Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per
share for the second quarter ended July 29, 2017 of $.82, up 15%
from $.71 last year. Net earnings grew to $317 million, compared to
$282 million in the prior year. Sales rose 8% to $3.432 billion,
with comparable store sales up 4% on top of 4% growth last
year.
For the first six months of fiscal 2017, earnings per share were
$1.64, up 14% on top of a 9% gain last year. Net earnings were $638
million, up from $573 million in the prior year. Sales rose 7% to
$6.738 billion, with comparable store sales up 4% versus a 3% gain
in the same period last year.
Barbara Rentler, Chief Executive Officer, commented, “We are
pleased with the better-than-expected growth we delivered in both
sales and earnings in the second quarter, especially given our
strong multi-year comparisons and today’s volatile retail climate.
Operating margin of 14.9% outperformed our projections, mainly due
to a combination of higher merchandise margin and leverage on our
above-plan sales gains.”
Ms. Rentler continued, “During the second quarter and first six
months of fiscal 2017, we repurchased 3.6 million and 6.9 million
shares of common stock, respectively, for an aggregate price of
$215 million in the quarter and $430 million year-to-date. As
planned, we expect to buy back a total of $875 million in common
stock during fiscal 2017 under the two-year $1.75 billion
authorization approved by our Board of Directors in February of
this year.”
Looking ahead, Ms. Rentler said, “For the third quarter ending
October 28, 2017, we are forecasting a same store sales gain of 1%
to 2% on top of a robust 7% increase in the prior year. Earnings
per share for the period are projected to be $.64 to $.67, up from
$.62 in last year’s third quarter. For the fourth quarter ending
February 3, 2018, we are also forecasting same store sales to grow
1% to 2% versus a strong 4% increase last year, with earnings per
share expected to be $.88 to $.92, up from $.77 in the 2016 fourth
quarter. Based on our first half results and second half guidance,
fiscal 2017 earnings per share for the 53 weeks ending February 3,
2018 are now planned to increase 12% to 14% to $3.16 to $3.23, on
top of a 13% gain last year. As a reminder, both our fourth quarter
and full year guidance include an approximate $.08 benefit from the
53rd week in fiscal 2017.”
The Company will host a conference call on Thursday, August 17,
2017 at 4:15 p.m. Eastern time to provide additional details
concerning its second quarter results and management’s outlook for
the remainder of the year. 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 #61894409 until 8:00 p.m.
Eastern time on August 24, 2017, as well as on the Company’s
website.
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 trends; 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-Q 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
2016 revenues of $12.9 billion. The Company operates Ross Dress for
Less® (“Ross”), the largest off-price apparel and home fashion
chain in the United States with 1,384 locations in 37 states, the
District of Columbia and Guam as of July 29, 2017. 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 205 dd’s DISCOUNTS® in
16 states as of July 29, 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.
Ross Stores, Inc. Condensed Consolidated
Statements of Earnings
Three Months Ended Six Months
Ended ($000, except stores and per share data, unaudited)
July 29, 2017 July 30, 2016
July 29, 2017 July 30, 2016
Sales $ 3,431,603 $ 3,180,917
$
6,738,032 $ 6,269,912
Costs and Expenses Cost
of goods sold
2,420,942 2,251,845
4,750,908 4,428,050
Selling, general and administrative
498,276
469,511
973,095 906,435 Interest expense, net
2,341 4,213
5,510
8,577 Total costs and expenses
2,921,559 2,725,569
5,729,513 5,343,062 Earnings before taxes
510,044 455,348
1,008,519 926,850 Provision for taxes
on earnings
193,505 173,442
370,962 354,310 Net earnings
$
316,539 $ 281,906
$ 637,557
$ 572,540
Earnings per share Basic
$
0.83 $ 0.72
$ 1.66 $ 1.45 Diluted
$
0.82 $ 0.71
$ 1.64
$
1.44
Weighted average shares outstanding (000)
Basic
383,011 393,568
384,722 394,684 Diluted
385,571 395,930
387,657 397,381
Dividends Cash dividends declared per share
$
0.1600 $ 0.1350
$ 0.3200 $ 0.2700
Stores open at end of period
1,589 1,501
1,589
1,501
Ross Stores, Inc. Condensed
Consolidated Balance Sheets
($000, unaudited)
July 29, 2017
July 30, 2016
Assets Current Assets Cash and
cash equivalents
$ 1,150,932 $ 927,718 Short-term
investments
- 1,213 Accounts receivable
103,359
97,139 Merchandise inventory
1,608,333 1,560,209 Prepaid
expenses and other
141,793 127,401
Total current assets
3,004,417 2,713,680 Property and
equipment, net
2,327,113 2,310,481 Long-term investments
1,259 1,325 Other long-term assets
181,690
168,748 Total assets
$ 5,514,479
$ 5,194,234
Liabilities and Stockholders’ Equity
Current Liabilities Accounts payable
$
1,172,847 $ 1,125,836 Accrued expenses and other
411,083 397,150 Accrued payroll and benefits
245,031 228,195 Total current liabilities
1,828,961 1,751,181 Long-term debt
396,729
396,259 Other long-term liabilities
319,770 296,867 Deferred
income taxes
129,135 135,597 Commitments and
contingencies
Stockholders’ Equity
2,839,884 2,614,330 Total liabilities and
stockholders’ equity
$ 5,514,479 $ 5,194,234
Ross Stores, Inc. Condensed Consolidated
Statements of Cash Flows
Six Months Ended ($000, unaudited)
July 29, 2017 July 30, 2016
Cash Flows From
Operating Activities Net earnings
$ 637,557 $
572,540
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
150,905 148,630 Stock-based
compensation
42,719 36,206 Deferred income taxes
8,426 5,509 Change in assets and liabilities: Merchandise
inventory
(95,447 ) (141,105 ) Other current assets
(56,520 ) (34,773 ) Accounts payable
154,828
192,610 Other current liabilities
(59,104 ) (13,108 )
Other long-term, net
14,566
13,045 Net cash provided by operating activities
797,930 779,554
Cash
Flows From Investing Activities Additions to property and
equipment
(169,316 ) (147,426 ) Increase in
restricted cash and investments
(247 ) (143 )
Proceeds from investments
19 514
Net cash used in investing activities
(169,544
) (147,055 )
Cash Flows From
Financing Activities Excess tax benefit from stock-based
compensation
- 22,682 Issuance of common stock related to
stock plans
9,157 9,862 Treasury stock purchased
(43,163 ) (39,328 ) Repurchase of common stock
(430,085 ) (351,515 ) Dividends paid
(124,962 ) (108,084 ) Net cash used in
financing activities
(589,053 )
(466,383 ) Net increase in cash and cash equivalents
39,333 166,116 Cash and cash equivalents: Beginning
of period
1,111,599 761,602
End of period
$ 1,150,932 $
927,718
Supplemental Cash Flow Disclosures
Interest paid
$ 9,053 $ 9,053 Income taxes paid
$ 379,154 $ 313,142
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170817005946/en/
Ross Stores, Inc.Michael Hartshorn, 925-965-4503Group Senior
Vice President,Chief Financial OfficerorConnie Kao,
925-965-4668Vice President, Investor
Relationsconnie.kao@ros.com
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