10-QPeriod: Q1 FY2009

ROSS STORES, INC. Quarterly Report for Q1 Ended May 3, 2008

Filed June 11, 2008For Securities:ROST

Summary

Ross Stores, Inc. reported a solid performance for the first quarter of fiscal year 2008, ending May 3, 2008. Sales increased by 10.3% to $1.56 billion, driven by both new store openings and a 3% increase in comparable store sales. This growth indicates continued consumer demand for value-oriented apparel and home goods, even amidst a challenging economic environment. Net earnings rose by 19% to $79.5 million, translating to a diluted EPS of $0.60, up from $0.48 in the prior year. The company demonstrated effective cost management, with Cost of Goods Sold as a percentage of sales slightly decreasing and Selling, General, and Administrative expenses as a percentage of sales also improving. This operational efficiency, combined with sales growth, led to a 25% increase in diluted earnings per share. Ross Stores continues to execute its growth strategy by expanding its store footprint, adding 28 new stores during the quarter, bringing the total to 918. The company also maintained a strong financial position, with ample liquidity and a commitment to returning capital to shareholders through its stock repurchase program.

Key Highlights

  • 1Sales increased by 10.3% to $1.56 billion for the quarter ended May 3, 2008.
  • 2Comparable store sales grew by 3%, indicating positive customer traffic and demand.
  • 3Net earnings rose by 19% to $79.5 million, with diluted EPS increasing 25% to $0.60.
  • 4The company opened 28 new stores, expanding its retail footprint to 918 locations.
  • 5Cost of goods sold as a percentage of sales slightly decreased, and SG&A expenses as a percentage of sales also improved, reflecting operational efficiencies.
  • 6The company repurchased $77.2 million of its common stock under its repurchase program.
  • 7Liquidity remains strong with $305.8 million in cash and cash equivalents at quarter-end.

Frequently Asked Questions

For the three months ended May 3, 2008, Ross Stores reported a sales increase of 10.3%, reaching $1.56 billion, compared to $1.41 billion in the same period of the prior year. This growth was a combination of new store openings and a 3% increase in comparable store sales.

Ross Stores continues its expansion strategy, opening 28 new stores during the quarter and ending with 918 locations. The company plans approximately $250 million in capital expenditures for fiscal year 2008 to support new store openings for both Ross and dd's DISCOUNTS, as well as investments in infrastructure and systems.

The company demonstrated effective cost management. Cost of goods sold as a percentage of sales decreased slightly due to improved merchandise gross margin and distribution costs. Selling, general, and administrative expenses also decreased as a percentage of sales, partly due to a gain from a lease settlement. These efficiencies contributed to a 19% increase in net earnings.

Ross Stores maintains a strong liquidity position with $305.8 million in cash and cash equivalents as of May 3, 2008. The company has a $600 million revolving credit facility, which was undrawn at the end of the quarter. Long-term debt consists of $150 million in senior notes. The company expects its operating cash flows, credit lines, and trade credit to be sufficient to meet its needs over the next twelve months.