U.S. Markets closed

Ross Stores Reports Third Quarter Earnings, Updates Fourth Quarter Guidance

DUBLIN, Calif.--(BUSINESS WIRE)--

Ross Stores, Inc. (ROST) today reported earnings per share for the third quarter ended November 2, 2019 of $1.03, up from $.91 last year. Net earnings grew to $371 million from $338 million in the prior year. Third quarter sales rose 8% to $3.8 billion, with comparable store sales up a strong 5% on top of last year’s gain of 3%.

For the nine months ended November 2, 2019, earnings per share were $3.32, up from $3.06 last year. Net earnings were $1.2 billion, compared to $1.1 billion in the prior year. Sales year-to-date rose 7% to $11.6 billion, with comparable store sales up 3% versus a 3% gain for the first nine months of 2018.

Barbara Rentler, Chief Executive Officer, commented, “We are pleased that our third quarter results were ahead of expectations. Operating margin of 12.4% was also above-plan mainly due to better than expected sales and merchandise margin.”

Ms. Rentler continued, “During the third quarter and first nine months of fiscal 2019, we repurchased 3.0 million and 9.6 million shares of common stock, respectively, for an aggregate price of $326 million in the quarter and $966 million year-to-date. We remain on track to buy back a total of $1.275 billion in common stock during fiscal 2019.”

Looking ahead, Ms. Rentler said, “As we enter this year’s holiday season, we are up against multiple years of strong comparable store sales gains. In addition, we expect another fiercely competitive retail landscape, along with ongoing uncertainty surrounding the macro-economic and political environment. As such, while we hope to do better, we continue to project fourth quarter comparable store sales gains of 1% to 2% versus a 4% increase last year.”

Ms. Rentler continued, “Given these sales assumptions, we continue to expect fourth quarter earnings per share to be in the range of $1.20 to $1.25, which now includes a one-time, non-cash benefit of $.02 per share, primarily due to the favorable resolution of a tax matter, offset by slightly higher pre-tax expenses. This forecasted guidance compares to $1.20 per share in the prior year period, which also included a one-time per share benefit of $.07 related to the favorable resolution of a tax matter.”

Ms. Rentler concluded, “Based on our year-to-date results, and our updated fourth quarter guidance, we are now planning earnings per share for fiscal 2019 to be in the range of $4.52 to $4.57, up from $4.26 in fiscal 2018.”

The Company will host a conference call on Thursday, November 21, 2019, at 4:15 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 #5397837 until 8:00 p.m. Eastern time on November 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-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 2018 revenues of $15.0 billion. Currently, the Company operates Ross Dress for Less® (“Ross”), the largest off-price apparel and home fashion chain in the United States with 1,550 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 currently operates 260 dd’s DISCOUNTS® in 19 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 Nine Months Ended
($000, except stores and per share data, unaudited) November 2, 2019 November 3, 2018 November 2, 2019 November 3, 2018
 
Sales

$

3,849,117

 

$

3,549,608

 

$

11,625,628

 

$

10,876,153

 

 
Costs and Expenses
Cost of goods sold

 

2,766,432

 

 

2,547,331

 

 

8,311,950

 

 

7,736,533

 

Selling, general and administrative

 

604,605

 

 

561,577

 

 

1,754,825

 

 

1,640,581

 

Interest income, net

 

(4,402

)

 

(2,953

)

 

(14,819

)

 

(4,849

)

Total costs and expenses

 

3,366,635

 

 

3,105,955

 

 

10,051,956

 

 

9,372,265

 

 
Earnings before taxes

 

482,482

 

 

443,653

 

 

1,573,672

 

 

1,503,888

 

Provision for taxes on earnings

 

111,550

 

 

105,545

 

 

368,877

 

 

358,124

 

Net earnings

$

370,932

 

$

338,108

 

$

1,204,795

 

$

1,145,764

 

 
Earnings per share
Basic

$

1.04

 

$

0.92

 

$

3.35

 

$

3.09

 

Diluted

$

1.03

 

$

0.91

 

$

3.32

 

$

3.06

 

 
 
Weighted average shares outstanding (000)
Basic

 

