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Ross Stores Reports Record Results for Fourth Quarter and Fiscal 2002Fiscal 2002 and 2001 Quarterly Income Statement
NEWARK, Calif., Mar 19, 2003 /PRNewswire-FirstCall via COMTEX/ -- Ross Stores, Inc. (ROST) today reported that earnings per share for the 13 weeks ended February 1, 2003 rose 19% to $.74, from $.62 for the 13 weeks ended February 2, 2002. Net earnings for the 13 weeks ended February 1, 2003 totaled $58.7 million, up 18% over net earnings of $50.0 million for the 13 weeks ended February 2, 2002. Sales for the fourth quarter of 2002 increased 14% to $965 million with comparable store sales up 3% over the prior year.
For the 52 weeks ended February 1, 2003, earnings per share grew 32% to $2.52, from $1.91 for the 52 weeks ended February 2, 2002. Net earnings for the 52 weeks ended February 1, 2003 increased 30% to a record $201.2 million, compared to $155.0 million for the 52 weeks ended February 2, 2002. Sales for the 2002 fiscal year rose 18% to $3.531 billion, with comparable store sales up 7% over the prior year.
Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, "We are very pleased with the solid sales and earnings gains we posted during the fourth quarter and fiscal 2002, especially considering today's challenging retail climate. Geographically, sales trends in the fourth quarter were relatively broadbased with positive comparable store sales gains in all major markets including California, where same store sales rose 3%. The strongest merchandise departments were Home and Shoes, with same store sales gains in the high single to low double digit range for the quarter."
Mr. Balmuth continued, "Fourth quarter results benefited from a 31 basis point expansion in operating margin. A slight decline in gross margin due to the combination of a sharper pricing strategy and higher freight costs was partially offset by improved shortage results and lower markdowns and distribution costs as a percent of sales. Lower general, selling and administrative costs as a percentage of sales more than offset the slight decrease in gross margin, due to a relative reduction in benefit and incentive plan costs compared to the prior year fourth quarter."
Mr. Balmuth continued, "I am pleased to report that the Company's financial position and cash flows remain strong. During fiscal 2002, we repurchased 3.8 million shares of common stock for an aggregate purchase price of $150 million, ending the year with 77.5 million shares of common stock outstanding. This buyback was affected under a two-year, $300 million stock repurchase program announced in early 2002, which we expect to complete in 2003."
"Our accelerated expansion program also remains on track. We added 55 net new stores during 2002, or unit growth of 12%. Expansion into new geographic markets continued, with 21 of these additions in our new Southeast markets of Georgia, North Carolina, South Carolina and Alabama. During 2003, we expect to continue to add new stores at the rate of 12% annually, with about 62 net new locations planned to open in both new and existing markets," said Mr. Balmuth.
The Company's operating statements for the fourth quarter and fiscal 2002 reflect a reclassification of buying and distribution costs into cost of goods sold. The reclassification only relates to the allocation of these costs on the Company's operating statement and has no impact on reported sales, net earnings or earnings per share. "Cost of goods sold including related buying, distribution and occupancy costs" now includes: cost of goods sold, store occupancy and depreciation costs, and all distribution and buying costs, including related depreciation and occupancy expense. "General, selling and administrative" now includes store operating costs and general and administrative costs, including related depreciation and occupancy. Buying costs were previously included in general, selling and administrative expenses, while elements of distribution costs were reported in several line items: (i) depreciation and amortization; (ii) cost of goods sold and occupancy; and (iii) general, selling and administrative costs. Adjustments to reflect these new line item classifications have been made to the 2001 fourth quarter and fiscal year operating statements, as well as the previously-reported operating statements for the first, second and third quarters of 2002 and 2001, which are available on the press release page of the Company's web site located at www.rossstores.com.
Mr. Balmuth stated: "This reclassification should result in improved trend data by collecting all distribution costs in the same line item for each reporting period. We also expect this change to afford more meaningful comparisons of gross margin and expense ratios versus our industry peers."
The Company will host a conference call on Wednesday, March 19, 2003 at 11:00 a.m. eastern time to communicate additional details concerning the quarter's and year's results and management's outlook and plans for 2003. A real time audio webcast of the conference call will be available at www.rossstores.com. An audio playback will be available at 402-220-5900, pin#2342 through March 26, 2003.
