Document



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):
March 6, 2018

ROSS STORES, INC.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
Delaware
 
0-14678 
 
94-1390387
(State or other jurisdiction of incorporation)
 
(Commission File No.)
 
(I.R.S. Employer Identification No.)

5130 Hacienda Drive, Dublin, California 94568
(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))






Item 2.02 Results of Operations and Financial Condition.
On March 6, 2018, the Company issued a press release regarding the Company’s financial results for its fiscal quarter and fiscal year ended February 3, 2018. 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
March 6, 2018 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: March 6, 2018


ROSS STORES, INC.
Registrant


By: /s/Michael J. Hartshorn    
Michael Hartshorn
Group Senior Vice President, Chief Financial Officer
and Principal Accounting Officer



Exhibit


Exhibit 99.1
https://cdn.kscope.io/2759f03a7f4b5e73fd213a45c05f238f-ross3005ca11.jpg______________________________________________________________________


FOR IMMEDIATE RELEASE
Contact:
Michael Hartshorn
 
Connie Kao
 
 
Group Senior Vice President,
 
Vice President, Investor Relations
 
 
Chief Financial Officer
 
(925) 965-4668
 
 
(925) 965-4503
 
connie.kao@ros.com
 

        
ROSS STORES REPORTS RECORD FOURTH QUARTER
AND FISCAL 2017 RESULTS

INCREASES 2018 STOCK REPURCHASE AUTHORIZATION
AND RAISES QUARTERLY CASH DIVIDEND

ALSO PROVIDES FIRST QUARTER AND FISCAL 2018 GUIDANCE


Dublin, California, March 6, 2018 -- Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for the 14 weeks ended February 3, 2018 of $1.19, up from $.77 in the 13 weeks ended January 28, 2017. Net earnings for the 14 weeks ended February 3, 2018 were $451 million, compared to $301 million in the 13 weeks ended January 28, 2017. Sales for the 2017 fourth quarter were up 16% to $4.1 billion. Comparable store sales for the 13 weeks ended January 27, 2018 rose 5% versus a 4% gain for the same period in the prior year.

For the 53 weeks ended February 3, 2018, earnings per share grew to $3.55, compared to $2.83 in the 52 weeks ended January 28, 2017. Net earnings for the 53 weeks ended February 3, 2018 were $1.4 billion, compared to $1.1 billion in the 52 weeks ended January 28, 2017. Sales for the 53-week 2017 fiscal year grew 10% to $14.1 billion. Comparable store sales for the 52 weeks ended January 27, 2018 were up 4% on top of a 4% increase in 2016.

The aforementioned earnings results for both the 2017 fourth quarter and fiscal year are inclusive of a per share benefit of approximately $.10 from the 53rd week and $.21 from the recently enacted tax reform legislation. Excluding these items, earnings per share on a 52-week basis increased 14% for both the quarter and fiscal 2017 compared to the prior year.
 
  


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Barbara Rentler, Chief Executive Officer, commented, “Despite our own difficult multi-year comparisons and a very competitive retail climate, sales and earnings were well ahead of our expectations for both the fourth quarter and the full year. We are pleased with these results, which reflect our ongoing success in delivering broad assortments of compelling bargains to today’s value-driven shoppers.”     

Ms. Rentler continued, “Fourth quarter operating margin grew 95 basis points to 14.6%, up from 13.6% in the prior year. This improvement was driven by a combination of strong merchandise margin, expense leverage from solid gains in same store sales, and the impact of the 53rd week. For the 2017 fiscal year, operating margin increased 50 basis points to a record 14.5%.”

Board Approves Increases to 2018 Stock Repurchase Authorization and Quarterly Cash Dividend
    
The Company’s Board of Directors has approved an increase in the stock repurchase authorization for 2018 to $1.075 billion, up from the previous $875 million. The Board also approved a higher quarterly cash dividend of $.225 per share, up 41% over the prior year. This quarterly dividend is payable on March 30, 2018 to stockholders of record as of March 19, 2018.

A total of 13.5 million shares of common stock were repurchased during fiscal 2017, for an aggregate purchase price of $875 million. During the recently completed fourth quarter, 3.0 million shares were repurchased for a total price of $226 million.

Ms. Rentler noted, “The increases to our stock repurchase and dividend programs for 2018 reflect the current strength of our balance sheet and our ongoing ability to generate significant amounts of cash after funding growth and other capital needs of the business. We have repurchased stock as planned every year since 1993 and also raised our cash dividend annually since 1994. This consistent record reflects our ongoing commitment to enhancing stockholder value and returns.”

Fiscal 2018 Guidance

Looking ahead, Ms. Rentler said, “While we are encouraged by our recent strong sales and earnings results, we again face our own challenging multi-year comparisons as well as a very competitive retail environment. As a result, although we hope to do better, we continue to take a prudent approach to forecasting our business in 2018.”
 

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For the 52 weeks ending February 2, 2019, the Company is forecasting same store sales to grow 1% to 2% on top of 4% gains in each of the past three years. We also plan to open about 100 new stores this year, consisting of 75 Ross Dress for Less and 25 dd’s DISCOUNTS locations. Fiscal 2018 earnings per share are projected to be $3.86 to $4.03, up from $3.55 for the 53 weeks ended February 3, 2018.

