ROSS STORES, INC. Quarterly Report for Q1 Ended May 5, 2018

Summary

Ross Stores, Inc. reported strong financial results for the first quarter of fiscal year 2018, with net sales increasing by 8.5% to $3.59 billion and diluted earnings per share (EPS) growing by 35% to $1.11. This EPS growth was significantly boosted by the new U.S. federal corporate income tax rate, which reduced the effective tax rate from 36% to 23%. Comparable store sales also saw a healthy 3% increase, indicating solid performance in existing locations. The company's robust sales growth was driven by both new store openings (90 net new stores added year-over-year) and consistent comparable store sales performance. Profitability improved, with net earnings as a percentage of sales increasing from 9.7% to 11.7%, largely due to tax benefits and a slight improvement in cost of goods sold margins. The company continued its strong capital return to shareholders, significantly increasing share repurchases and dividends paid compared to the prior year, underscoring confidence in its financial health and future prospects.

Key Highlights

• 1Net sales increased by 8.5% to $3.59 billion, driven by both new store openings and comparable store sales growth.
• 2Comparable store sales increased by 3%, demonstrating continued customer demand in existing locations.
• 3Diluted EPS grew by 35% to $1.11, significantly benefiting from the reduction in the U.S. federal corporate income tax rate.
• 4The effective tax rate decreased from 36% to 23% due to the Tax Cuts and Jobs Act of 2017.
• 5Net earnings margin improved to 11.7% from 9.7% in the prior year period, reflecting operational efficiencies and tax benefits.
• 6The company returned significant capital to shareholders, with a substantial increase in share repurchases and cash dividends paid.
• 7Inventory levels increased year-over-year, with packaway inventory remaining at 49% of total inventory, managed to meet future demand.

Frequently Asked Questions