UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
_______________
Form
8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Date of report (date of earliest event
reported):
November 20,
2007
ROSS STORES, INC.
(Exact name of registrant
as specified in its charter)
| Delaware | 0-14678 | 94-1390387 |
| (State or other jurisdiction of | (Commission File No.) | (I.R.S. Employer Identification |
| incorporation) | No.) |
4440 Rosewood Drive, Pleasanton,
California, 94588-3050
(Address of principal executive
offices)
Registrant’s telephone number, including
area code:
(925) 965-4400
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| ROSS STORES, INC. | 4440 Rosewood Drive, Pleasanton, California 94588-3050 | (925) 965-4400 |
Item 2.02 Results of Operations and Financial Condition.
On November 20, 2007, the Company issued a press release regarding the Company’s financial results for its fiscal quarter ended November 3, 2007. The full text of the Company’s press release is attached hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
| Exhibit | ||
| No. | Description | |
| 99.1 | November 20, 2007 Press Release by Ross Stores, Inc.* |
*Pursuant to Item 2.02 of Form 8-K,
Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the
Securities Act of 1934, nor shall it be deemed incorporated by reference in any
filing under the Securities Act of 1933, except as shall be expressly set forth
by specific reference in such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 20, 2007
| ROSS STORES, INC. | |||
| Registrant | |||
| By: | /s/J. Call | ||
| John G. Call | |||
| Senior Vice President, Chief Financial Officer, Principal | |||
| Accounting Officer and Corporate Secretary | |||
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Exhibit 99.1
 |
FOR IMMEDIATE RELEASE |
| Contact: | John G. Call | Katie Loughnot | |
| Senior Vice President | Vice President, Investor Relations | ||
| Chief Financial Officer | (925) 965-4509 | ||
| (925) 965-4315 | Email: katie.loughnot@ros.com |
ROSS STORES REPORTS THIRD QUARTER
EARNINGS
AND REITERATES FOURTH QUARTER GUIDANCE
Pleasanton, California, November 20, 2007 -- Ross Stores, Inc. (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.”
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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 www.rossstores.com. 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.
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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® (“Ross”) and dd’s DISCOUNTS® 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® (“Ross”) stores and 52 dd’s DISCOUNTS® 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 www.rossstores.com.
* * * * *
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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 | ||||||||||||
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Ross Stores,
Inc.
Condensed Consolidated Balance
Sheets
| November 3, | October 28, | |||||
| ($000, unaudited) | 2007 | 2006 | ||||
| Assets | ||||||
| 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 | ||
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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 | ) | ||||
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Ross Stores,
Inc.
Condensed Consolidated Statements
of Cash Flows (continuation)
| Nine Months Ended | ||||||||
| November 3, | October 28, | |||||||
| ($000, unaudited) | 2007 | 2006 | ||||||
| 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 | ||||
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