Provides Second Half and Updated Fiscal 2023
Guidance
Ross Stores, Inc. (NASDAQ: ROST) today reported earnings per
share for the 13 weeks ended July 29, 2023 of $1.32 on net income
of $446 million. These results compare to $1.11 per share on net
earnings of $385 million for the 13 weeks ended July 30, 2022.
Sales for the second quarter of 2023 were $4.9 billion versus $4.6
billion in the prior year period. Comparable store sales were up 5%
versus down 7% in the second quarter of 2022.
For the six months ended July 29, 2023, earnings per share were
$2.41 on net income of $818 million. These results compare to
earnings per share of $2.08 on net earnings of $723 million in the
first half of 2022. Sales for the first six months of 2023 were
$9.4 billion, with comparable store sales up 3% versus down 7% in
the first half of 2022.
Barbara Rentler, Chief Executive Officer, commented, “We are
pleased with our second quarter results, with both sales and
earnings well above our expectations. Along with easing
inflationary pressures, customers responded well to our improved
value offerings throughout our stores. Second quarter operating
margin was flat to last year at 11.3%.”
She continued, “During the second quarter, we repurchased 2.2
million shares of common stock for an aggregate price of $230
million. As previously announced, we expect to buy back $950
million of common stock this year under our two-year $1.9 billion
repurchase program that extends through fiscal 2023.”
Second Half and Updated Fiscal 2023
Guidance
Looking ahead, Ms. Rentler commented, “Despite the recent
moderation in inflation, our low-to-moderate income customer
continues to face persistently higher costs on necessities. As
such, we believe it is prudent to continue to plan the business
cautiously. However, given our improved second quarter performance,
we are raising our second half sales and earnings outlook. We are
now planning comparable store sales for the third and fourth
quarters of 2023 to be up 2% to 3% and up 1% to 2%, respectively.
Based on these assumptions, same store sales for the 52 weeks
ending January 27, 2024 are forecast to be in the range of up 2% to
3%.”
She continued, “If the second half performs in line with these
updated sales assumptions, earnings per share for the third quarter
are projected to be $1.16 to $1.21 versus $1.00 last year and $1.58
to $1.64 for the fourth quarter, compared to $1.31 in 2022. Based
on our first half results and second half guidance, earnings per
share for the 53 weeks ending February 3, 2024 are now planned to
be in the range of $5.15 to $5.26 versus $4.38 last year.
Incorporated in this updated guidance range is an estimated benefit
to earnings per share of approximately $0.16 from the 53rd week in
fiscal 2023.”
Ms. Rentler concluded, “Moving forward, we remain focused on
delivering the most compelling bargains possible while also
carefully managing our expenses and inventory to maximize our
potential for both sales and earnings growth. Longer-term, we
believe the rigorous execution of our off-price business model will
allow us to consistently deliver solid results.”
The Company will host a conference call on Thursday, August 17,
2023 at 4:15 p.m. Eastern time to provide additional details
concerning its second quarter results and management’s outlook for
the second half and fiscal year 2023. 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 201-612-7415, PIN #13740437 until
8:00 p.m. Eastern time on August 24, 2023, as well as on the
Company’s website.
Forward-Looking Statements:
This press release and the related conference call remarks contain
forward-looking statements regarding, without limitation, projected
sales, costs, and earnings, planned new store growth, capital
expenditures, liquidity, and other matters. These forward-looking
statements reflect our then-current beliefs, plans, and estimates
with respect to future events and our projected financial
performance and operations, and they 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, uncertainties arising from the
macroeconomic environment, including inflation, interest rates,
housing costs, energy and fuel costs, financial and credit market
conditions, recession concerns, geopolitical conditions (including
the current Russia-Ukraine conflict), the COVID-19 pandemic, and
other public health and public safety issues, that affect our
costs, consumer confidence, and consumer disposable income;
unexpected changes in the level of consumer spending on, or
preferences for, apparel and home-related merchandise, which could
adversely affect us; competitive pressures in the apparel and
home-related merchandise retailing industry; our need to
effectively manage our inventories, markdowns, and inventory
shortage in order to achieve our planned gross margins; risks
associated with importing and selling merchandise produced in other
countries, including risks from supply chain disruption, shipping
delays, and higher than expected ocean freight costs; unseasonable
weather or extreme temperatures that may affect shopping patterns
and consumer demand for seasonal apparel and other merchandise; our
dependence on the market availability, quantity, and quality of
attractive brand name merchandise at desirable discounts, and on
the ability of our buyers to anticipate consumer preferences and to
purchase merchandise to enable us to offer customers a wide
assortment of merchandise at competitive prices; 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; disruptions in our supply
chain or in our information systems, including from ransomware or
other cyber-attacks, that could impact our ability to process sales
and to deliver product to our stores in a timely and cost-effective
manner; our need to obtain acceptable new store sites with
favorable consumer demographics to achieve our planned new store
openings; our need to expand in existing markets and enter new
geographic markets in order to achieve planned market penetration;
consumer problems or legal 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; an adverse outcome
