10-QPeriod: Q1 FY2014

ROSS STORES, INC. Quarterly Report for Q1 Ended May 4, 2013

Filed June 12, 2013For Securities:ROST

Summary

Ross Stores, Inc. (ROST) reported a solid first quarter for fiscal year 2013, with net sales increasing by 7.8% to $2.54 billion and comparable store sales growing by 3%. This top-line growth translated into a 15% increase in diluted earnings per share, reaching $1.07, up from $0.93 in the prior year. The company's effective tax rate remained stable at approximately 38%. Management highlighted strong operational execution and strategic initiatives, including store expansion, as drivers of performance. The company also announced a new two-year, $1.1 billion stock repurchase program and continued to return capital to shareholders through dividends, though cash dividends declared per share were $0 for the period reported in the Condensed Consolidated Statements of Earnings. Financially, ROST demonstrated robust operating cash flow of $352.9 million, an increase from the prior year, supporting significant investments in capital expenditures, which rose to $97.6 million, primarily for new store openings and infrastructure projects like new distribution centers. The company maintained a strong balance sheet with ample liquidity, evidenced by its $600 million revolving credit facility remaining fully available and no outstanding borrowings. Management expressed confidence in their ability to meet ongoing operating needs and planned investments for at least the next twelve months.

Financial Highlights

47 data points
Beta

Revenue

$2.54B

29.2% Gross Margin

Net Income

$234.61M

9.2% Net Margin

EPS (Diluted)

$0.54

Total Assets

$3.84B

Cash & Equivalents

$714.17M

Free Cash Flow

$255.31M

Financial Statements
Beta
Revenue$2.54B
Cost of Revenue$1.80B
Gross Profit$741.10M
SG&A Expenses$361.97M
Operating Expenses$2.16B
Net Income$234.61M
EPS (Basic)$0.55
EPS (Diluted)$0.54
Shares Outstanding (Basic)430.82M
Shares Outstanding (Diluted)436.99M

Key Highlights

  • 1Net sales increased by 7.8% to $2.54 billion for the three months ended May 4, 2013, compared to $2.36 billion in the prior year.
  • 2Comparable store sales grew by 3%, indicating continued customer traffic and demand.
  • 3Diluted earnings per share (EPS) rose by 15% to $1.07, up from $0.93 in the prior year's quarter.
  • 4Operating cash flow increased to $352.9 million, up from $297.3 million, demonstrating strong cash generation from operations.
  • 5Capital expenditures increased significantly to $97.6 million, supporting expansion and infrastructure development, including new distribution centers.
  • 6The company repurchased $138.3 million of common stock during the quarter and announced a new $1.1 billion stock repurchase program for fiscal years 2013-2014.
  • 7Ross Stores ended the period with 1,227 stores, an increase of 81 net new stores compared to the prior year period.

Frequently Asked Questions

For the three months ended May 4, 2013, Ross Stores reported a 7.8% increase in net sales, reaching $2.54 billion, and a 3% increase in comparable store sales. Net earnings also saw a significant increase, leading to a 15% rise in diluted earnings per share to $1.07 from $0.93 in the same period last year.

Ross Stores is increasing its capital expenditures, with $97.6 million invested in the quarter, up from $58.0 million in the prior year. These investments are primarily directed towards opening new stores, upgrading existing ones, and significant infrastructure projects such as developing new distribution centers and a new data center, and relocating its corporate headquarters.

Ross Stores continues to return capital to shareholders through its stock repurchase program and dividends. During the quarter, the company repurchased approximately $138.3 million of its common stock. Additionally, a new two-year, $1.1 billion stock repurchase program was approved for fiscal years 2013 and 2014. The company also declared a cash dividend of $0.17 per share payable in June 2013.

The company exhibits a strong financial position. It generated robust operating cash flow of $352.9 million in the quarter and maintained a fully available $600 million unsecured revolving credit facility with no outstanding borrowings as of May 4, 2013. Management believes existing cash balances, cash flows from operations, and credit facilities are sufficient to meet operating needs and planned investments for at least the next twelve months.