Ross Stores (ROST) Reports Record Fourth Quarter and Fiscal Year 2009 Earnings (PRN)

PLEASANTON, Calif., March 18 /PRNewswire-FirstCall/ — Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for the 13 weeks ended January 30, 2010 of $1.16, up 53% from $.76 for the 13 weeks ended January 31, 2009.  Net earnings for the 13 weeks ended January 30, 2010 grew to a record $142.9 million, up 47% from $97.4 million for the 13 weeks ended January 31, 2009.  Sales for the fourth quarter ended January 30, 2010 grew 14% to $1.980 billion, with comparable store sales up 10% over the prior year.

For the 52 weeks ended January 30, 2010, earnings per share grew 52% to $3.54, up from $2.33 for the 52 weeks ended January 31, 2009.  Net earnings for the 2009 fiscal year ended January 30, 2010 grew 45% to a record $442.8 million, from $305.4 million for the 2008 fiscal year ended January 31, 2009.  Sales for the 2009 fiscal year increased 11% to $7.184 billion, with comparable store sales up 6% on top of a 2% gain in the prior year.

Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, “We are exceptionally pleased with our outstanding sales and earnings results for the fourth quarter and full year.  During one of the most challenging economic and retail environments, we not only generated stronger-than-planned revenues, but did so with record merchandise gross margins that drove double digit operating profits as a percent of sales. The best performing merchandise categories for both the quarter and the year were Shoes, Dresses and Home, while geographic trends were broadbased, with all regions posting healthy comparable store sales gains for both periods.”

Mr. Balmuth continued, “Earnings before interest and taxes for the 2009 fourth quarter grew about 260 basis points to 11.7% of sales, up from 9.1% in the prior year period.  This higher profit margin was mainly due to a 230 basis point improvement in cost of goods sold along with a 30 basis point decline in selling, general and administrative costs.  For the 2009 fiscal year, operating margin increased about 250 basis points over the prior year to 10.1% of sales, driven by a 230 basis point decline in cost of goods sold combined with a 20 basis point reduction in selling, general and administrative expenses.  Key drivers of our improved profitability for both the fourth quarter and the year were much higher merchandise gross margin, lower shortage costs and leverage on operating expenses from the strong gains in same store sales.”

“Healthy operating cash flows during the year continued to provide the resources to make capital investments in new store growth and infrastructure and fund our ongoing stock repurchase and dividend programs.  During 2009, we repurchased a total of 7.4 million shares of common stock for an aggregate purchase price of $300 million, completing the two-year $600 million stock repurchase program announced in early 2008.  In January 2010, our Board of Directors approved a new two-year $750 million stock repurchase program along with a 45% increase in our quarterly cash dividend to $.16 per common share.  These actions reflect our confidence in the Company’s ongoing ability to generate healthy amounts of excess cash and our commitment to enhancing stockholder returns,” Mr. Balmuth said.

Looking ahead to 2010, Mr. Balmuth commented, “Our past results demonstrate that we can deliver consistent growth in both healthy and challenging economic climates if we execute our strategies well. This long-term record gives us the confidence to project strong cash flows from additional increases in both comparable store sales and earnings per share during 2010 and beyond.”

The Company will host a conference call on Thursday, March 18, 2010 at 11:00 a.m. Eastern time to provide additional details concerning the fourth quarter and fiscal year 2009 results and management’s outlook and plans for 2010.  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 706-645-9291, ID #55962140 until 8:00 p.m. Eastern time on March 25, 2010, as well as at the Company’s website address.

Forward-Looking Statements:  This press release and the recorded conference call on our corporate website contain forward-looking statements regarding expected sales and earnings levels 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,” “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 industry; changes in the level of consumer spending on or preferences for apparel or home-related merchandise, including the potential impact from the macro-economic environment, uncertainty in financial and credit markets, and changes in geopolitical conditions; unseasonable weather trends; disruptions in supply chain; lower than planned gross margin, including higher than planned markdowns and higher than expected inventory shortage; greater than planned operating costs; our ability to continue to purchase attractive brand-name merchandise at desirable discounts; our ability to attract and retain personnel with the retail talent necessary to execute our strategies; our ability to effectively operate our various supply chain, core merchandising and other information systems; our ability to improve our merchandising capabilities through the recent implementation of new processes and systems enhancements; achieving and maintaining targeted levels of productivity and efficiency in our distribution centers; and obtaining acceptable new store locations. Other risk factors are detailed in our SEC filings including, without limitation, the Form 10-K for fiscal 2008, Form 10-Qs for fiscal 2009 and Form 8-Ks for fiscal 2009 and 2010.  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., an S&P 500, Fortune 500 and Nasdaq 100 (ROST) company headquartered in Pleasanton, California, is the nation’s second largest off-price retailer with fiscal 2009 revenues of $7.2 billion.  As of February 27, 2010 the Company operated 953 Ross Dress for Less^® (“Ross”) stores and 54 dd’s DISCOUNTS^® locations, compared to 904 Ross and 53 dd’s DISCOUNTS locations at the end of the same period last year.  Ross offers first-quality, in-season, name brand and designer apparel, accessories, footwear and home fashions for the entire family at everyday savings of 20 to 60 percent off department and specialty store regular prices.  dd’s DISCOUNTS features a more moderately-priced assortment of first-quality, in-season, name brand apparel, accessories, footwear and home fashions for the entire family at everyday savings of 20 to 70 percent off moderate department and discount store regular prices. Additional information is available at www.rossstores.com.

