10-KPeriod: FY2013

ROSS STORES, INC. Annual Report, Year Ended Feb 2, 2013

Filed April 2, 2013For Securities:ROST

Summary

Ross Stores, Inc. (ROST) reported strong performance in its fiscal year ending February 2, 2013, characterized by consistent sales growth and expanding store count. The company operates two distinct off-price retail chains: Ross Dress for Less, targeting middle-income households, and dd's DISCOUNTS, focusing on more moderate-income consumers. The off-price model, emphasizing value and brand names at significant discounts, continues to resonate with consumers, as evidenced by the company's ability to capture market share gains within the broader apparel and home fashion retail sector. This filing highlights the company's strategic focus on efficient operations, disciplined real estate growth, and robust inventory management, all contributing to solid financial results and a positive outlook.

Financial Highlights

51 data points
Beta

Revenue

$9.72B

27.9% Gross Margin

Net Income

$786.76M

8.1% Net Margin

EPS (Diluted)

$1.76

Total Assets

$3.67B

Cash & Equivalents

$646.76M

Free Cash Flow

$555.21M

Financial Statements
Beta
Revenue$9.72B
Cost of Revenue$7.01B
Gross Profit$2.71B
SG&A Expenses$1.44B
Operating Expenses$8.46B
Interest Expense$9.72M
Net Income$786.76M
EPS (Basic)$1.79
EPS (Diluted)$1.76
Shares Outstanding (Basic)438.26M
Shares Outstanding (Diluted)445.57M

Key Highlights

  • 1Ross Stores operated 1,199 stores (1,091 Ross, 108 dd's DISCOUNTS) as of February 2, 2013, a net increase of 74 stores in fiscal year 2012.
  • 2Sales for fiscal year 2012 reached $9.72 billion, a 12.9% increase over the prior year, driven by new store openings and a 6% increase in comparable store sales.
  • 3Net earnings for fiscal year 2012 were $786.8 million, a 19.7% increase from the prior year, with diluted earnings per share of $3.53.
  • 4The company demonstrated strong merchandise gross margin improvement, contributing to a decrease in Cost of Goods Sold as a percentage of sales.
  • 5Selling, General, and Administrative (SG&A) expenses as a percentage of sales also decreased, reflecting effective cost management and leverage from store growth.
  • 6Ross Stores continued its commitment to returning capital to shareholders through significant stock repurchases ($450 million in FY2012) and consistent dividend payments, with a new $1.1 billion repurchase program authorized for fiscal years 2013-2014.
  • 7The company is investing in infrastructure, including plans for two new distribution centers, a new data center, and relocation of its corporate headquarters, to support future growth.

Frequently Asked Questions

Ross Stores operates as an off-price retailer, offering first-quality, in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family. They achieve this by purchasing merchandise opportunistically from manufacturers, often due to overruns or canceled orders, allowing them to sell products at significant discounts (20-60% below department store prices for Ross, and 20-70% for dd's DISCOUNTS).

Sales growth is driven by a combination of factors including the opening of new stores (net increase of 74 stores in fiscal year 2012) and comparable store sales increases (6% in fiscal year 2012). The company's focus on providing value and recognizable brands at discount prices appeals to a broad customer base, especially in the current economic environment.

Ross Stores employs an opportunistic purchasing strategy, including 'packaway' inventory, to secure goods at lower costs. They also focus on efficient operations and maintaining low overhead. For fiscal year 2012, the company reported a decrease in Cost of Goods Sold and SG&A expenses as a percentage of sales, indicating effective cost management and operational leverage.

Ross Stores actively returns capital to shareholders through stock repurchase programs and dividend payments. In fiscal year 2012, they repurchased approximately $450 million of stock and declared $0.59 per share in dividends. A substantial new $1.1 billion stock repurchase program was authorized for fiscal years 2013 and 2014.