Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per
share for the second quarter ended August 3, 2019 of $1.14, up from
$1.04 last year. Net earnings grew to $413 million, compared to
$389 million in the prior year. Sales rose 6% to $4.0 billion, with
comparable store sales up 3% on top of last year’s strongest
quarterly comparison of 5%.
For the six months ended August 3, 2019, earnings per share were
$2.29, up from $2.15 last year. Net earnings were $834 million
versus $808 million in the first half of 2018. Sales for the first
six months of 2019 rose 6% to $7.8 billion, with comparable store
sales up 2% versus a 4% gain for the first half of 2018. Both the
second quarter and year-to-date earnings results include an
approximate $.02 per share benefit from favorable timing of
expenses that are expected to reverse in the second half.
Barbara Rentler, Chief Executive Officer, commented, “We
delivered respectable gains in both sales and earnings for the
second quarter. While our Ladies business continued to trail the
chain, trends in this important area showed some improvement during
the period. Operating margin of 13.7% was better than expected,
mainly due to favorable timing of expenses that are expected to
reverse in the second half.”
Ms. Rentler continued, “During the second quarter and first six
months of fiscal 2019, we repurchased 3.2 million and 6.6 million
shares of common stock, respectively, for an aggregate price of
$320 million in the quarter and $640 million year-to-date. As
planned, we expect to buy back a total of $1.275 billion in common
stock during fiscal 2019.”
Looking ahead, Ms. Rentler said, “Our sales outlook remains
unchanged. We continue to forecast same store sales gains of 1% to
2% for both the third and fourth quarters. However, given the
recent announcement of 10% tariffs on goods sourced from China,
including apparel and footwear, we have updated our earnings
guidance for the balance of the year.”
Ms. Rentler added, “If sales perform in line with this guidance,
including a slight impact from the recently announced tariffs,
earnings per share for the third quarter ending November 2, 2019
are forecasted to be $.92 to $.96, compared to $.91 a year ago. For
the fourth quarter ending February 1, 2020, earnings per share are
projected to be $1.20 to $1.25 versus $1.20 in the prior year. As a
reminder, last year’s fourth quarter included a one-time per share
benefit of $.07 related to the favorable resolution of a tax
matter. Based on our first half results and second half guidance,
earnings per share for fiscal year 2019 are now planned to be in
the range of $4.41 to $4.50.”
The Company will host a conference call on Thursday, August 22,
2019 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 #9991468 until 8:00 p.m.
Eastern time on August 29, 2019, as well as on the Company’s
website.
Forward-Looking Statements:
This press release contains forward-looking statements regarding
expected sales, earnings levels, new store growth, 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, tariff, or trade 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 2018, and Form 10-Q and Form 8-Ks for fiscal 2019.
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
2018 revenues of $15.0 billion. As of August 3, 2019, the Company
operates Ross Dress for Less® (“Ross”), the largest off-price
apparel and home fashion chain in the United States with 1,523
locations in 39 states, the District of Columbia, and Guam. 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 249 dd’s DISCOUNTS® in
18 states 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)
August 3, 2019 August 4, 2018
August 3, 2019 August
4, 2018
Sales
$
3,979,869
$
3,737,926
$
7,776,511
$
7,326,545
Costs and Expenses Cost of goods sold
2,843,850
2,666,983
5,545,518
5,189,202
Selling, general and administrative
591,970
554,581
1,150,220
1,079,004
Interest income, net
