10-QPeriod: Q3 FY2014

ROSS STORES, INC. Quarterly Report for Q3 Ended Nov 2, 2013

Filed December 11, 2013For Securities:ROST

Summary

Ross Stores, Inc. reported solid financial results for the third quarter and nine months ended November 2, 2013, demonstrating continued sales growth and improved profitability. Sales increased by 6% for the quarter and 7.6% year-to-date, driven by both new store openings and a 2-3% increase in comparable store sales. Net earnings also saw an increase, with diluted earnings per share rising 11% for the quarter to $0.80 and 16% year-to-date to $2.86. This performance was supported by improvements in merchandise margin and effective management of selling, general, and administrative expenses, despite increased store operating costs due to expansion. The company continues to execute its growth strategy by opening new stores, with 80 net new stores added in the past year, expanding its footprint to 1,285 locations. Significant investments in capital expenditures are underway, including new distribution centers and corporate office upgrades, funded by strong operating cash flows. The company also actively returned capital to shareholders through a robust stock repurchase program and dividend payments, underscoring its commitment to shareholder value.

Financial Highlights

48 data points
Beta

Revenue

$2.40B

27.2% Gross Margin

Net Income

$171.62M

7.2% Net Margin

EPS (Diluted)

$0.40

Total Assets

$3.95B

Cash & Equivalents

$372.27M

Free Cash Flow

-$2.63M

Financial Statements
Beta
Revenue$2.40B
Cost of Revenue$1.75B
Gross Profit$651.89M
SG&A Expenses$381.86M
Operating Expenses$2.13B
Net Income$171.62M
EPS (Basic)$0.41
EPS (Diluted)$0.40
Shares Outstanding (Basic)423.97M
Shares Outstanding (Diluted)429.61M

Key Highlights

  • 1Total sales increased by 6.0% to $2.4 billion for the three months ended November 2, 2013, and by 7.6% to $7.5 billion for the nine months ended November 2, 2013, compared to the prior year periods.
  • 2Comparable store sales grew by 2% for the quarter and 3% for the nine months, indicating sustained customer demand.
  • 3Net earnings for the quarter increased to $171.6 million, resulting in diluted EPS of $0.80, up from $0.72 in the prior year.
  • 4For the nine-month period, net earnings rose to $619.4 million, with diluted EPS of $2.86, up from $2.46 in the prior year.
  • 5The company expanded its store base by 80 net new stores, bringing the total to 1,285 locations as of November 2, 2013.
  • 6Operating cash flow remained strong, providing $681.2 million for the nine months ended November 2, 2013, supporting investment and capital return activities.
  • 7Significant capital expenditures of $423.2 million were made in the nine-month period, primarily for new stores, distribution centers, and corporate infrastructure.

Frequently Asked Questions

For the three months ended November 2, 2013, Ross Stores reported a 6.0% increase in sales, reaching $2.4 billion, compared to $2.26 billion in the same period of the prior year. This growth was driven by both new store openings and a 2% increase in comparable store sales.

Net earnings for the third quarter of fiscal year 2013 increased to $171.6 million from $159.5 million in the prior year's quarter. Diluted earnings per share (EPS) rose by 11% to $0.80, compared to $0.72 in the prior year period. For the nine-month period, net earnings were $619.4 million, with diluted EPS of $2.86, up 16% from $2.46 in the prior year.

Ross Stores is expanding its physical footprint, having opened 80 net new stores in the last year, bringing the total to 1,285 locations. The company also invested $423.2 million in capital expenditures during the first nine months of fiscal year 2013, which included costs for new and existing stores, distribution centers, and information technology systems. Future investments are planned, including significant capital expenditures for distribution centers and corporate headquarters.

Ross Stores actively returned capital to shareholders through its stock repurchase program and dividend payments. During the nine months ended November 2, 2013, the company repurchased approximately $421.3 million of common stock under its $1.1 billion program and paid $111.4 million in dividends.