Summary
Ross Stores, Inc. reported strong performance for the second quarter and first half of fiscal year 2011, demonstrating robust sales growth and improved profitability. Net sales increased by 9% for the quarter and 8% for the six-month period, driven by new store openings and a 5% and 4% increase in comparable store sales, respectively. This growth outpaced the prior year's comparable store sales gains, indicating healthy underlying demand. The company effectively managed its cost of goods sold, leading to improved merchandise gross margins due to fewer markdowns and faster inventory turns, contributing to a 7.1% net earnings margin for the quarter, up from 6.8% in the prior year. Financially, the company maintained a strong liquidity position with significant cash flows from operations, although there was a planned increase in inventory for "packaway" opportunities. Capital expenditures were elevated due to new store openings and warehouse purchases, with a forecast for continued investment in fiscal year 2011. The company also actively returned capital to shareholders through share repurchases and a consistent dividend payout, underscoring a focus on shareholder value. Management expressed confidence in the company's ability to meet its liquidity needs and fund ongoing operations and growth initiatives.
Financial Highlights
46 data points| Revenue | $2.09B |
| Cost of Revenue | $1.52B |
| Gross Profit | $565.10M |
| SG&A Expenses | $320.88M |
| Operating Expenses | $1.85B |
| Net Income | $148.28M |
| EPS (Basic) | $0.33 |
| EPS (Diluted) | $0.32 |
| Shares Outstanding (Basic) | 454.61M |
| Shares Outstanding (Diluted) | 462.35M |
Key Highlights
- 1Total sales increased by 9.3% to $2,089 million for the third quarter of fiscal 2011 compared to the same period in the prior year.
- 2Comparable store sales increased by 5% for the third quarter of fiscal 2011, building on a 4% increase in the prior year.
- 3Net earnings per diluted share rose 20% to $1.28 for the third quarter of fiscal 2011 compared to $1.07 in the prior year.
- 4Cost of goods sold as a percentage of sales decreased, primarily driven by a 45 basis point increase in merchandise gross margin due to fewer markdowns and faster inventory turns.
- 5Selling, general, and administrative expenses as a percentage of sales decreased by 50 basis points, reflecting leverage from comparable store sales increases.
- 6The company repurchased approximately $230.2 million of common stock during the first six months of fiscal 2011, and paid dividends of $51.6 million.
- 7Ross Stores opened 25 net new stores during the third quarter, bringing the total store count to 1,091.