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Ross Stores Reports Fourth Quarter and Fiscal 2019 Results Announces 12% Increase in Quarterly Cash Dividend Provides First Quarter and Fiscal 2020 Guidance

Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for the 13 weeks ended February 1, 2020 grew 7% to $1.28 on net income of $456 million. Sales for the fourth quarter of 2019 were $4.4 billion, with comparable store sales up 4% on top of a 4% gain in the prior year period.

For the 2019 fiscal year, earnings per share increased 8% to $4.60, compared to $4.26 in the prior year. Net income for the period was $1.7 billion, up from $1.6 billion last year. Sales for the 2019 year grew 7% to $16.0 billion, with same store sales up 3% on top of a 4% gain last year.

Earnings results for both the 2019 and 2018 fourth quarters and fiscal years reflect one-time, non-cash gains of $.02 and $.07 per share, respectively, primarily related to the favorable resolution of tax matters.

Barbara Rentler, Chief Executive Officer, commented, "We delivered strong sales and earnings growth for both the fourth quarter and fiscal year. Our ongoing ability to offer compelling bargains to our customers enabled us to achieve these results despite our own challenging multi-year comparisons and a fiercely competitive holiday season."

Ms. Rentler continued, "Fourth quarter operating margin of 13.3% was slightly better than expected, driven by higher merchandise margin."

Update on Stock Repurchase Program

During the fourth quarter and fiscal 2019 we repurchased a total of 2.7 million and 12.3 million shares of common stock, respectively, for an aggregate price of $309 million in the quarter and $1.275 billion for the full year. These purchases were made pursuant to the two-year $2.55 billion program announced in March 2019. We expect to complete the $1.275 billion remaining under the authorization in fiscal 2020.

Declaration of Higher Quarterly Cash Dividend

The Company’s Board of Directors also recently approved an increase in the quarterly cash dividend to $.285 per share, up 12% over the prior year. This higher quarterly dividend is payable on March 31, 2020 to stockholders of record as of March 17, 2020.

Ms. Rentler noted, "The increases to our shareholder payouts for 2020 reflect our ongoing confidence in the Company’s ability to generate significant amounts of cash after funding our growth and the other capital needs of our business. We have repurchased stock as planned every year since 1993 and raised our cash dividend annually since 1994. This consistent record reflects our ongoing commitment to enhancing stockholder value and returns."

Fiscal 2020 Guidance

Looking ahead, Ms. Rentler said, "As we enter 2020, we continue to face our own strong long-term sales and earnings results plus ongoing uncertainty in the macro-economic, political, and retail landscapes. Therefore, while we hope to do better, we believe it is prudent to maintain a somewhat cautious outlook when projecting our performance for the coming year."

Ms. Rentler added, "Our guidance also does not reflect the potential unknown impacts from the evolving coronavirus outbreak. While we are closely monitoring the situation, there remains a high level of uncertainty over supply chain disruptions in China. In addition, it is unclear how a further possible spread of the coronavirus could negatively impact U.S. consumer demand."

For the 52 weeks ending January 30, 2021, the Company is planning same store sales to grow 1% to 2% and earnings per share of $4.67 to $4.88. We also plan to open about 100 stores this year, consisting of approximately 75 Ross Dress for Less and 25 dd’s DISCOUNTS locations.

For the first quarter ending May 2, 2020, comparable store sales are forecast to be up 1% to 2% with earnings per share projected to be $1.16 to $1.21 versus $1.15 for the first quarter ended May 4, 2019.

The Company will host a conference call on Tuesday, March 3, 2020 at 4:15 p.m. Eastern time to provide additional details concerning its fourth quarter and fiscal year 2019 results, and management’s outlook and guidance for fiscal 2020. 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 #7499025 until 8:00 p.m. Eastern time on March 10, 2020, 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, geopolitical conditions, or public health issues (such as pandemics); 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-Qs 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 2019 revenues of $16.0 billion. The Company operates Ross Dress for Less® ("Ross"), the largest off-price apparel and home fashion chain in the United States with 1,546 locations in 39 states, the District of Columbia, and Guam at fiscal 2019 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 259 dd’s DISCOUNTS® in 19 states at the end of fiscal 2019 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 Twelve Months Ended
($000, except stores and per share data, unaudited) February 1, 2020February 2, 2019February 1, 2020February 2, 2019
 
