Summary
Ross Stores, Inc. reported solid performance for the third quarter and nine months ended October 29, 2011. Total sales increased by 9% for both periods, driven by a combination of comparable store sales growth of 5% and the opening of 69 net new stores. This growth is particularly strong given the prior year's comparable store sales increase of 3% (Q3) and 6% (nine months). The company also demonstrated improved profitability, with net earnings as a percentage of sales increasing to 7.0% in the quarter and 7.5% for the nine months, up from 6.5% and 6.9% respectively in the prior year. This margin expansion was fueled by a decrease in cost of goods sold as a percentage of sales, primarily due to higher merchandise gross margins resulting from fewer markdowns and faster inventory turns. Financially, Ross Stores continued to invest in growth, with capital expenditures increasing significantly to support new store openings and infrastructure. The company also actively returned capital to shareholders through a robust stock repurchase program and dividend payments. Despite increased investments, the company maintained a strong liquidity position, with ample cash flows from operations and an available $600 million revolving credit facility. Management expressed confidence in their ability to meet liquidity needs for at least the next twelve months. The company's expansion strategy continues to be a key driver of performance, with a focus on leveraging market opportunities.
Financial Highlights
46 data points| Revenue | $2.05B |
| Cost of Revenue | $1.49B |
| Gross Profit | $556.21M |
| SG&A Expenses | $332.23M |
| Operating Expenses | $1.83B |
| Net Income | $143.97M |
| EPS (Basic) | $0.32 |
| EPS (Diluted) | $0.32 |
| Shares Outstanding (Basic) | 449.08M |
| Shares Outstanding (Diluted) | 456.92M |
Key Highlights
- 1Total sales grew 9.2% for the three months and 8.6% for the nine months ended October 29, 2011, compared to the prior year periods.
- 2Comparable store sales increased by a healthy 5% for both the three- and nine-month periods, indicating strong performance in existing locations.
- 3Net earnings as a percentage of sales improved to 7.0% for the quarter and 7.5% for the nine months, up from 6.5% and 6.9% in the prior year, respectively.
- 4Cost of goods sold as a percentage of sales decreased, driven by improved merchandise gross margin due to fewer markdowns and faster inventory turns.
- 5Selling, general, and administrative expenses as a percentage of sales also decreased, demonstrating effective cost management.
- 6The company opened 39 new stores in the quarter and 80 net new stores in the nine months, expanding its retail footprint.
- 7Diluted earnings per share saw a significant increase of 24% for both the three- and nine-month periods, boosted by net earnings growth and a reduction in shares outstanding due to stock repurchases.