10-KPeriod: FY2015

ROSS STORES, INC. Annual Report, Year Ended Jan 31, 2015

Filed March 31, 2015For Securities:ROST

Summary

Ross Stores, Inc. (ROST) presented its 2014 fiscal year-end 10-K filing on March 31, 2015, highlighting a strong performance characterized by consistent sales growth and effective cost management. The company operates two distinct off-price retail brands, Ross Dress for Less and dd's DISCOUNTS, catering to value-conscious consumers. Ross Dress for Less, the larger brand, focuses on middle-income households, while dd's DISCOUNTS targets a more moderate income demographic. The company's strategy centers on offering first-quality, in-season, name-brand merchandise at significant discounts, achieved through opportunistic purchasing. This approach, combined with a focus on maintaining an organized and appealing store environment, has driven both store count expansion and comparable store sales increases. Financially, ROST demonstrated robust operating cash flow and profitability, supported by efficient inventory management and disciplined expense control. The company also continued its commitment to returning value to shareholders through share repurchases and dividend payments.

Financial Highlights

28 data points
Beta

Revenue

$11.04B

28.1% Gross Margin

Net Income

$924.72M

8.4% Net Margin

EPS (Diluted)

$2.21

Free Cash Flow

$726.17M

Financial Statements
Beta
Revenue$11.04B
Cost of Revenue$7.94B
Gross Profit$3.10B
SG&A Expenses$1.62B
Operating Expenses$9.56B
Interest Expense$12.99M
Net Income$924.72M
EPS (Basic)$2.24
EPS (Diluted)$2.21
Shares Outstanding (Basic)413.55M
Shares Outstanding (Diluted)418.08M

Key Highlights

  • 1Ross Stores operates two off-price retail brands: Ross Dress for Less and dd's DISCOUNTS, with a combined total of 1,362 stores by the end of fiscal year 2014.
  • 2Sales for fiscal year 2014 increased by 7.9% to $11.04 billion, driven by both new store openings and a 3% comparable store sales increase.
  • 3Net earnings for fiscal year 2014 were $924.7 million, resulting in diluted earnings per share of $4.42, an increase from $3.88 in the prior year.
  • 4The company maintained strong operational efficiency, with cost of goods sold as a percentage of sales decreasing slightly, and selling, general, and administrative expenses as a percentage of sales improving by 30 basis points.
  • 5Capital expenditures totaled $646.7 million in fiscal 2014, primarily for new stores, distribution center expansion, and IT systems.
  • 6Ross Stores actively returned capital to shareholders, repurchasing approximately $550 million in common stock and paying dividends totaling $168.5 million in fiscal year 2014.
  • 7The company declared a new two-year, $1.4 billion stock repurchase program in February 2015, underscoring confidence in future performance.

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 at savings of 20% to 60% below department and specialty store regular prices. Their strategy involves opportunistic purchasing, maintaining efficient operations, expanding their store base, and providing a compelling value proposition to their target customers through their Ross Dress for Less and dd's DISCOUNTS brands.

In fiscal year 2014, Ross Stores reported a 7.9% increase in sales to $11.04 billion and net earnings of $924.7 million, or $4.42 per diluted share. This growth was supported by a 3% increase in comparable store sales and effective cost management, which led to improved profitability margins.

Ross Stores utilizes off-price buying strategies, including purchasing manufacturer overruns, canceled orders, close-outs, and 'packaway' merchandise (purchased off-season for future sale). This allows them to secure merchandise at lower costs. They receive new merchandise frequently (three to six times a week) and buyers review assortments weekly to respond to trends and purchasing opportunities, emphasizing brand name merchandise at discounts.

The company actively returns value to shareholders through a combination of stock repurchases and cash dividends. In fiscal year 2014, they repurchased approximately $550 million of their common stock and paid out $168.5 million in dividends. Furthermore, they announced a new $1.4 billion stock repurchase program for fiscal years 2015 and 2016, indicating continued confidence in their financial position and commitment to shareholder returns.