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rossstores_8k.htm
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 18, 2010
 
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 18, 2010, the Company issued a press release regarding the Company’s financial results for its fiscal quarter ended October 30, 2010. 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 18, 2010 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 18, 2010
 
  ROSS STORES, INC.
  Registrant
     
     
  By:   /s/J. Call
    John G. Call
    Senior Vice President, Chief Financial Officer and Principal
    Accounting Officer

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exhibit99-1.htm
Exhibit 99.1
 
 

FOR IMMEDIATE RELEASE
 
Contact:       John G. Call Bobbi Chaville
  Senior Vice President, Senior Director, Investor Relations
  Chief Financial Officer (925) 965-4289
  (925) 965-4315 Email: bobbi.chaville@ros.com

ROSS STORES REPORTS RECORD THIRD QUARTER EARNINGS,
REAFFIRMS FOURTH QUARTER 2010 GUIDANCE
 
     Pleasanton, California, November 18, 2010 -- Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for the 13 weeks ended October 30, 2010 of $1.02, up from $.84 for the 13 weeks ended October 31, 2009. These results reflect a 21% increase on top of an exceptional 91% gain in the third quarter of 2009. Net earnings for the third quarter ended October 30, 2010 grew 16% to a record $121.4 million, up from $105.1 million for the third quarter ended October 31, 2009. Fiscal 2010 third quarter sales increased 7% to $1.874 billion, with comparable store sales up 3% on top of a strong 8% gain in the prior year.
 
     For the nine months ended October 30, 2010, earnings per share were $3.26, up from $2.39 for the nine months ended October 31, 2009. These results represent 36% growth on top of a robust 52% gain for the first nine months of 2009. Net earnings for the year-to-date period in 2010 grew 31% to a record $393.0 million, up from $299.9 million in the prior year period. Sales for the first nine months of 2010 increased 10% to $5.721 billion, with comparable store sales up 6% on top of a 5% gain last year.
 
     Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, “We delivered strong sales and earnings increases in the third quarter and first nine months of 2010 on top of outstanding gains in the prior year. This performance is especially noteworthy considering the ongoing uncertainty in the macro-economic and retail environment. Record operating margins in the third quarter and year-to-date periods were driven by our continued ability to deliver exciting bargains while operating our business on lower inventories, as well as much better-than-expected shortage results. The best performing merchandise categories during the third quarter were Dresses and Home. Geographic trends were relatively broad-based, with the strongest performance in Florida.”
 
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     Mr. Balmuth continued, “Third quarter 2010 operating margin grew to 10.5%, a 60 basis point increase on top of an exceptional 385 basis point gain in the third quarter of 2009. Gross margin rose 80 basis points, as higher merchandise gross margin, improved distribution costs and leverage on occupancy expenses were partially offset by higher incentive and freight costs as a percent of sales versus the prior year. Selling, general and administrative expenses grew 20 basis points mainly due to higher incentive plan costs.”
 
     Mr. Balmuth also noted, “As we ended the third quarter, our balance sheet and cash flows remained healthy, allowing us to continue to return capital to stockholders through our stock repurchase and dividend programs. During the first nine months of fiscal 2010, we repurchased 5.4 million shares of common stock for an aggregate purchase price of $287 million. We remain on track to complete by the end of 2010 approximately $375 million of our current two-year $750 million stock repurchase authorization.”
 
     Looking ahead, Mr. Balmuth said, “As we enter the fourth quarter, we are favorably positioned and our stores are stocked with fresh and exciting assortments of branded bargains. However, while we have outperformed our projections year-to-date, there are a number of reasons why we believe it is appropriate to maintain a cautious outlook. These include the likelihood of a very competitive holiday season, our tough prior year sales comparisons and this year’s difficult holiday calendar where the timing of Christmas Day means we have one less Saturday of business in our largest volume month of the year. As a result, although we hope to do better, we are maintaining our prior forecast for both sales and earnings in the fourth quarter.”
 
     For the 13 weeks ending January 29, 2011, the Company continues to project same store sales to be flat to down 1% versus a 10% increase in the fourth quarter of 2009. Fourth quarter 2010 earnings per share are still forecast to be in the range of $1.15 to $1.20. For the fiscal year ending January 29, 2011, we now project earnings per share to increase 25% to 26% to $4.41 to $4.46, up from $3.54 in fiscal 2009.
 
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     The Company will provide additional details concerning its third quarter results, fourth quarter and fiscal 2010 guidance, and business outlook on a conference call to be held on Thursday, November 18, 2010 at 11:00 a.m. Eastern time. Participants may listen to a real time audio webcast of the conference call by visiting the Investors section of the Company’s website, located at www.rossstores.com. A recorded version of the call will be available at the website address and via a telephone recording until 8:00 p.m. Eastern time on November 25, 2010 at 706-645-9291, PIN # 55962255.
 