For the 13 weeks ending May 5, 2018, comparable store sales are forecast to be up 1% to 2%, with earnings per share projected to be $1.03 to $1.07, up from $.82 for the first quarter ended April 29, 2017.

Ms. Rentler noted, “Our fiscal year and first quarter 2018 guidance ranges include a per share benefit of approximately $.69 and $.16, respectively, from the recently enacted tax legislation. In addition, our 2018 ranges reflect our plans to make competitive wage and benefit-related investments, including raising our minimum wage to $11.00 per hour. We believe these actions will allow us to continue to attract and retain talented associates.”

The Company will host a conference call on Tuesday, March 6, 2018 at 4:15 p.m. Eastern time to provide additional details concerning its fourth quarter and fiscal year 2017 results, and management’s outlook and guidance for fiscal 2018. A real-time audio webcast of the conference call will be available in the Investors section of the Company’s website, located at www.rossstores.com. An audio playback will be available at 404-537-3406, PIN #5783629 until 8:00 p.m. Eastern time on March 13, 2018, as well as on the Company’s website.





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Forward-Looking Statements:  This press release contains forward-looking statements regarding expected sales, earnings levels, and other financial results 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,” “outlook,” “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 retailing industry; changes in the level of consumer spending on or preferences for apparel and home-related merchandise; market availability, quantity, and quality of attractive brand name merchandise at desirable discounts and our buyers’ ability to purchase merchandise that enables us to offer customers a wide assortment of merchandise at competitive prices; impacts from the macro-economic environment, financial and credit markets, and geopolitical conditions that affect consumer confidence and consumer disposable income; our ability to continually attract, train, and retain associates to execute our off-price strategies; unseasonable weather that may affect shopping patterns and consumer demand for seasonal apparel and other merchandise, and may result in temporary store closures and disruptions in deliveries of merchandise to our stores; potential information or data security breaches, including cyber-attacks on our transaction processing and computer information systems, which could result in theft or unauthorized disclosure of customer, credit card, employee, or other private and valuable information that we handle in the ordinary course of our business; potential disruptions in our supply chain or information systems; issues involving the quality, safety, or authenticity of products we sell, which could harm our reputation, result in lost sales, and/or increase our costs; our ability to effectively manage our inventories, markdowns, and inventory shortage to achieve planned gross margin; changes in U.S. tax or tariff policy regarding apparel and home-related merchandise produced in other countries that could adversely affect our business; volatility in revenues and earnings; an adverse outcome in various legal, regulatory, or tax matters; a natural or man-made disaster in California or in another region where we have a concentration of stores, offices, or a distribution center; unexpected issues or costs from expanding in existing markets and entering new geographic markets; obtaining acceptable new store sites with favorable consumer demographics; damage to our corporate reputation or brands; effectively advertising and marketing our brands; issues from selling and importing merchandise produced in other countries; and maintaining sufficient liquidity to support our continuing operations, new store and distribution center growth plans, and stock repurchase and dividend programs. Other risk factors are set forth in our SEC filings including without limitation, the Form 10-K for fiscal 2016, and Form 10-Qs and 8-Ks for fiscal 2017.  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. is an S&P 500, Fortune 500, and Nasdaq 100 (ROST) company headquartered in Dublin, California, with fiscal 2017 revenues of $14.1 billion. The Company operates Ross Dress for Less® (“Ross”), the largest off-price apparel and home fashion chain in the United States with 1,409 locations in 37 states, the District of Columbia, and Guam at fiscal 2017 year end. Ross offers first-quality, in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day. The Company also operates 213 dd’s DISCOUNTS® in 16 states at the end of fiscal 2017 that feature a more moderately-priced assortment of first-quality, in-season, name brand apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 70% off moderate department and discount store regular prices every day. Additional information is available at www.rossstores.com.


* * * * *



4



Ross Stores, Inc.
Condensed Consolidated Statements of Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
($000, except stores and per share data, unaudited)
 
 
February 3, 2018

 
January 28, 2017

 
February 3, 2018

 
January 28, 2017

 
 
 
 
 
 
 
 
 
 
 
 
Sales
 
 
$
4,067,806

 
$
3,510,158

 
$
14,134,732

 
$
12,866,757

 
 
 
 
 
 
 
 
 
 
 
 
Costs and Expenses
 
 
 
 
 
 
 
 
 
 
Cost of goods sold
 
 
2,922,582

 
2,539,563

 
10,042,638

 
9,173,705

 
Selling, general and administrative
 
 
553,306

 
493,802

 
2,043,698

 
1,890,408

 
Interest expense, net
 
 
386

 
3,755

 
7,676

 
16,488

 
 
Total costs and expenses
 
 
3,476,274

 
3,037,120

 
12,094,012

 
11,080,601

 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes
 
 
591,532

 
473,038

 
2,040,720

 
1,786,156

Provision for taxes on earnings
 
 
140,785

 
172,470

 
677,967

 
668,502

Net earnings
 
 
$
450,747

 
$
300,568

 
$
1,362,753

 
$
1,117,654

 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
 
 
 
