EQUITY
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.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
August 2, August 3,
($000, unaudited) 2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES
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
CASH FLOWS USED IN INVESTING ACTIVITIES
Additions to property and equipment (70,366) (54,088)
Net cash used in investing activities (70,366) (54,088)
CASH FLOWS USED IN FINANCING ACTIVITIES
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 katie.loughnot@ros.com, both of
Ross Stores, Inc.