Ross Stores, Inc.

Condensed Consolidated Statements of Earnings

                             Three Months Ended        Twelve Months Ended

                             January 30,  January 31,  January 30,  January 31,

($000, except stores and
per share data, unaudited)   2010         2009         2010         2009

Sales                        $ 1,979,839  $1,734,112   $ 7,184,213  $6,486,139

Costs and Expenses

 Costs of goods sold         1,462,581    1,321,346    5,327,278    4,956,576

 Selling, general and
 administrative              286,114      255,312      1,130,813    1,034,357

 Interest expense (income),
 net                         2,604        2,531        7,593        (157)

      Total costs and
      expenses               1,751,299    1,579,189    6,465,684    5,990,776

Earnings before taxes        228,540      154,923      718,529      495,363

Provision for taxes on
earnings                     85,657       57,536       275,772      189,922

Net earnings                 $ 142,883    $ 97,387     $ 442,757    $ 305,441

Earnings per share

 Basic                       $ 1.18       $ 0.77       $ 3.60       $ 2.36

 Diluted                     $ 1.16       $ 0.76       $ 3.54       $ 2.33

Weighted average shares
outstanding (000)

 Basic                       121,013      126,580      122,887      129,235

 Diluted                     123,355      128,175      125,014      131,315

Dividends

 Cash dividends declared
 per share                   $ 0.270      $ 0.205      $ 0.490      $ 0.395

Stores open at end of
period                       1,005        956          1,005        956

Ross Stores, Inc.

Condensed Consolidated Balance Sheets

                                              January 30,  January 31,

($000, unaudited)                             2010         2009

Assets

Current Assets

 Cash and cash equivalents                    $ 768,343    $ 321,355

 Short-term investments                       1,754        798

 Accounts receivable                          44,234       41,170

 Merchandise inventory                        872,498      881,058

 Prepaid expenses and other                   58,618       55,241

 Deferred income taxes                        -            14,093

  Total current assets                        1,745,447    1,313,715

Property and equipment, net                   942,999      951,656

Long-term investments                         16,848       38,014

Other long-term assets                        63,339       52,126

Total assets                                  $ 2,768,633  $2,355,511

Liabilities and Stockholders’ Equity

Current Liabilities

 Accounts payable                             $ 658,299    $ 536,745

 Accrued expenses and other                   259,582      238,516

 Accrued payroll and benefits                 218,234      170,878

 Income taxes payable                         51,505       9,120

 Deferred income taxes                        2,894        -

  Total current liabilities                   1,190,514    955,259

Long-term debt                                150,000      150,000

Other long-term liabilities                   174,543      156,726

Deferred income taxes                         96,283       97,157

Commitments and contingencies

Stockholders’ Equity                        1,157,293    996,369

Total liabilities and stockholders’ equity  $ 2,768,633  $2,355,511

Ross Stores, Inc.

Condensed Consolidated Statements of Cash Flows

                                                   Twelve Months Ended

                                                   January 30,  January 31,

($000, unaudited)                                  2010         2009

Cash Flows From Operating Activities

Net earnings                                       $ 442,757    $ 305,441

Adjustments to reconcile net earnings to net cash

provided by operating activities:

 Depreciation and amortization                     159,043      141,802

 Stock-based compensation                          25,746       22,575

 Deferred income taxes                             16,113       23,804

 Tax benefit from equity issuance                  8,582        8,532

 Excess tax benefit from stock-based compensation  (7,291)      (5,973)

 Change in assets and liabilities:

  Merchandise inventory                            8,560        144,237

  Other current assets                             (6,441)      (6,089)

  Accounts payable                                 115,893      (101,682)

  Other current liabilities                        118,980      43,249

  Other long-term, net                             6,442        7,543

  Net cash provided by operating activities        888,384      583,439

Cash Flows From Investing Activities

Additions to property and equipment                (158,487)    (224,418)

Proceeds from sales of property and equipment      10           117

Purchases of investments                           (2,904)      (36,984)

Proceeds from investments                          24,548       42,522

  Net cash used in investing activities            (136,833)    (218,763)

Cash Flows From Financing Activities

Excess tax benefit from stock-based compensation   7,291        5,973

Issuance of common stock related to stock plans    49,393       47,873

Treasury stock purchased                           (6,045)      (4,909)

Repurchase of common stock                         (300,000)    (300,000)

Dividends paid                                     (55,202)     (49,838)

  Net cash used in financing activities            (304,563)    (300,901)

Net increase in cash and cash equivalents          446,988      63,775

Cash and cash equivalents:

  Beginning of year                                321,355      257,580

  End of year                                      $ 768,343    $ 321,355

Supplemental Cash Flow Disclosures

Interest paid                                      $ 9,668      $ 9,676

Income taxes paid                                  $ 201,232    $ 167,478

Non-Cash Investing Activities

Increase (decrease) in fair value of investment
securities                                         $ 1,435      $ (2,514)