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Ross Stores Inc.$110.97($1.21)(1.08%)

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 Ross Stores Reports Fourth Quarter and Fiscal 2016 Results
   Tuesday, February 28, 2017 4:01:00 PM ET

--Also Provides First Quarter and Fiscal 2017 Guidance

Ross Stores, Inc. (ROST ) today reported earnings per share for the fourth quarter ended January 28, 2017 of $.77, up 17% from the prior year, on net earnings that rose 14% to $301 million. Sales for the fiscal 2016 fourth quarter grew 8% to $3.5 billion, with comparable store sales up 4% versus a 4% gain last year.

For the fiscal year, earnings per share rose 13% to $2.83, while net earnings increased 10% to $1.1 billion. Sales for the 2016 fiscal year grew 8% to $12.9 billion, with comparable store sales up 4% on top of a 4% increase in 2015.

Barbara Rentler, Chief Executive Officer, commented, "We are very pleased with our better-than-expected sales and earnings results for the fourth quarter and fiscal year, especially given our strong multi-year comparisons and the highly competitive and promotional holiday season. Our results continued to benefit from our ability to offer customers great values on a wide assortment of gifts and fashions for the family and the home."

Ms. Rentler continued, "Fourth quarter operating margin grew 90 basis points to 13.6% up from 12.7% in the prior year. This improvement was mainly driven by our above-plan sales along with a favorable comparison of packaway-related costs versus last year’s fourth quarter. For the 2016 fiscal year, operating margin increased 40 basis points to a new record of 14.0%."

New Two-Year $1.75 Billion Stock Repurchase Program and 19% Increase in Quarterly Cash Dividend

The Company’s Board of Directors authorized a new program to repurchase $1.75 billion of its common stock over the next two fiscal years. At recent stock prices, this new repurchase program represents about 6% of the Company’s total market value and a 25% increase over the prior two-year $1.4 billion authorization that was completed in January 2017.

The Board also approved an increase in the quarterly cash dividend to $.16 per share, up 19% on top of a 15% increase in the prior year. This higher quarterly dividend is payable on March 31, 2017 to stockholders of record as of March 10, 2017.

In commenting on these actions, Ms. Rentler said, "Our larger two-year $1.75 billion stock repurchase authorization and increase in the quarterly cash dividend demonstrate 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 also raised our cash dividend annually since 1994. This consistent record also reflects our unwavering commitment to enhancing stockholder value and returns."

A total of 11.6 million shares of common stock were repurchased during fiscal 2016, for an aggregate purchase price of $700 million. During the fourth quarter, the Company repurchased 2.6 million shares for a total price of $170 million.

Fiscal 2017 Guidance

Looking ahead, Ms. Rentler said, "There continues to be uncertainty in the political, macro-economic, and retail climates, and we also face our own challenging sales and earnings comparisons. Thus, while we hope to do better, we believe it is prudent to remain somewhat cautious in planning our business for the 2017 fiscal year."

For the 52 weeks ending January 27, 2018, the Company is forecasting same store sales to grow 1% to 2% compared to 4% last year. For the 53 weeks ending February 3, 2018, earnings per share are projected to be $3.02 to $3.15, up 7% to 11% from $2.83 in fiscal 2016. Incorporated in this guidance range is an estimated benefit to earnings per share of approximately $.08 from the 53rd week in fiscal 2017.

For the first quarter ending April 29, 2017, comparable store sales are forecast to be up 1% to 2% with earnings per share projected to be $.76 to $.79, up from $.73 in the first quarter of 2016.

The Company will host a conference call on Tuesday, February 28, 2017 at 4:15 p.m. Eastern time to provide additional details concerning its fourth quarter and fiscal year 2016 results, and management’s outlook and guidance for fiscal 2017. 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 #55318917 until 8:00 p.m. Eastern time on March 7, 2017, as well as on the Company’s website.

