01—Abstract
Summary
Summary of the 10-K filed April 14, 2005. Cited figures are marked; the original filing is the authoritative source.
Ross Stores, Inc. reported its fiscal year 2004 results, ending January 29, 2005, highlighting continued expansion and a new off-price concept, dd's DISCOUNTS.
The company saw an 8% increase in sales year-over-year, reaching $4.24 billiona. This growth was primarily driven by the net opening of 81 new stores, expanding the total store count to 649. Despite overall sales growth, comparable store sales experienced a slight decrease of 1%, which management attributed in part to challenges with a new Core Merchandising System implemented during the year.
The company also announced a restatement of prior period financial statements related to accounting for operating leases, specifically tenant improvement allowances and rent holidays, which impacted prior years' earnings but did not materially affect the current fiscal year's results. Financial position remained solid with a strong working capital position and a significant stock repurchase program in place.
02—Key points
Key Highlights
- Total sales for fiscal year 2004 increased by 8% to $4.24 billion, driven by store expansion.
- The company opened 84 new stores, expanding its total store count to 649 locations by year-end.
- Comparable store sales decreased by 1% in fiscal year 2004.
- A new off-price concept, dd's DISCOUNTS, was launched with 10 stores.
- The company repurchased approximately $175 million of its common stock in fiscal year 2004.
- A restatement of prior period financial statements was necessary due to lease accounting adjustments, impacting fiscal years 2002 and 2003.
- Net earnings for fiscal year 2004 were $169.9 million, a decrease from $227.6 million in fiscal year 2003, partly due to a $15.8 million impairment charge for long-lived assets.
03—Questions
Frequently Asked Questions
What was the primary driver of sales growth in fiscal year 2004?
The primary driver of sales growth in fiscal year 2004 was the company's strategy of store expansion, with 81 net new stores opened during the year, bringing the total store count to 649. This expansion contributed to an 8% overall sales increase.
Why did comparable store sales decrease by 1%?
The decrease in comparable store sales was attributed to several factors, including operational challenges experienced after the installation of a new Core Merchandising System, which temporarily impacted the ability to generate essential merchandising information. Management believed these issues were largely resolved by the end of fiscal year 2004.
What was the reason for the restatement of prior period financial statements?
Ross Stores, Inc. restated its fiscal years 2003 and 2002 financial statements due to a review of its accounting for operating leases. Specifically, the company's methods for accounting for landlord incentives (tenant improvement allowances) and 'rent holidays' were found to be inconsistent with new SEC guidance. This led to adjustments in how these items were recognized on the balance sheet and in the statements of cash flows and earnings over time.
How is the company returning value to shareholders?
Ross Stores is returning value to shareholders through a combination of cash dividends and a stock repurchase program. In fiscal year 2004, the company declared quarterly cash dividends and repurchased approximately $175 million of its common stock under a $350 million program authorized for 2004 and 2005.
04—Continue