Basic
 
 
$
1.20

 
$
0.77

 
$
3.58

 
$
2.85

 
Diluted
 
 
$
1.19

 
$
0.77

 
$
3.55

 
$
2.83

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding (000)
 
 
 
 
 
 
 
 
 
 
Basic
 
 
376,204

 
388,258

 
381,174

 
392,124

 
Diluted
 
 
379,734

 
391,139

 
384,329

 
394,958

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
 
 
 
 
 
 
 
 
 
 
Cash dividends declared per share
 
 
$
0.160

 
$
0.135

 
$
0.640

 
$
0.540

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stores open at end of period
 
 
1,622

 
1,533

 
1,622

 
1,533

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


5



Ross Stores, Inc.
Condensed Consolidated Balance Sheets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
($000, unaudited)
 
February 3, 2018

 
January 28, 2017

Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets
 
 
 
 
 
Cash and cash equivalents
 
$
1,290,294

 
$
1,111,599

 
Short-term investments
 
512

 

 
Accounts receivable
 
87,868

 
75,154

 
Merchandise inventory
 
1,641,735

 
1,512,886

 
Prepaid expenses and other
 
130,748

 
113,410

 
 
Total current assets
 
3,151,157

 
2,813,049

 
 
 
 
 
 
 
Property and equipment, net
 
2,382,464

 
2,328,048

Long-term investments
 
712

 
1,288

Other long-term assets
 
187,718

 
166,966

Total assets
 
$
5,722,051

 
$
5,309,351

 
 
 
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
Accounts payable
 
$
1,059,844

 
$
1,021,735

 
Accrued expenses and other
 
431,706

 
398,126

 
Accrued payroll and benefits
 
349,879

 
316,492

 
Income taxes payable
 

 
16,153

 
Current portion of long-term debt
 
84,973

 

 
 
Total current liabilities
 
1,926,402

 
1,752,506

 
 
 
 
 
 
 
Long-term debt
 
311,994

 
396,493

Other long-term liabilities
 
348,541

 
290,950

Deferred income taxes
 
85,806

 
121,385

 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
Stockholders’ Equity
 
3,049,308

 
2,748,017

Total liabilities and stockholders’ equity
 
$
5,722,051

 
$
5,309,351

 
 
 
 
 
 
 


6



Ross Stores, Inc.
Condensed Consolidated Statements of Cash Flows
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
($000, unaudited)
 
February 3, 2018

 
January 28, 2017

 
 
 
 
 
 
 
Cash Flows From Operating Activities
 
 
 
 
Net earnings
 
$
1,362,753

 
$
1,117,654

Adjustments to reconcile net earnings to net cash
 
 
 
 
provided by operating activities:
 
 
 
 
 
Depreciation and amortization
 
313,163

 
302,515

 
Stock-based compensation
 
87,417

 
74,554

 
Gain on sale of assets
 
(6,328
)
 

 
Deferred income taxes
 
(34,903
)
 
(8,703
)
 
Change in assets and liabilities:
 
 
 
 
 
 
Merchandise inventory
 
(128,849
)
 
(93,782
)
 
 
Other current assets
 
(31,796
)
 
(928
)
 
 
Accounts payable
 
41,322

 
83,085

 
 
Other current liabilities
 
49,068

 
76,676

 
 
Other long-term, net
 
29,431

 
7,780

 
 
Net cash provided by operating activities
 
1,681,278

 
1,558,851

 
 
 
 
 
 
 
Cash Flows From Investing Activities
 
 
 
 
Additions to property and equipment
 
(371,423
)
 
(297,880
)
Proceeds from sale of property and equipment
 
15,981

 

Decrease in restricted cash and investments
 
2,310

 
3,388

Proceeds from investments
 
40

 
1,729

 
 
Net cash used in investing activities
 
(353,092
)
 
(292,763
)
 
 
 
 
 
 
 
Cash Flows From Financing Activities
 
 
 
 
Excess tax benefit from stock-based compensation
 

 
23,331

Issuance of common stock related to stock plans
 
18,468

 
18,539

Treasury stock purchased
 
(45,433
)
 
(43,321
)
Repurchase of common stock
 
(875,000
)
 
(700,000
)
Dividends paid
 
(247,526
)
 
(214,640
)
 
 
Net cash used in financing activities
 
(1,149,491
)
 
(916,091
)
 
 
 
 
 
 
 
Net increase in cash and cash equivalents
 
178,695

 
349,997

 
 
 
 
 
 
 
Cash and cash equivalents:
 
 
 
 
 
 
Beginning of period
 
1,111,599

 
761,602

 
 
End of period
 
$
1,290,294

 
$
1,111,599

 
 
 
 
 
 
 
Supplemental Cash Flow Disclosures
 
 
 
 
Interest paid
 
$
18,105

 
$
18,105

Income taxes paid
 
$
714,566

 
$
628,441

 
 
 
 
 
 
 

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