Forward-Looking Statements: This press release contains forward-looking statements regarding expected sales, earnings levels 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," "looking ahead" and similar expressions identify forward-looking statements. Risk factors for Ross Dress for Less(R) ("Ross") and dd’s DISCOUNTS(R) 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 or 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 trends; 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 - such breaches of our data security, or our failure or delay in detecting and mitigating a loss of personal or business information, could result in damage to our reputation, loss of customer confidence, violation (or alleged violation) of applicable laws, and could expose us to civil claims, litigation and regulatory action, and to unanticipated costs and disruption of our operations; potential disruptions in our supply chain or information systems; issues involving the quality, safety, or authenticity of products we sell could harm our reputation, result in lost sales, and increase our costs; our ability to effectively manage our inventories, markdowns, and inventory shortage to achieve planned gross margin; changes in U.S. tax or tariff policy regarding apparel and other 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; natural or man-made disaster in California or in another region where we have a concentration of stores, offices, or a distribution center; increase in our labor costs; unexpected issues or costs from expanding in existing markets and entering new geographic markets; obtaining acceptable new store sites with favorable 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 2015, and Form 10-Qs and 8-Ks for fiscal 2016. 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 2016 revenues of $12.9 billion. The Company operates Ross Dress for Less(R) ("Ross"), the largest off-price apparel and home fashion chain in the United States with 1,340 locations in 36 states, the District of Columbia and Guam at fiscal 2016 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 193 dd’s DISCOUNTS(R) in 15 states at the end of fiscal 2016 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)                                 January 28,                                 January 30,                                 January 28,                                 January 30,
                                                                                                              2017                                                           2016                                                           2017                                                           2016
--------------------------------------------------- -------------------- ----------------------------------------  -------------------- ----------------------------------------  -------------------- ----------------------------------------  -------------------- ----------------------------------------
                                                                                                                                                                                                                                                                       
Sales                                                                                       $            3,510,158                                         $            3,250,726                                         $           12,866,757                                         $           11,939,999
                                                                                                                                                                                                                                                                       
Costs and Expenses
   Cost of goods sold                                                                                    2,539,563                                                      2,386,591                                                      9,173,705                                                      8,576,873
   Selling, general and administrative                                                                     493,802                                                        450,877                                                      1,890,408                                                      1,738,755
   Interest expense, net                                                                  3,755                    4,530                   16,488                   12,612
                                                                         -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
      Total costs and expenses                                                                           3,037,120                                                      2,841,998                                                     11,080,601                                                     10,328,240
                                                                                                                                                                                                                                                                       
Earnings before taxes                                                                                      473,038                                                        408,728                                                      1,786,156                                                      1,611,759
Provision for taxes on earnings                                                         172,470                  144,567                  668,502                  591,098
                                                                         -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net earnings                                                                                $              300,568                      $              264,161                      $            1,117,654                      $            1,020,661
                                                                         ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                                                                       
Earnings per share
   Basic                                                                                    $                 0.77                                         $                 0.66                                         $                 2.85                                         $                 2.53
   Diluted                                                                                  $                 0.77                                         $                 0.66                                         $                 2.83                                         $                 2.51
                                                                                                               
--------------------------------------------------- -------------------- -------------------------------------------------------------- -------------------------------------------------------------- -------------------------------------------------------------- ------------------------------------------
                                                                                                                                                                                                                                                                       
Weighted average shares outstanding (000)
   Basic                                                                                                   388,258                                                        398,229                                                        392,124                                                        403,034
   Diluted                                                                                                 391,139                                                        401,619                                                        394,958                                                        406,405
                                                                                                               
--------------------------------------------------- -------------------- -------------------------------------------------------------- -------------------------------------------------------------- -------------------------------------------------------------- ------------------------------------------
                                                                                                                                                                                                                                                                       
Dividends
   Cash dividends declared per share                                                        $               0.1350                                         $               0.1175                                         $               0.5400                                         $               0.4700
                                                                                                               
--------------------------------------------------- -------------------- -------------------------------------------------------------- -------------------------------------------------------------- -------------------------------------------------------------- ------------------------------------------
                                                                                                                                                                                                                                                                       
Stores open at end of period                                                                                 1,533                                                          1,446                                                          1,533                                                          1,446
                                                        
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                            
 
                                                                                          Ross Stores, Inc.
                                                                                   Condensed Consolidated Balance
                                                                                               Sheets
                                                                                                                   
($000, unaudited)                                                                                January 28, 2017                            January 30, 2016
--------------------------------------------------------------------- -------------------- -------------------------------------------------------------- ------------------------------------------
Assets
                                                                                                                                                           
Current Assets
   Cash and cash equivalents                                                                                  $            1,111,599                                         $              761,602
   Short-term investments                                                                                                          -                                                          1,737
   Accounts receivable                                                                                                        75,154                                                         73,627
   Merchandise inventory                                                                                                   1,512,886                                                      1,419,104
   Prepaid expenses and other                                                                             113,410                  116,125
                                                                                           -------------------- -------------------- -------------------- -------------------- --------------------
      Total current assets                                                                                                 2,813,049                                                      2,372,195
                                                                                                                                                           
Property and equipment, net                                                                                                2,328,048                                                      2,342,906
Long-term investments                                                                                                          1,288                                                          1,331
Other long-term assets                                                                                    166,966                  152,687
                                                                                           -------------------- -------------------- -------------------- -------------------- --------------------
Total assets                                                                                                  $            5,309,351                      $            4,869,119
                                                                                           ==================== ==================== ==================== ==================== ====================
                                                                                                                                                           
