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Ross Stores
ISIN: US7782961038
WKN: 870053
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Ross Stores · ISIN: US7782961038 · Business Wire (ID: 20240822924570)
22 August 2024 10:01PM

Ross Stores Reports Second Quarter Earnings


Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for the 13 weeks ended August 3, 2024 of $1.59 on net income of $527 million. These results compare to earnings per share of $1.32 on net income of $446 million for the 13 weeks ended July 29, 2023. Total sales for the 2024 second quarter increased 7% to $5.3 billion, up from $4.9 billion for the same period in 2023, with comparable store sales up 4% versus last year.

For the six months ended August 3, 2024, earnings per share were $3.05 on net income of $1.0 billion. These results compare to earnings per share of $2.41 on net earnings of $818 million in the first half of 2023. Sales for the first six months of 2024 grew to $10.1 billion, up from $9.4 billion in the prior year. Comparable store sales for the first half of 2024 were up 3%.

Barbara Rentler, Chief Executive Officer, commented, “Second quarter sales and earnings were above our expectations as our stronger value offerings resonated with our customers. Operating margin increased 115 basis points to 12.5% compared to the prior year period. Our improved profitability relative to last year benefited from higher sales, and lower distribution and incentive costs that were partially offset, as expected, by lower merchandise margins.”

During the second quarter of fiscal 2024, a total of 1.8 million shares of common stock were repurchased for an aggregate price of $262 million. As a result, the Company remains on track to buy back a total of $1.05 billion in common stock during fiscal 2024 under the Company’s two-year $2.1 billion authorization approved by its Board of Directors in March of this year.

Second Half and Updated Fiscal 2024 Guidance

Looking ahead, Ms. Rentler commented, “Our low-to-moderate income customers continue to face persistently high costs on necessities, pressuring their discretionary spending. In addition, our prior year sales comparisons become more challenging during the second half of the year amidst an external environment that is uncertain and volatile. As such, we continue to maintain a cautious approach to forecasting our sales.”

Ms. Rentler continued, “For both the third and fourth quarters, we are planning comparable sales growth of 2% to 3% on top of 5% and 7% gains, respectively, in 2023. If the second half of 2024 performs in line with these sales projections, earnings per share for the third quarter are projected to be $1.35 to $1.41 versus $1.33 last year and $1.60 to $1.67 for the fourth quarter, compared to $1.82 in 2023. This updated earnings guidance now reflects additional efficiencies we expect to achieve in the second half of 2024.”

Ms. Rentler added, “Based on our first half results and second half guidance, earnings per share for the 52 weeks ending February 1, 2025 are now planned to be in the range of $6.00 to $6.13 versus $5.56 last year. As a reminder, both the 2023 fourth quarter and full year results included an approximate $0.20 earnings per share benefit from the 53rd week.”

Ms. Rentler concluded, “Delivering the great values that our off-price customers have come to expect from us is more important than ever, especially given the continued pressures they face from the high costs on necessities. Thus, to maximize our prospects for ongoing market share gains, we will stay laser-focused on providing our shoppers the most quality branded bargains available in the marketplace.”

The Company will host a conference call on Thursday, August 22, 2024 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 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 #13748197 until 8:00 p.m. Eastern time on August 29, 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, and public health and public safety issues that affect consumer confidence, consumer disposable income, and shopping behavior, as well as our 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 store openings; our need to expand in existing markets and enter new geographic markets in order to achieve planned growth and 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, or a natural or man-made disaster in California or 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 the Form 10-K for fiscal 2023 and fiscal 2024 Form 8-Ks and 10-Q 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 1,795 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 353 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) August 3, 2024 July 29, 2023 August 3, 2024 July 29, 2023
 
Sales

$

5,287,519

 

$

4,934,905

 

$

10,145,586

 

$

9,429,591

 

 
Costs and Expenses
Cost of goods sold

 

3,791,929

 

 

3,569,367

 

 

7,282,601

 

 

6,861,973

 

Selling, general and administrative

 

836,357

 

 

807,898

 

 

1,612,639

 

 

1,554,120

 

Interest income, net

 

(43,350

)

 

(37,214

)

 

(89,300

)

 

(68,611

)

Total costs and expenses

 

4,584,936

 

 

4,340,051

 

 

8,805,940

 

 

8,347,482

 

 
Earnings before taxes

 

702,583

 

 

594,854

 

 

1,339,646

 

 

1,082,109

 

Provision for taxes on earnings

 

175,435

 

 

148,535

 

