Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per
share for the third quarter ended November 3, 2018 of $.91, versus
$.72 for the 13 weeks ended October 28, 2017. Net earnings grew to
$338 million, up from $274 million in the prior year. Third quarter
sales rose 7% to $3.5 billion, with comparable store sales up 3%
over the 13 weeks ended November 4, 2017. This compares to last
year’s same store sales gain of 4% for the 13 weeks ended October
28, 2017.
For the nine months ended November 3, 2018, earnings per share
were $3.06, up from $2.36 last year. Net earnings were $1.1
billion, compared to $912 million in the prior year. Sales
year-to-date rose 8% to $10.9 billion, with comparable store sales
up 3% over the 39 weeks ended November 4, 2017. This is on top of a
same store sales gain of 4% for the nine months ended October 28,
2017. Both the third quarter and year-to-date earnings results
include the benefit of tax reform.
Barbara Rentler, Chief Executive Officer, commented, “Both sales
and earnings for the quarter were ahead of our forecast, despite
being up against very strong multi-year comparisons. Though above
plan, operating margin of 12.4% was down from last year as higher
merchandise margin was more than offset by increases in freight
costs and this year’s wage investments.”
Ms. Rentler continued, “During the third quarter and first nine
months of fiscal 2018, we repurchased 2.9 million and 9.4 million
shares of common stock, respectively, for an aggregate price of
$278 million in the quarter and $807 million year-to-date. We
remain on track to buy back a total of $1.075 billion in common
stock during fiscal 2018.”
Looking ahead, Ms. Rentler said, “As we enter this year’s
holiday season, not only are we up against our toughest sales
comparisons from 2017, but we are also expecting another fiercely
competitive retail environment. As a result, while we hope to do
better, we continue to project fourth quarter comparable store
sales gains of 1% to 2% versus a strong 5% increase last year. We
are now forecasting our earnings per share for the 13 weeks ending
February 2, 2019 to be in the range of $1.09 to $1.14, which
includes a one-time, non-cash benefit of approximately $.07 per
share related to the favorable resolution of a tax matter. This
updated guidance compares to earnings per share for the 14 weeks
ended February 3, 2018 of $1.19, which included a per share benefit
of $.14 from a one-time revaluation of deferred taxes and $.10 from
the 53rd week.”
Ms. Rentler continued, “Based on our year-to-date results and
our updated fourth quarter guidance, we are now planning earnings
per share for fiscal 2018 to be in the range of $4.15 to
$4.20.”
The Company will host a conference call on Tuesday, November 20,
2018, at 12:00 p.m. Eastern time to provide additional details
concerning its third 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 #8886637 until 8:00 p.m.
Eastern time on November 27, 2018, 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 opportunity, 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
2017, and Form 10-Qs and Form 8-Ks for fiscal 2018. 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 1,483 locations in 38 states, the
District of Columbia and Guam as of November 3, 2018. 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 237 dd’s DISCOUNTS® in
18 states as of November 3, 2018 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 Nine Months
Ended ($000, except stores and per share data, unaudited)
November 3,2018
October 28,2017
November 3,2018
October 28,2017
Sales $ 3,549,608 $ 3,328,894
$
10,876,153 $ 10,066,926
Costs and Expenses
Cost of goods sold
2,547,331 2,369,148
7,736,533
7,120,056 Selling, general and administrative
561,577
517,297
1,640,581 1,490,392 Interest (income) expense, net
(2,953 ) 1,780
(4,849 ) 7,290
Total costs and expenses