(4,782
)
(1,393
)
(10,417
)
(1,896
)
Total costs and expenses
3,431,038
3,220,171
6,685,321
6,266,310
Earnings before taxes
548,831
517,755
1,091,190
1,060,235
Provision for taxes on earnings
136,110
128,351
257,327
252,579
Net earnings
$
412,721
$
389,404
$
833,863
$
807,656
Earnings per share Basic
$
1.15
$
1.05
$
2.31
$
2.17
Diluted
$
1.14
$
1.04
$
2.29
$
2.15
Weighted average shares outstanding (000)
Basic
359,794
371,031
361,439
372,414
Diluted
362,074
373,717
364,007
375,336
Stores open at end of period
1,772
1,680
1,772
1,680
Ross Stores, Inc. Condensed Consolidated
Balance Sheets ($000, unaudited)
August 3,
2019 August 4, 2018
Assets Current Assets
Cash and cash equivalents
$
1,382,025
$
1,386,935
Accounts receivable
130,439
121,508
Merchandise inventory
1,835,869
1,698,390
Prepaid expenses and other
167,585
172,822
Total current assets
3,515,918
3,379,655
Property and equipment, net
2,505,040
2,384,301
Operating lease assets
2,932,199
-
Other long-term assets
198,790
199,800
Total assets
$
9,151,947
$
5,963,756
Liabilities and Stockholders’ Equity
Current Liabilities Accounts payable
$
1,359,829
$
1,184,422
Accrued expenses and other
474,273
427,875
Current operating lease liabilities
549,841
-
Accrued payroll and benefits
295,465
280,861
Current portion of long-term debt
-
84,989
Total current liabilities
2,679,408
1,978,147
Long-term debt
312,665
312,217
Non-current operating lease liabilities
2,496,230
-
Other long-term liabilities
227,842
374,587
Deferred income taxes
139,538
114,195
Commitments and contingencies
Stockholders’
Equity
3,296,264
3,184,610
Total liabilities and stockholders’ equity
$
9,151,947
$
5,963,756
Ross Stores, Inc. Condensed Consolidated
Statements of Cash Flows Six Months Ended
($000, unaudited)
August 3, 2019 August 4, 2018
Cash Flows From Operating Activities Net earnings
$
833,863
$
807,656
Adjustments to reconcile net earnings to net cash provided by
operating activities: Depreciation and amortization
166,898
162,403
Stock-based compensation
44,613
47,580
Deferred income taxes
21,868
21,664
Change in assets and liabilities: Merchandise inventory
(85,427
)
(56,654
)
Other current assets
(55,309
)
(64,754
)
Accounts payable
187,050
122,008
Other current liabilities
(8,529
)
(29,348
)
Income taxes
(31,193
)
(1,619
)
Operating lease assets and liabilities, net
8,276
-
Other long-term, net
1,353
5,248
Net cash provided by operating activities
1,083,463
1,014,184
Cash Flows From Investing Activities Additions to
property and equipment
(250,314
)
(178,635
)
Proceeds from investments
517
505
Net cash used in investing activities
(249,797
)
(178,130
)
Cash Flows From Financing Activities Issuance of
common stock related to stock plans
10,906
9,817
Treasury stock purchased
(52,349
)
(51,061
)
Repurchase of common stock
(640,259
)
(528,580
)
Dividends paid
(186,642
)
(169,971
)
Net cash used in financing activities
(868,344
)
(739,795
)
Net (decrease) increase in cash, cash equivalents, and
restricted cash and cash equivalents
(34,678
)
96,259
Cash, cash equivalents, and restricted cash and cash
equivalents: Beginning of period
1,478,079
1,353,272
End of period
$
1,443,401
$
1,449,531
Reconciliations: Cash and cash equivalents
$
1,382,025
$
1,386,935
Restricted cash and cash equivalents included in prepaid expenses
and other
11,048
8,961
Restricted cash and cash equivalents included in other long-term
assets
50,328
53,635
Total cash, cash equivalents, and restricted cash and cash
equivalents:
$
1,443,401
$
1,449,531
Supplemental Cash Flow Disclosures Interest paid
$
6,341
$
9,053
Income taxes paid
$
266,653
$
232,528
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190822005661/en/
Travis Marquette Group Senior Vice President, Chief Financial
Officer (925) 965-4550
Connie Kao Vice President, Investor Relations (925) 965-4668
connie.kao@ros.com
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