 

324,508

 

 

264,599

 

Net earnings

$

527,148

 

$

446,319

 

$

1,015,138

 

$

817,510

 

 
Earnings per share
Basic

$

1.60

 

$

1.33

 

$

3.07

 

$

2.42

 

Diluted

$

1.59

 

$

1.32

 

$

3.05

 

$

2.41

 

 
 
Weighted-average shares outstanding (000)
Basic

 

329,392

 

 

336,231

 

 

330,325

 

 

337,140

 

Diluted

 

331,511

 

 

337,932

 

 

332,620

 

 

339,003

 

 
 
Store count at end of period

 

2,148

 

 

2,061

 

 

2,148

 

 

2,061

 

 
 

Ross Stores, Inc.

Condensed Consolidated Balance Sheets

 
 
($000, unaudited) August 3, 2024 July 29, 2023
Assets
 
Current Assets
Cash and cash equivalents

$

4,668,137

$

4,583,606

Accounts receivable

 

181,918

 

175,410

Merchandise inventory

 

2,490,558

 

2,300,063

Prepaid expenses and other

 

254,370

 

214,673

Total current assets

 

7,594,983

 

7,273,752

 
Property and equipment, net

 

3,583,535

 

3,310,605

Operating lease assets

 

3,234,180

 

3,164,685

Other long-term assets

 

265,323

 

238,260

Total assets

$

14,678,021

$

13,987,302

 
Liabilities and Stockholders’ Equity
 
Current Liabilities
Accounts payable

$

2,217,227

$

2,150,999

Accrued expenses and other

 

639,703

 

689,866

Current operating lease liabilities

 

691,036

 

668,028

Accrued payroll and benefits

 

353,980

 

435,300

Income taxes payable

 

23,266

 

25,449

Current portion of long-term debt

 

949,028

 

Total current liabilities

 

4,874,240

 

3,969,642

 
 
Long-term debt

 

1,513,826

 

2,458,615

Non-current operating lease liabilities

 

2,710,239

 

2,653,632

Other long-term liabilities

 

254,487

 

231,945

Deferred income taxes

 

194,697

 

218,726

 
Commitments and contingencies
 
Stockholders’ Equity

 

5,130,532

 

4,454,742

Total liabilities and stockholders’ equity

$

14,678,021

$

13,987,302

 
 
Ross Stores, Inc.
Condensed Consolidated Statements of Cash Flows
 
 
Six Months Ended
($000, unaudited) August 3, 2024 July 29, 2023
Cash Flows From Operating Activities
Net earnings

$

1,015,138

 

$

817,510

 

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

 

217,781

 

 

197,924

 

Stock-based compensation

 

78,468

 

 

72,492

 

Deferred income taxes

 

(1,541

)

 

1,667

 

Change in assets and liabilities:
Merchandise inventory

 

(298,338

)

 

(276,568

)

Other current assets

 

(81,363

)

 

(60,431

)

Accounts payable

 

271,582

 

 

144,775

 

Other current liabilities

 

(197,585

)

 

235,490

 

Income taxes

 

(46,708

)

 

(24,152

)

Operating lease assets and liabilities, net

 

6,962

 

 

5,172

 

Other long-term, net

 

(3,354

)

 

2,402

 

Net cash provided by operating activities

 

961,042

 

 

1,116,281

 

 
Cash Flows From Investing Activities
Additions to property and equipment

 

(333,735

)

 

(363,459

)

Net cash used in investing activities

 

(333,735

)

 

(363,459

)

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

 

12,418

 

 

12,358

 

Treasury stock purchased

 

(71,728

)

 

(38,435

)

Repurchase of common stock

 

(524,979

)

 

(464,890

)

Dividends paid

 

(245,751

)

 

(228,799

)

Net cash used in financing activities

 

(830,040

)

 

(719,766

)

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

 

(202,733

)

 

33,056

 

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

 

4,935,441

 

 

4,612,241

 

End of period

$

4,732,708

 

$

4,645,297

 

 
Reconciliations:
Cash and cash equivalents

$

4,668,137

 

$

4,583,606

 

Restricted cash and cash equivalents included in prepaid expenses and other

 

14,851

 

 

12,955

 

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

 

49,720

 

 

48,736

 

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

$

4,732,708

 

$

4,645,297

 

 
Supplemental Cash Flow Disclosures
Interest paid

$

40,158

 

$

40,158

 

Income taxes paid, net

$

372,756

 

$

287,084

 

 

 

Contact

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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