     Forward-Looking Statements: This press release and the recorded comments and transcript on our corporate website contain forward-looking statements regarding expected sales and earnings levels in future periods 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,” “target,” “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, competitive pressures in the apparel or home-related merchandise industry; changes in the level of consumer spending on or preferences for apparel or home-related merchandise, including the potential impact from the macro-economic environment, uncertainty in financial and credit markets, and changes in geopolitical conditions; unseasonable weather trends; disruptions in supply chain; lower t han 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 attract and retain personnel with the retail talent necessary to execute our strategies; our ability to effectively operate our various supply chain, core merchandising and other information systems; our ability to improve our merchandising capabilities through the recent implementation of new processes and systems enhancements; achieving and maintaining targeted levels of productivity and efficiency in our distribution centers; and obtaining acceptable new store locations. Other risk factors are detailed in our SEC filings including, without limitation, the Form 10-K for fiscal 2009 and Form 10-Qs and 8-Ks for fiscal 2010. 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., an S&P 500, Fortune 500 and Nasdaq 100 (ROST) company headquartered in Pleasanton, California, is the nation’s second largest off-price retailer with fiscal 2009 revenues of $7.2 billion. As of October 30, 2010 the Company operated 990 Ross Dress for Less® (“Ross”) stores and 67 dd’s DISCOUNTS® locations, compared to 955 Ross and 53 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
  October 30,       October 31,       October 30,       October 31,
($000, except stores and per share data, unaudited) 2010   2009   2010   2009
Sales $  1,874,320   $  1,744,139   $  5,720,858   $  5,204,374
                       
Costs and Expenses                      
    Costs of goods sold   1,365,513     1,284,852     4,167,380     3,864,697
    Selling, general and administrative   312,277     286,511     910,151     844,699
    Interest expense, net   2,232     1,943     7,056     4,989
       Total costs and expenses   1,680,022     1,573,306     5,084,587     4,714,385
                       
Earnings before taxes   194,298     170,833     636,271     489,989
Provision for taxes on earnings   72,920     65,753     243,270     190,115
Net earnings $ 121,378   $ 105,080   $ 393,001   $ 299,874
                       
Earnings per share                      
    Basic $ 1.04   $ 0.86   $ 3.32   $ 2.43
    Diluted $ 1.02   $ 0.84   $ 3.26   $ 2.39
                        
                       
Weighted average shares outstanding (000)                      
    Basic   117,039     122,377     118,494     123,512
    Diluted   119,018     124,648     120,522     125,592
                       
                       
Dividends                      
    Cash dividends declared per share $ 0.16   $ 0.11   $ 0.32   $ 0.22
                       
                       
Stores open at end of period   1,057     1,008     1,057     1,008
                       

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Ross Stores, Inc.
Condensed Consolidated Balance Sheets
 
  October 30,       October 31,
($000, unaudited) 2010   2009
Assets          
           
Current Assets          
    Cash and cash equivalents $ 732,798   $ 576,162
    Short-term investments   1,798     979
    Accounts receivable   53,930     47,496
    Merchandise inventory   1,048,130     1,014,638
    Prepaid expenses and other   66,762     63,048
    Deferred income taxes   1,426     11,737
       Total current assets   1,904,844     1,714,060
           
Property and equipment, net   966,191     945,734
Long-term investments   16,998     18,974
Other long-term assets   74,556     62,702
Total assets $  2,962,589   $  2,741,470
           
Liabilities and Stockholders’ Equity          
           
Current Liabilities          
    Accounts payable $ 767,741   $ 767,771
    Accrued expenses and other   262,017     235,605
    Accrued payroll and benefits   213,103     193,221
    Income taxes payable   4,769     11,275
       Total current liabilities   1,247,630     1,207,872
           
Long-term debt   150,000     150,000
Other long-term liabilities   187,772     171,666
Deferred income taxes   92,176     104,739
           
Commitments and contingencies          
           
Stockholders’ Equity   1,285,011     1,107,193
Total liabilities and stockholders’ equity $ 2,962,589   $ 2,741,470
           
 
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Ross Stores, Inc.
Condensed Consolidated Statements of Cash Flows
 
  Nine Months Ended
  October 30,       October 31,
($000, unaudited) 2010   2009
Cash Flows From Operating Activities              
Net earnings $ 393,001       $ 299,874  
Adjustments to reconcile net earnings to net cash              
provided by operating activities:              
    Depreciation and amortization   120,123       115,188  
    Stock-based compensation   27,523       19,232  
    Deferred income taxes   (8,427 )     9,838  
    Tax benefit from equity issuance   11,747       7,773  
    Excess tax benefit from stock-based compensation   (11,466 )     (6,184 )
    Change in assets and liabilities:              
       Merchandise inventory   (175,632 )     (133,580 )
       Other current assets   (17,840 )     (14,133 )
       Accounts payable   129,111       245,034  
       Other current liabilities   (43,368 )     36,564  
       Other long-term, net   1,989       4,276  
       Net cash provided by operating activities   426,761       583,882  
Cash Flows From Investing Activities              
Additions to property and equipment   (149,659 )       (124,175 )
Proceeds from sales of property and equipment   -       10  
Purchases of investments   (6,842 )     (2,904 )
Proceeds from investments   7,461       23,223  
       Net cash used in investing activities    (149,040 )      (103,846 )
Cash Flows From Financing Activities              
Excess tax benefit from stock-based compensation   11,466       6,184  
Issuance of common stock related to stock plans   29,989       45,392  
Treasury stock purchased   (9,131 )     (5,428 )
Repurchase of common stock   (287,275 )     (229,817 )
Dividends paid   (58,315 )     (41,560 )
       Net cash used in financing activities   (313,266 )     (225,229 )
Net (decrease) increase in cash and cash equivalents   (35,545 )     254,807  
Cash and cash equivalents:              
       Beginning of period   768,343       321,355  
       End of period $ 732,798     $ 576,162  
Supplemental Cash Flow Disclosures              
Interest paid $ 4,834     $ 4,834  
Income taxes paid $ 282,417     $ 166,382  
Non-Cash Investing Activities              
Increase in fair value of investment securities $ 814     $ 1,462  
                

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