ROST Ross Stores Inc

Provides Second Quarter and Updated Fiscal 2024 Guidance

Ross Stores, Inc. (NASDAQ: ROST) today reported earnings per share for the 13 weeks ended May 4, 2024 of $1.46 on net earnings of $488 million. These results compare to earnings per share of $1.09 on net income of $371 million for the 13 weeks ended April 29, 2023. Sales for the first quarter of 2024 grew 8% to $4.9 billion, up from $4.5 billion in the prior year period, with comparable sales up 3% versus last year.

Barbara Rentler, Chief Executive Officer, commented, “Though we had hoped to do better, first quarter sales were in line with guidance despite macroeconomic headwinds that continued to pressure our customers’ discretionary spending. Earnings results for the period were better-than-expected primarily due to lower expenses relative to our plan.”

Ms. Rentler continued, “Operating margin of 12.2% rose 205 basis points compared to 10.1% in last year’s first quarter. This improvement was primarily driven by lower distribution, incentive, and freight costs that were partially offset by the planned decline in merchandise margin.”

During the first quarter of fiscal 2024, a total of 1.9 million shares of common stock were repurchased for an aggregate price of $262 million under the Company’s new two-year $2.1 billion authorization approved by its Board of Directors in March 2024. The Company remains on track to buy back a total of $1.05 billion in common stock during fiscal 2024.

Fiscal 2024 Guidance

Looking ahead, Ms. Rentler commented, “Ongoing uncertainty in today’s macroeconomic and geopolitical environments, including prolonged inflation, continue to squeeze our low-to-moderate income customers’ purchasing power. As a result, we believe it is more important than ever to offer our customers the best branded values possible. In addition, we will continue to manage inventory and expenses tightly in order to maximize sales and earnings growth over the balance of the year.”

Ms. Rentler continued, “For the 13 weeks ending August 3, 2024, comparable store sales are projected to increase 2% to 3% on top of a 5% gain in the second quarter of last year. Earnings per share for the second quarter are projected to be in the range of $1.43 to $1.49, up from reported earnings per share of $1.32 for the prior year period ended July 29, 2023.”

Ms. Rentler added, “Based on our first quarter results and forward guidance, comparable store sales for the 52 weeks ending February 1, 2025 remain unchanged at up 2% to 3%, with earnings per share for the 2024 fiscal year now projected to be in the range of $5.79 to $5.98 versus $5.56 for the 53 weeks ended February 3, 2024. As a reminder, fiscal 2023 earnings per share included a benefit of approximately $0.20 from the 53rd week.”

The Company will host a conference call on Thursday, May 23, 2024 at 4:15 p.m. Eastern time to provide additional details concerning its first quarter results and management’s outlook for the second quarter and fiscal year 2024. 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 #13746503 until 8:00 p.m. Eastern time on May 30, 2024, 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, 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, high interest rates, housing costs, energy and fuel costs, financial and credit market conditions, recession concerns, geopolitical conditions, public health and public safety issues that affect our costs, consumer confidence, and consumer disposable income and shopping behavior as well as costs; 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 disrupt our operations, and result in theft or unauthorized disclosure of confidential and valuable business information, such as 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 a 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 2023 and fiscal 2024 Form 8-Ks on file with the SEC. The factors underlying our forecasts and plans 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.

About Ross Stores, Inc.

Ross Stores, Inc. is an S&P 500, Fortune 500, and Nasdaq 100 (ROST) company headquartered in Dublin, California, with fiscal 2023 revenues of $20.4 billion. Currently, the Company operates Ross Dress for Less® (“Ross”), the largest off-price apparel and home fashion chain in the United States with 1,775 locations in 43 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 352 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 ($000, except stores and per share data, unaudited)

May 4, 2024

April 29, 2023

  Sales

$

4,858,067

 

$

4,494,686

 

  Costs and Expenses Cost of goods sold

 

3,490,672

 

 

3,292,606

 

Selling, general and administrative

 

776,282

 

 

746,222

 

Interest income, net

 

(45,950

)

 

(31,397

)

Total costs and expenses

 

4,221,004

 

 

4,007,431

 

  Earnings before taxes

 

637,063

 

 

487,255

 