Forward-Looking Statements: This press release contains certain forward-looking statements relating to future stock repurchases and future plans to open new stores which are subject to risks and uncertainties that could cause the Company's actual results to differ materially from management's current expectations. Risk factors include obtaining acceptable new store locations, competitive pressures in the apparel industry, changes in economic or geo-political conditions, changes in the level of consumer spending on or preferences in apparel or home-related merchandise, unseasonable weather trends, and greater than planned operating costs. Other risk factors are detailed in the Company's Form 10-K for fiscal 2001. 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 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 507 stores in operation February 1, 2003, compared to 452 stores at the end of the same period last year.
ROSS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended Twelve Months Ended
Feb. 1 Feb. 2 Feb. 1 Feb. 2
($000, except per share data,
unaudited) 2003 2002 2003 2002
Sales $964,610 $848,374 $3,531,349 $2,986,596
Costs and Expenses
Cost of goods sold,
including related
buying,
distribution and
occupancy costs 720,284 633,104 2,628,412 2,243,384
General, selling and
administrative 148,081 133,218 572,316 485,455
Interest (income)
expense (214) -- 279 3,168
868,151 766,322 3,201,007 2,732,007
Earnings before taxes 96,459 82,052 330,342 254,589
Provision for taxes on
earnings 37,716 32,082 129,164 99,544
Net earnings $58,743 $49,970 $201,178 $155,045
Earnings per share
Basic $0.76 $0.63 $2.58 $1.94
Diluted $0.74 $0.62 $2.52 $1.91
Weighted average shares
outstanding (000)
Basic 77,472 79,367 78,123 79,886
Diluted 79,043 80,923 79,746 81,210
Stores open end of period 507 452 507 452
ROSS STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
February 1, February 2,
($000, unaudited) 2003 2002
ASSETS
Current Assets
Cash and cash equivalents $150,649 $40,351
Accounts receivable 18,349 20,540
Merchandise inventory 716,518 623,390
Other current assets 36,904 30,710
Total Current Assets $922,420 $714,991
Property and equipment, net 402,683 331,550
Other long-term assets 36,242 36,184
$1,361,345 $1,082,725
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, accrued
expenses and other $610,894 $477,703
Income taxes payable 15,790 11,885
Total Current Liabilities $626,684 $489,588
Long-term debt 25,000 --
Other liabilities 41,452 41,036
Deferred Income Taxes 25,021 7,646
Stockholders' Equity 643,188 544,455
$1,361,345 $1,082,725
ROSS STORES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended Year Ended
February 1, February 2,
($000, unaudited) 2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $201,178 $155,045
Adjustments to reconcile net
earnings to net
cash provided by operating
activities:
Depreciation and amortization
of property and equipment 53,329 49,896
Other amortization 12,847 12,725
Deferred income taxes 17,375 12,633
Change in assets and liabilities:
Merchandise inventory (93,128) (63,824)
Other current assets _ net (4,003) (16,901)
Accounts payable 81,958 54,064
Other current liabilities 54,541 34,384
Other 8,348 4,867
Net cash provided by operating
activities 332,445 242,889
CASH FLOWS USED IN INVESTING
ACTIVITIES
Additions to property and equipment (133,166) (86,002)
Net cash used in investing
activities (133,166) (86,002)
CASH FLOWS USED IN FINANCING
ACTIVITIES
Repayments under lines of credit -- (64,000)
Proceeds from long-term debt 25,000 --
Issuance of common stock related to
stock plans 50,863 54,581
Repurchase of common stock (149,997) (130,676)
Dividends paid (14,847) (13,595)
Net cash used in financing
activities (88,981) (153,690)
Net increase in cash and cash
equivalents 110,298 3,197
Cash and cash equivalents:
Beginning of year 40,351 37,154
End of year $150,649 $40,351
SOURCE Ross Stores, Inc.
CONTACT:
John G. Call
Senior Vice President, Chief Financial Officer
1-510-505-4315
or
Katie Loughnot
Vice President, Investor Relations
1-510-505-4509
or katie.loughnot@ros.com
both of Ross Stores, Inc.
Copyright (C) 2003 PR Newswire. All rights reserved.