356,879

 

 

368,102

 

 

359,919

 

 

370,977

 

Diluted

 

359,299

 

 

371,061

 

 

362,455

 

 

373,936

 

 
 
Stores open at end of period

 

1,810

 

 

1,720

 

 

1,810

 

 

1,720

 

 
Ross Stores, Inc.
Condensed Consolidated Balance Sheets
 
 
($000, unaudited) November 2, 2019 November 3, 2018
Assets
 
Current Assets
Cash and cash equivalents

$

1,142,709

$

1,349,196

Accounts receivable

 

124,853

 

117,825

Merchandise inventory

 

2,168,796

 

1,979,080

Prepaid expenses and other

 

170,304

 

177,206

Total current assets

 

3,606,662

 

3,623,307

 
Property and equipment, net

 

2,565,882

 

2,418,226

Operating lease assets

 

3,042,298

 

-

Other long-term assets

 

200,999

 

194,234

Total assets

$

9,415,841

$

6,235,767

 
Liabilities and Stockholders’ Equity
 
Current Liabilities
Accounts payable

$

1,480,205

$

1,394,029

Accrued expenses and other

 

496,623

 

455,743

Current operating lease liabilities

 

559,433

 

-

Accrued payroll and benefits

 

321,977

 

317,525

Current portion of long-term debt

 

-

 

84,997

Total current liabilities

 

2,858,238

 

2,252,294

 
 
Long-term debt

 

312,778

 

312,328

Non-current operating lease liabilities

 

2,601,372

 

-

Other long-term liabilities

 

225,934

 

371,844

Deferred income taxes

 

140,740

 

112,138

 
Commitments and contingencies
 
Stockholders’ Equity

 

3,276,779

 

3,187,163

Total liabilities and stockholders’ equity

$

9,415,841

$

6,235,767

 
Ross Stores, Inc.
Condensed Consolidated Statements of Cash Flows
 
 

Nine Months Ended

($000, unaudited) November 2, 2019 November 3, 2018
 
Cash Flows From Operating Activities
Net earnings

$

1,204,795

 

$

1,145,764

 

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

 

255,089

 

 

246,151

 

Stock-based compensation

 

70,600

 

 

71,361

 

Deferred income taxes

 

23,070

 

 

19,607

 

Change in assets and liabilities:
Merchandise inventory

 

(418,354

)

 

(337,345

)

Other current assets

 

(46,161

)

 

(62,081

)

Accounts payable

 

305,648

 

 

328,062

 

Other current liabilities

 

43,968

 

 

35,758

 

Income taxes

 

(42,619

)

 

(5,338

)

Operating lease assets and liabilities, net

 

12,911

 

 

-

 

Other long-term, net

 

1,983

 

 

8,133

 

Net cash provided by operating activities

 

1,410,930

 

 

1,450,072

 

 
Cash Flows From Investing Activities
Additions to property and equipment

 

(401,251

)

 

(293,366

)

Proceeds from investments

 

517

 

 

739

 

Net cash used in investing activities

 

(400,734

)

 

(292,627

)

 
Cash Flows From Financing Activities
Issuance of common stock related to stock plans

 

16,451

 

 

14,915

 

Treasury stock purchased

 

(56,920

)

 

(53,680

)

Repurchase of common stock

 

(965,909

)

 

(806,500

)

Dividends paid

 

(278,370

)

 

(253,863

)

Net cash used in financing activities

 

(1,284,748

)

 

(1,099,128

)

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

 

(274,552

)

 

58,317

 

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

 

1,478,079

 

 

1,353,272

 

End of period

$

1,203,527

 

$

1,411,589

 

 
Reconciliations:
Cash and cash equivalents

$

1,142,709

 

$

1,349,196

 

Restricted cash and cash equivalents included in prepaid expenses and other

 

10,947

 

 

8,933

 

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

 

49,871

 

 

53,460

 

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

$

1,203,527

 

$

1,411,589

 

 
Supplemental Cash Flow Disclosures
Interest paid

$

10,560

 

$

13,271

 

Income taxes paid

$

388,426

 

$

343,848

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20191121005952/en/