Provision for taxes on earnings

 

149,073

 

 

116,064

 

Net earnings

$

487,990

 

$

371,191

 

  Earnings per share Basic

$

1.47

 

$

1.10

 

Diluted

$

1.46

 

$

1.09

 

    Weighted-average shares outstanding (000) Basic

 

331,258

 

 

338,049

 

Diluted

 

333,737

 

 

340,044

 

    Store count at end of period

 

2,127

 

 

2,034

 

  Ross Stores, Inc. Condensed Consolidated Balance Sheets     ($000, unaudited)

May 4, 2024

April 29, 2023

Assets   Current Assets Cash and cash equivalents

$

4,654,316

$

4,416,480

Accounts receivable

 

165,436

 

170,816

Merchandise inventory

 

2,461,699

 

2,241,735

Prepaid expenses and other

 

225,911

 

210,597

Total current assets

 

7,507,362

 

7,039,628

  Property and equipment, net

 

3,515,193

 

3,224,733

Operating lease assets

 

3,210,455

 

3,122,474

Other long-term assets

 

258,772

 

232,069

Total assets

$

14,491,782

$

13,618,904

  Liabilities and Stockholders’ Equity   Current Liabilities Accounts payable

$

2,119,114

$

2,061,529

Accrued expenses and other

 

612,244

 

607,294

Current operating lease liabilities

 

679,596

 

654,709

Accrued payroll and benefits

 

313,305

 

299,465

Income taxes payable

 

212,700

 

158,170

Current portion of long-term debt

 

948,590

 

—

Total current liabilities

 

4,885,549

 

3,781,167

    Long-term debt

 

1,513,200

 

2,457,561

Non-current operating lease liabilities

 

2,693,259

 

2,619,466

Other long-term liabilities

 

245,096

 

222,463

Deferred income taxes

 

206,726

 

227,851

  Commitments and contingencies   Stockholders’ Equity

 

4,947,952

 

4,310,396

Total liabilities and stockholders’ equity

$

14,491,782

$

13,618,904

  Ross Stores, Inc. Condensed Consolidated Statements of Cash Flows     Three Months Ended ($000, unaudited)

May 4, 2024

April 29, 2023

Cash Flows From Operating Activities Net earnings

$

487,990

 

$

371,191

 

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

 

109,186

 

 

99,379

 

Stock-based compensation

 

40,447

 

 

33,063

 

Deferred income taxes

 

10,488

 

 

10,792

 

Change in assets and liabilities: Merchandise inventory

 

(269,479

)

 

(218,240

)

Other current assets

 

(57,685

)

 

(51,914

)

Accounts payable

 

179,376

 

 

46,577

 

Other current liabilities

 

(269,973

)

 

16,336

 

Income taxes

 

138,959

 

 

105,225

 

Operating lease assets and liabilities, net

 

2,267

 

 

(102

)

Other long-term, net

 

(2,655

)

 

845

 

Net cash provided by operating activities

 

368,921

 

 

413,152

 

  Cash Flows From Investing Activities Additions to property and equipment

 

(136,249

)

 

(167,253

)

Net cash used in investing activities

 

(136,249

)

 

(167,253

)

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

 

6,224

 

 

6,149

 

Treasury stock purchased

 

(70,480

)

 

(37,522

)

Repurchase of common stock

 

(262,479

)

 

(234,468

)

Dividends paid

 

(123,298

)

 

(114,794

)

Net cash used in financing activities

 

(450,033

)

 

(380,635

)

  Net decrease in cash, cash equivalents, and restricted cash and cash equivalents

 

(217,361

)

 

(134,736

)

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

 

4,935,441

 

 

4,612,241

 

End of period

$

4,718,080

 

$

4,477,505

 

  Reconciliations: Cash and cash equivalents

$

4,654,316

 

$

4,416,480

 

Restricted cash and cash equivalents included in prepaid expenses and other

 

14,666

 

 

12,815

 

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

 

49,098

 

 

48,210

 

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

$

4,718,080

 

$

4,477,505

 

  Supplemental Cash Flow Disclosures Interest paid

$

40,158

 

$

40,158

 

Income taxes (refunded) paid, net

$

(375

)

$

47

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240523559859/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