Sales

$ 4,413,445

$ 4,107,388

$ 16,039,073

$ 14,983,541

 
Costs and Expenses
Cost of goods sold

3,224,237

2,989,744

11,536,187

10,726,277

Selling, general and administrative

601,879

575,969

2,356,704

2,216,550

Interest income, net

(3,287)

(5,313)

(18,106)

(10,162)

Total costs and expenses

3,822,829

3,560,400

13,874,785

12,932,665

 
Earnings before taxes

590,616

546,988

2,164,288

2,050,876

Provision for taxes on earnings

134,483

105,295

503,360

463,419

Net earnings

$ 456,133

$ 441,693

$ 1,660,928

$ 1,587,457

 
Earnings per share
Basic

$ 1.29

$ 1.21

$ 4.63

$ 4.30

Diluted

$ 1.28

$ 1.20

$ 4.60

$ 4.26

 
 
Weighted average shares outstanding (000)
Basic

354,090

365,202

358,462

369,533

Diluted

356,918

368,365

361,182

372,678

 
 
Stores open at end of period

1,805

1,717

1,805

1,717

 
Ross Stores, Inc.
Condensed Consolidated Balance Sheets
 
 
($000, unaudited) February 1, 2020February 2, 2019
Assets
 
Current Assets
Cash and cash equivalents

$ 1,351,205

$ 1,412,912

Accounts receivable

102,236

96,711

Merchandise inventory

1,832,339

1,750,442

Prepaid expenses and other

147,048

143,954

Total current assets

3,432,828

3,404,019

 
Property and equipment, net

2,653,436

2,475,201

Operating lease assets

3,053,782

-

Other long-term assets

208,321

194,471

Total assets

$ 9,348,367

$ 6,073,691

 
Liabilities and Stockholders’ Equity
 
Current Liabilities
Accounts payable

$ 1,296,482

$ 1,177,104

Accrued expenses and other

462,111

431,596

Current operating lease liabilities

564,481

-

Accrued payroll and benefits

364,435

363,035

Income taxes payable

14,425

37,749

Total current liabilities

2,701,934

2,009,484

 
 
Long-term debt

312,891

312,440

Non-current operating lease liabilities

2,610,528

-

Other long-term liabilities

214,086

321,713

Deferred income taxes

149,679

124,308

 
Commitments and contingencies
 
Stockholders’ Equity

3,359,249

3,305,746

Total liabilities and stockholders’ equity

$ 9,348,367

$ 6,073,691

 
Ross Stores, Inc.
Condensed Consolidated Statements of Cash Flows
 
 
Twelve Months Ended
($000, unaudited) February 1, 2020February 2, 2019
 
Cash Flows From Operating Activities
Net earnings

$ 1,660,928

$ 1,587,457

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

350,892

330,357

Stock-based compensation

95,438

95,585

Deferred income taxes

32,009

31,777

Change in assets and liabilities:
Merchandise inventory

(81,897)

(108,707)

Other current assets

(10,315)

(30,789)

Accounts payable

114,153

110,483

Other current liabilities

30,513

37,080

Income taxes

(35,239)

3,706

Operating lease assets and liabilities, net

15,631

-

Other long-term, net

(567)

9,728

Net cash provided by operating activities

2,171,546

2,066,677

 
Cash Flows From Investing Activities
Additions to property and equipment

(555,483)

(413,898)

Proceeds from investments

517

3,489

Net cash used in investing activities

(554,966)

(410,409)

 
Cash Flows From Financing Activities
Payment of long-term debt

-

(85,000)

Issuance of common stock related to stock plans

22,209

20,112

Treasury stock purchased

(60,665)

(54,384)

Repurchase of common stock

(1,275,000)

(1,075,000)

Dividends paid

(369,793)

(337,189)

Net cash used in financing activities

(1,683,249)

(1,531,461)

Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents

(66,669)

124,807

Cash, cash equivalents, and restricted cash and cash equivalents:
Beginning of period

1,478,079

1,353,272

End of period

$ 1,411,410

$ 1,478,079

 
Reconciliations:
Cash and cash equivalents

$ 1,351,205

$ 1,412,912

Restricted cash and cash equivalents included in prepaid expenses and other

10,235

11,402

Restricted cash and cash equivalents included in other long-term assets

49,970

53,765

Total cash, cash equivalents, and restricted cash and cash equivalents:

$ 1,411,410

$ 1,478,079

 
Supplemental Cash Flow Disclosures
Interest paid

$ 12,682

$ 18,105

Income taxes paid

$ 506,591

$ 427,930

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200303005997/en/

Contacts

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