Liabilities and Stockholders’ Equity
                                                                                                                                                           
Current Liabilities
   Accounts payable                                                                                           $            1,021,735                                         $              945,559
   Accrued expenses and other                                                                                                398,126                                                        376,522
   Accrued payroll and benefits                                                                                              316,492                                                        280,766
   Income taxes payable                                                                                    16,153                        -
                                                                                           -------------------- -------------------- -------------------- -------------------- --------------------
      Total current liabilities                                                                                            1,752,506                                                      1,602,847
                                                                                                                                                           
Long-term debt                                                                                                               396,493                                                        396,025
Other long-term liabilities                                                                                                  290,950                                                        268,168
Deferred income taxes                                                                                                        121,385                                                        130,088
                                                                                                                                                           
Commitments and contingencies
                                                                                                                                                           
Stockholders’ Equity                                                         2,748,017                2,471,991
                                                                                           -------------------- -------------------- -------------------- -------------------- --------------------
Total liabilities and stockholders’ equity                                         $            5,309,351                      $            4,869,119
                                                                                           ==================== ==================== ==================== ==================== ====================
                                                              
--------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                
 
                                                                                                           Ross Stores, Inc.
                                                                                                   Condensed Consolidated Statements
                                                                                                             of Cash Flows
                                                                                                                                
                                                                                                                                                   Twelve Months Ended
                                                                                   ---------------------------------------------------------------------------------------------------------------------------------------------------
($000, unaudited)                                                                                             January 28, 2017                                                 January 30, 2016
------------------------------------------------------------- -------------------- ----------------------------------------------------------------------------------- ---------------------------------------------------------------
                                                                                                                                                                        
Cash Flows From Operating Activities
Net earnings                                                                                          $            1,117,654                                                              $            1,020,661
Adjustments to reconcile net earnings to net cash provided by
operating activities:
   Depreciation and amortization                                                                                     302,515                                                                             274,828
   Stock-based compensation                                                                                           74,554                                                                              70,937
   Deferred income taxes                                                                                              (8,703 )                                                                            56,358
   Tax benefit from equity issuance                                                                                   23,331                                                                              42,382
   Excess tax benefit from stock-based compensation                                                                  (23,331 )                                                                           (42,302 )
   Change in assets and liabilities:
      Merchandise inventory                                                                                          (93,782 )                                                                           (46,429 )
      Other current assets                                                                                              (928 )                                                                           (13,496 )
      Accounts payable                                                                                                83,085                                                                             (41,464 )
      Other current liabilities                                                                                       76,676                                                                               7,796
      Other long-term, net                                                                          7,780                     (3,019 )
                                                                                   -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
      Net cash provided by operating activities                                                 1,558,851                  1,326,252  
                                                                                   -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                        
Cash Flows From Investing Activities
Additions to property and equipment                                                                                 (297,880 )                                                                          (366,960 )
Decrease in restricted cash and investments                                                                            3,388                                                                               4,065
Purchases of investments                                                                                                   -                                                                                (718 )
Proceeds from investments                                                                           1,729                      1,104  
                                                                                   -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
      Net cash used in investing activities                                                      (292,763 )                                    (362,509 )
                                                                                   -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                        
Cash Flows From Financing Activities
Excess tax benefit from stock-based compensation                                                                      23,331                                                                              42,302
Issuance of common stock related to stock plans                                                                       18,539                                                                              20,186
Treasury stock purchased                                                                                             (43,321 )                                                                           (68,925 )
Repurchase of common stock                                                                                          (700,000 )                                                                          (700,000 )
Dividends paid                                                                                   (214,640 )                                    (192,312 )
                                                                                   -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
      Net cash used in financing activities                                                      (916,091 )                                    (898,749 )
                                                                                   -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                        
Net increase in cash and cash equivalents                                                                            349,997                                                                              64,994
                                                                                                                                                                        
Cash and cash equivalents:
      Beginning of period                                                                         761,602                    696,608  
                                                                                   -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
      End of period                                                                                   $            1,111,599                        $              761,602  
                                                                                   ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                        
Supplemental Cash Flow Disclosures
Interest paid                                                                                         $               18,105                                                              $               18,035
Income taxes paid                                                                                     $              628,441                                                              $              523,597
                                                          
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170228006763r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170228006763/en/

SOURCE: Ross Stores, Inc.

Ross Stores, Inc. 
Michael Hartshorn, 925-965-4503 
Group Senior Vice President, Chief Financial Officer 
or 
Connie Kao, 925-965-4668 
Vice President, Investor Relations 
connie.kao@ros.com


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