in various legal, regulatory, or tax matters, or the adoption of
new federal or state tax legislation that increases tax rates or
adds new taxes, that could increase our costs; damage to our
corporate reputation or brands that could adversely affect our
sales and operating results; our need to continually attract,
train, and retain associates with the retail talent necessary to
execute our off-price retail strategies; our need to effectively
advertise and market our business; changes in U.S. tax, tariff, or
trade policy regarding apparel and home-related merchandise
produced in other countries, which could adversely affect our
business; possible volatility in our revenues and earnings; a
public health or public safety crisis, demonstrations, or a natural
or man-made disaster in California or in another region where we
have a concentration of stores, offices, or a distribution center,
that could harm our business; and our need to maintain sufficient
liquidity to support our continuing operations and our new store
openings. Other risk factors are set forth in our SEC filings
including without limitation, the Form 10-K for fiscal 2022 and
fiscal 2023 Form 8-Ks and 10-Q on file with the SEC. The factors
underlying our forecasts are dynamic and subject to change. As a
result, any forecasts or forward-looking statements speak only as
of the date they are given and do not necessarily reflect our
outlook at any other point in time. We disclaim any obligation 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
2022 revenues of $18.7 billion. Currently, the Company operates
Ross Dress for Less® (“Ross”), the largest off-price apparel and
home fashion chain in the United States with 1,722 locations in 41
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 339 dd’s DISCOUNTS®
stores in 22 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)
July 29, 2023
July 30, 2022
July 29, 2023
July 30, 2022
Sales
$
4,934,905
$
4,583,009
$
9,429,591
$
8,916,109
Costs and Expenses Cost of goods sold
3,569,367
3,399,535
6,861,973
6,595,981
Selling, general and administrative
807,898
667,063
1,554,120
1,336,559
Interest (income) expense, net
(37,214
)
10,667
(68,611
)
28,363
Total costs and expenses
4,340,051
4,077,265
8,347,482
7,960,903
Earnings before taxes
594,854
505,744
1,082,109
955,206
Provision for taxes on earnings
148,535
121,227
264,599
232,244
Net earnings
$
446,319
$
384,517
$
817,510
$
722,962
Earnings per share Basic
$
1.33
$
1.11
$
2.42
$
2.09
Diluted
$
1.32
$
1.11
$
2.41
$
2.08
Weighted-average shares outstanding (000)
Basic
336,231
344,884
337,140
345,969
Diluted
337,932
346,106
339,003
347,470
Store count at end of period
2,061
1,980
2,061
1,980
Ross Stores, Inc. Condensed Consolidated
Balance Sheets ($000, unaudited)
July 29, 2023
July 30, 2022
Assets Current Assets Cash and cash
equivalents
$
4,583,606
$
3,903,670
Accounts receivable
175,410
167,503
Merchandise inventory
2,300,063
2,716,878
Prepaid expenses and other
214,673
197,020
Total current assets
7,273,752
6,985,071
Property and equipment, net
3,310,605
2,929,774
Operating lease assets
3,164,685
3,025,814
Other long-term assets
238,260
239,263
Total assets
$
13,987,302
$
13,179,922
Liabilities and Stockholders’ Equity
Current Liabilities Accounts payable
$
2,150,999
$
2,085,680
Accrued expenses and other
689,866
611,186
Current operating lease liabilities
668,028
647,504
Accrued payroll and benefits
435,300
300,611
Income taxes payable
25,449
—
Total current liabilities
3,969,642
3,644,981
Long-term debt
2,458,615
2,454,413
Non-current operating lease liabilities
2,653,632
2,525,512
Other long-term liabilities
231,945
231,285
Deferred income taxes
218,726
196,780
Commitments and contingencies
Stockholders’
Equity
4,454,742
4,126,951
Total liabilities and stockholders’ equity
$
13,987,302
$
13,179,922
Ross Stores, Inc. Condensed Consolidated
Statements of Cash Flows Six Months Ended
($000, unaudited)
July 29, 2023
July 30, 2022
Cash Flows From Operating Activities Net earnings
$
817,510
$
722,962
Adjustments to reconcile net earnings to net cash provided by (used
in) operating activities: Depreciation and amortization
197,924
189,181
Stock-based compensation
72,492
62,874
Deferred income taxes
1,667
59,138
Change in assets and liabilities: Merchandise inventory
(276,568
)
(454,605
)
Other current assets
(60,431
)
(71,290
)
Accounts payable
144,775
(288,454
)
Other current liabilities
235,490
(265,399
)
Income taxes
(24,152
)
(13,941
)
Operating lease assets and liabilities, net
5,172
4,660
Other long-term, net
2,402
(1,391
)
Net cash provided by (used in) operating activities
1,116,281
(56,265
)
Cash Flows From Investing Activities Additions to
property and equipment
(363,459
)
(243,346
)
Net cash used in investing activities
(363,459
)
(243,346
)
Cash Flows From Financing Activities Issuance of
common stock related to stock plans
12,358
11,892
Treasury stock purchased
(38,435
)
(38,634
)
Repurchase of common stock
(464,890
)
(475,000
)
Dividends paid
(228,799
)
(217,193
)
Net cash used in financing activities
(719,766
)
(718,935
)
Net increase (decrease) in cash, cash equivalents, and
restricted cash and cash equivalents
33,056
(1,018,546
)
Cash, cash equivalents, and restricted cash and cash
equivalents: Beginning of period
4,612,241
4,982,382
End of period
$
4,645,297
$
3,963,836
Reconciliations: Cash and cash equivalents
$
4,583,606
$
3,903,670
Restricted cash and cash equivalents included in prepaid expenses
and other
12,955
11,432
Restricted cash and cash equivalents included in other long-term
assets
48,736
48,734
Total cash, cash equivalents, and restricted cash and cash
equivalents:
$
4,645,297
$
3,963,836
Supplemental Cash Flow Disclosures Interest paid
$
40,158
$
40,158
Income taxes paid
$
287,084
$
187,047
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230817468485/en/
Adam Orvos Executive Vice President, Chief Financial Officer
(925) 965-4550
Connie Kao Group Vice President, Investor Relations (925)
965-4668 connie.kao@ros.com
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