3,105,955 2,888,225
9,372,265 8,617,738 Earnings before taxes
443,653 440,669
1,503,888 1,449,188 Provision for
taxes on earnings
105,545
166,220
358,124
537,182 Net earnings
$ 338,108
$ 274,449
$ 1,145,764
$ 912,006
Earnings per share Basic
$ 0.92 $ 0.72
$ 3.09 $ 2.38 Diluted
$ 0.91 $ 0.72
$ 3.06 $ 2.36
Weighted average shares outstanding
(000) Basic
368,102 379,432
370,977 382,959
Diluted
371,061 382,132
373,936 385,823
Stores open at end of period
1,720
1,627
1,720 1,627
Ross
Stores, Inc. Condensed Consolidated Balance Sheets
($000, unaudited)
November 3,
2018 October 28, 2017
Assets
Current Assets Cash and cash equivalents
$
1,349,196 $ 1,144,169 Short-term investments
- 518
Accounts receivable
117,825 103,071 Merchandise inventory
1,979,080 1,840,225 Prepaid expenses and other
177,206 147,962 Total current assets
3,623,307 3,235,945 Property and equipment, net
2,418,226 2,348,186 Long-term investments
475 715
Other long-term assets
193,759
182,132 Total assets
$ 6,235,767 $
5,766,978
Liabilities and Stockholders’ Equity
Current Liabilities Accounts payable
$
1,394,029 $ 1,289,620 Accrued expenses and other
455,743 445,728 Accrued payroll and benefits
317,525
320,894 Current portion of long-term debt
84,997
- Total current liabilities
2,252,294
2,056,242 Long-term debt
312,328 396,848 Other
long-term liabilities
371,844 325,587 Deferred income taxes
112,138 129,782 Commitments and contingencies
Stockholders’ Equity 3,187,163
2,858,519 Total liabilities and stockholders’ equity
$ 6,235,767 $ 5,766,978
Ross Stores, Inc. Condensed Consolidated
Statements of Cash Flows Nine Months Ended
($000, unaudited)
November 3, 2018
October 28, 20171
Cash Flows From Operating
Activities Net earnings
$ 1,145,764 $ 912,006
Adjustments to reconcile net earnings to net cash provided by
operating activities: Depreciation and amortization
246,151
227,255 Stock-based compensation
71,361 64,937 Deferred
income taxes
19,607 9,074 Change in assets and liabilities:
Merchandise inventory
(337,345 ) (327,339 ) Other
current assets
(76,489 ) (62,610 ) Accounts payable
328,062 271,526 Other current liabilities
35,758
51,567 Other long-term, net
17,203
19,270 Net cash provided by operating
activities
1,450,072
1,165,686
Cash Flows From Investing Activities
Additions to property and equipment
(293,366 )
(266,863 ) Proceeds from investments
739
- Net cash used in investing activities
(292,627 ) (266,863 )
Cash Flows From Financing Activities Issuance of
common stock related to stock plans
14,915 13,668 Treasury
stock purchased
(53,680 ) (45,440 ) Repurchase of
common stock
(806,500 ) (648,835 ) Dividends paid
(253,863 ) (186,459 ) Net
cash used in financing activities
(1,099,128 )
(867,066 ) Net increase in cash, cash
equivalents, and restricted cash and cash equivalents
58,317
31,757 Cash, cash equivalents, and restricted cash and cash
equivalents: Beginning of period1
1,353,272
1,176,180 End of period
$
1,411,589 $ 1,207,937
Reconciliations: Cash and cash equivalents
$
1,349,196 $ 1,144,169 Restricted cash and cash equivalents
included in prepaid expenses and other
8,933 12,776
Restricted cash and cash equivalents included in other long-term
assets
53,460 50,992
Total cash, cash equivalents, and restricted cash and cash
equivalents:
$ 1,411,589 $
1,207,937
Supplemental Cash Flow Disclosures
Interest paid
$ 13,271 $ 13,271 Income taxes paid
$ 343,848 $ 552,720
1 As the result of the adoption of ASU
2016-18, Statement of Cash Flow (Topic 230): Restricted Cash, the
prior year amounts were retrospectively adjusted to include
restricted cash and cash equivalents.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181120005167/en/
Michael HartshornExecutive Vice President,Chief Financial
Officer(925) 965-4503
Connie KaoVice President, Investor Relations(925)
965-4668connie.kao@ros.com
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