01—Abstract
Summary
Summary of the 10-K filed March 29, 2016. Cited figures are marked; the original filing is the authoritative source.
Ross Stores, Inc. (ROST) reported strong performance for the fiscal year ending January 30, 2016, demonstrating continued growth in sales and net earnings.
The company operates two off-price retail chains, Ross Dress for Less and dd's DISCOUNTS, focusing on offering branded apparel and home fashions at significant discounts. This business model resonated well with value-conscious consumers, driving an 8.1% increase in sales to $11.94 billiona and a 10.4% increase in net earnings to $1.02 billion. Key to the company's success is its effective off-price buying strategy, which allows it to procure merchandise opportunistically and pass savings onto customers.
The company expanded its store base by opening 84 net new stores, contributing to sales growth alongside a healthy 4%b increase in comparable store sales. Financially, ROST maintained a strong balance sheet with robust operating cash flow and returned capital to shareholders through dividends and significant stock repurchases. Management expressed confidence in its strategy and outlook, anticipating continued growth and profitability.
02—Key points
Key Highlights
- Sales increased by 8.1% to $11.94 billion in fiscal year 2015.
- Net earnings grew by 10.4% to $1.02 billion, with diluted EPS reaching $2.51.
- Opened 84 net new stores, expanding the total store count to 1,446 (1,274 Ross, 172 dd's DISCOUNTS).
- Achieved a 4% increase in comparable store sales, indicating strong performance in existing locations.
- Maintained a strong merchandise gross margin and managed operating expenses effectively.
- Returned significant capital to shareholders through $700 million in stock repurchases and $192.3 million in dividends.
- Packaway inventory represented 47% of total inventories, a strategic approach to secure discounted merchandise for future sale.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2016filed March 29, 2016Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $11.94B$11.04B | +8.1% |
| Cost of Revenue | $8.58B$7.94B | +8.0% |
| Gross Profit | $3.36B$3.10B | +8.4% |
| SG&A Expenses | $1.74B$1.62B | +7.6% |
| Operating Expenses | $10.33B$9.56B | +8.1% |
| Interest Expense | $18.57M$12.99M | +42.9% |
| Net Income | $1.02B$924.72M | +10.4% |
| EPS (Basic) | $2.53$2.24 | +12.9% |
| EPS (Diluted) | $2.51$2.21 | +13.6% |
| Shares Outstanding (Basic) | 403.03M413.55M | −2.5% |
| Shares Outstanding (Diluted) | 406.40M418.08M | −2.8% |
05—Questions
Frequently Asked Questions
What is Ross Stores' primary business strategy?
Ross Stores operates as an off-price retailer, offering first-quality, in-season, name-brand, and designer apparel, accessories, footwear, and home fashions at 20% to 60% off department and specialty store regular prices. Its strategy relies on opportunistic purchasing and efficient operations to deliver value to its target customers.
How did the company perform in terms of store expansion?
In fiscal year 2015, Ross Stores expanded its retail footprint by opening 84 net new stores, increasing its total store count to 1,446. This expansion included 70 new Ross Dress for Less stores and 20 new dd's DISCOUNTS stores, while six Ross stores were closed.
What is the company's approach to inventory management, particularly 'packaway' merchandise?
Ross Stores utilizes an 'opportunistic buying' strategy, which includes purchasing 'packaway' merchandise. This refers to inventory bought with the intent to store it in warehouses for later release to stores, often up to six months later. Packaway merchandise accounted for approximately 47% of total inventories as of January 30, 2016, allowing the company to secure compelling discounts and maximize brand availability.
How does Ross Stores manage its financial resources and return value to shareholders?
The company generated strong cash flows from operations, which funded its capital expenditures for store expansion and improvements, as well as its regular quarterly cash dividends. Additionally, Ross Stores actively repurchased its common stock, demonstrating a commitment to returning capital to shareholders. In fiscal year 2015, approximately $700 million was spent on stock repurchases.
06—Continue