10-KPeriod: FY2017

ROSS STORES, INC. Annual Report, Year Ended Jan 28, 2017

Filed March 28, 2017For Securities:ROST

Summary

Ross Stores, Inc. (ROST) reported strong performance in its fiscal year 2016, demonstrating consistent growth in sales and net earnings. The company's off-price retail model, operating under the Ross Dress for Less® and dd's DISCOUNTS® brands, continues to resonate with value-conscious consumers. This fiscal year saw a notable increase in sales, driven by both new store openings and a healthy comparable store sales increase, indicating effective operational execution and strong customer demand for branded merchandise at significant discounts. Financially, the company maintained robust profitability, with net earnings as a percentage of sales showing improvement. The company also demonstrated a strong commitment to returning value to shareholders through substantial stock repurchases and consistent dividend payments, supported by healthy cash flows from operations. The strategic expansion of its store base and focus on optimizing merchandising and operational efficiencies position Ross Stores for continued success in the competitive retail landscape.

Financial Highlights

29 data points
Beta

Revenue

$12.87B

28.7% Gross Margin

Net Income

$1.12B

8.7% Net Margin

EPS (Diluted)

$2.83

Free Cash Flow

$1.26B

Financial Statements
Beta
Revenue$12.87B
Cost of Revenue$9.17B
Gross Profit$3.69B
SG&A Expenses$1.89B
Operating Expenses$11.08B
Interest Expense$18.57M
Net Income$1.12B
EPS (Basic)$2.85
EPS (Diluted)$2.83
Shares Outstanding (Basic)392.12M
Shares Outstanding (Diluted)394.96M

Key Highlights

  • 1Achieved significant sales growth of 7.8% to $12.87 billion in fiscal year 2016, up from $11.94 billion in fiscal year 2015.
  • 2Reported a 4% increase in comparable store sales, indicating sustained customer traffic and demand for its off-price offerings.
  • 3Net earnings grew by approximately 9.5% to $1.12 billion, with diluted earnings per share increasing by 13% to $2.83.
  • 4Continued aggressive share repurchase program, buying back approximately 11.6 million shares for $700 million in fiscal year 2016, and approved a new $1.75 billion repurchase program.
  • 5Expanded its store footprint, opening 93 net new stores, bringing the total store count to 1,533 by the end of fiscal year 2016.
  • 6Maintained a strong gross margin and controlled operating expenses, leading to improved net earnings margin.
  • 7Generated robust cash flow from operations ($1.56 billion), supporting capital expenditures, dividends, and share repurchases.

Frequently Asked Questions

Ross Stores operates as an off-price retailer, focusing on selling first-quality, in-season, name-brand and designer apparel, accessories, footwear, and home fashions at discounts of 20% to 60% below department and specialty store regular prices. The company operates two brands: Ross Dress for Less® and dd's DISCOUNTS®.

In fiscal year 2016, Ross Stores reported a 7.8% increase in sales to $12.87 billion and a 13% increase in diluted earnings per share to $2.83. Comparable store sales grew by 4%, and net earnings rose to $1.12 billion. The company also maintained a healthy profit margin and generated strong operating cash flow.

Ross Stores' real estate strategy involves opening new stores, primarily in states where they already operate to increase market penetration and leverage overhead. They also continue to expand in newer markets. Key considerations for new locations include site availability and quality, demographics, competition, and population density. During fiscal 2016, they opened 93 net new stores.

The company employs opportunistic buying strategies, purchasing merchandise from over 8,000 vendors. This includes leveraging manufacturer overruns, canceled orders, and packaway merchandise (purchased in advance for later sale). Packaway inventory represented approximately 49% of total inventories at the end of fiscal 2016. New merchandise is received frequently, allowing for rapid response to selling trends.