01—Abstract
Summary
Summary of the 10-K filed March 27, 2012. Cited figures are marked; the original filing is the authoritative source.
Ross Stores, Inc. (ROST) reported a strong fiscal year ending January 28, 2012, demonstrating consistent growth and outperformance compared to broader market indices.
The company experienced a 9.4% increase in sales, reaching $8.61 billiona, driven by both new store openings and a healthy 5% comparable store sales growth. Profitability also saw significant improvement, with net earnings increasing by approximately 18% to $657.2 million, resulting in diluted earnings per share of $2.86, up from $2.31 in the prior year. This growth was fueled by improved gross margins through better cost of goods sold management and operating expense leverage.
For investors, Ross Stores continues to return value through a combination of share repurchases and growing dividends. The company repurchased $450 millionb of its stock and declared a quarterly dividend of $0.14 per share, indicating a commitment to shareholder returns.
The off-price retail model continues to resonate with consumers seeking value, positioning Ross Stores favorably within the retail landscape. The company's strategic focus on efficient execution, expense control, and opportunistic inventory management appears to be yielding positive financial results.
02—Key points
Key Highlights
- Total sales increased by 9.4% to $8.61 billion in fiscal 2011.
- Comparable store sales increased by 5% for the fiscal year.
- Net earnings rose by 18.4% to $657.2 million, with diluted EPS growing to $2.86 from $2.31.
- Cost of goods sold as a percentage of sales decreased by 35 basis points, driven by improved merchandise gross margin and occupancy leverage.
- Selling, general, and administrative expenses decreased as a percentage of sales by 50 basis points.
- The company repurchased $450 million of its common stock during fiscal 2011 under a $900 million repurchase program.
- Total stockholder returns significantly outperformed the S&P 500 and S&P Retailing Group over the past five years.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2012filed March 27, 2012Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $8.61B$7.87B | +9.4% |
| Cost of Revenue | $6.24B$5.73B | +8.9% |
| Gross Profit | $2.37B$2.14B | +10.8% |
| SG&A Expenses | $1.30B$1.23B | +6.0% |
| Operating Expenses | $7.56B$6.97B | +8.4% |
| Net Income | $657.17M$554.80M | +18.5% |
| EPS (Basic) | $1.46$1.18 | +23.8% |
| EPS (Diluted) | $1.43$1.16 | +23.8% |
| Shares Outstanding (Basic) | 451.83M471.28M | −4.1% |
| Shares Outstanding (Diluted) | 459.96M479.61M | −4.1% |
05—Questions
Frequently Asked Questions
What were the main drivers of Ross Stores' sales and earnings growth in fiscal year 2011?
Sales growth was driven by a combination of opening 70 net new stores and a 5% increase in comparable store sales. Earnings growth was primarily due to an increase in net earnings, benefiting from lower cost of goods sold and selling, general, and administrative expenses as a percentage of sales, alongside a reduction in weighted average diluted shares outstanding due to the stock repurchase program.
How is Ross Stores managing its inventory and cost of goods sold?
Ross Stores is focused on managing inventory levels and cost of goods sold efficiently. In fiscal 2011, cost of goods sold as a percentage of sales decreased due to a 50 basis point increase in merchandise gross margin (including a benefit from lower shortage) and 20 basis points of occupancy leverage, partially offset by increased freight and distribution costs. The company also noted an increase in packaway inventory, which represented 49% of total inventory, as they took advantage of market opportunities.
What is Ross Stores' strategy for returning capital to shareholders?
Ross Stores actively returns capital to shareholders through its stock repurchase program and dividend payments. In fiscal 2011, the company repurchased $450 million of its common stock under a $900 million program approved in January 2011. Additionally, the company continues to pay and increase its quarterly cash dividends, declaring $0.470 per share for the full fiscal year 2011.
How did Ross Stores perform relative to its industry peers and the broader market?
Ross Stores demonstrated strong performance, with total stockholder returns outperforming the S&P 500 Index and the S&P Retailing Group over the five-year period leading up to fiscal year 2011. The company also noted that the off-price retailers' sales growth (6% in 2011) favorably compared to total national apparel sales (4% increase), indicating strength in its sector.
06—Continue