01—Abstract
Summary
Summary of the 10-K filed March 31, 2020. Cited figures are marked; the original filing is the authoritative source.
Ross Stores, Inc. (ROST) reported its fiscal year 2019 results in this 10-K filing, which concluded on January 31, 2020.
The company operates two off-price retail chains, Ross Dress for Less and dd's DISCOUNTS, offering branded apparel and home fashions at significant discounts. The filing highlights a strong financial performance in fiscal 2019, with notable sales growth driven by both new store openings and comparable store sales increases. However, the report also contains a significant cautionary note regarding the onset of the COVID-19 pandemic.
The company details the immediate impacts, including temporary store closures starting in March 2020 and the subsequent uncertainty surrounding future operations. Despite these challenges, Ross Stores continued its strategic store expansion and maintained a solid financial position, though future outlook is heavily impacted by the pandemic's evolving effects.
02—Key points
Key Highlights
- Operates 1,805 stores across two off-price brands: Ross Dress for Less (1,546 stores) and dd's DISCOUNTS (259 stores) as of February 1, 2020.
- Reported net sales of $16.04 billion in fiscal 2019, a 7.0% increase year-over-year, driven by 88 net new stores and a 3% comparable store sales growth.
- Maintained a strong profit margin with net earnings of $1.66 billion in fiscal 2019, representing 10.4% of sales.
- Continued strategic expansion with the opening of 98 new stores in fiscal 2019, reflecting a focus on market penetration and leveraging overhead.
- The company proactively addressed the emerging COVID-19 pandemic by temporarily closing all stores from March 20, 2020, and borrowing $800 million from its revolving credit facility to enhance financial flexibility.
- Implemented cost control measures and reduced inventory receipts and capital expenditure plans in response to the pandemic.
- Stockholder returns have been strong over the five-year period presented, outperforming the S&P 500 and Dow Jones Apparel Retailers indices.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2020filed March 31, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $16.04B$14.98B | +7.0% |
| Cost of Revenue | $11.54B$10.73B | +7.6% |
| Gross Profit | $4.50B$4.26B | +5.8% |
| SG&A Expenses | $2.36B$2.22B | +6.3% |
| Operating Expenses | $13.87B$12.93B | +7.3% |
| Interest Expense | $13.14M$17.90M | −26.6% |
| Net Income | $1.66B$1.59B | +4.6% |
| EPS (Basic) | $4.63$4.30 | +7.7% |
| EPS (Diluted) | $4.60$4.26 | +8.0% |
| Shares Outstanding (Basic) | 358.46M369.53M | −3.0% |
| Shares Outstanding (Diluted) | 361.18M372.68M | −3.1% |
05—Questions
Frequently Asked Questions
What is Ross Stores' primary business model?
Ross Stores operates as an off-price retailer, offering first-quality, in-season, name-brand and designer apparel, accessories, footwear, and home fashions at significant discounts (20%-60% off department and specialty store prices). They operate under two brands: Ross Dress for Less, targeting middle-income households, and dd's DISCOUNTS, targeting more moderate-income households.
What was the financial performance of Ross Stores in fiscal year 2019?
In fiscal year 2019 (ending January 31, 2020), Ross Stores reported net sales of $16.04 billion, an increase of 7.0% compared to the prior year. Net earnings were $1.66 billion, or $4.60 per diluted share. This growth was supported by both the opening of 88 net new stores and a 3% increase in comparable store sales.
How did the COVID-19 pandemic impact Ross Stores as of the filing date?
The filing, dated March 31, 2020, indicates that the COVID-19 pandemic was severely impacting operations. The company temporarily closed all stores from March 20, 2020, to April 3, 2020, and suspended stock repurchases. To maintain financial flexibility, they borrowed $800 million from their revolving credit facility. Management expected material adverse impacts on financial results, position, and cash flows in fiscal year 2020 due to the pandemic's uncertainty and associated economic disruptions.
What is the company's strategy for store growth?
Ross Stores continues to pursue store expansion, with plans to open additional stores primarily in states where they already operate to increase market penetration and leverage overhead. They also consider opportunistic real estate acquisitions and evaluate existing store locations for potential closures based on market and demographic characteristics, competition, and expected profitability.
06—Continue