10-QPeriod: Q2 FY2020

ROSS STORES, INC. Quarterly Report for Q2 Ended Aug 3, 2019

Filed September 11, 2019For Securities:ROST

Summary

Ross Stores, Inc. reported solid results for the second quarter and first half of fiscal 2019, demonstrating continued growth in sales and earnings. For the three months ended August 3, 2019, sales increased by 6.5% to $3.98 billion, driven by both new store openings and a comparable store sales increase of 3%. Diluted earnings per share (EPS) rose to $1.14, up from $1.04 in the prior year's period. The company maintained its profitability, with net earnings as a percentage of sales remaining stable at 10.4% year-over-year for the quarter. Looking at the first half of the fiscal year, sales grew by 6.1% to $7.78 billion, with comparable store sales up 2%. Diluted EPS increased to $2.29 from $2.15 in the comparable period last year. The company's financial position remains strong, supported by healthy cash flows from operations. Ross Stores continues to execute its expansion strategy, adding net new stores and repurchasing shares, reflecting confidence in its business model and commitment to returning value to shareholders.

Financial Statements
Beta
Revenue$3.98B
Cost of Revenue$2.84B
Gross Profit$1.14B
SG&A Expenses$591.97M
Operating Expenses$3.43B
Interest Expense$3.28M
Net Income$412.72M
EPS (Basic)$1.15
EPS (Diluted)$1.14
Shares Outstanding (Basic)359.79M
Shares Outstanding (Diluted)362.07M

Key Highlights

  • 1Total sales for the three months ended August 3, 2019, increased 6.5% to $3.98 billion compared to $3.74 billion for the same period in the prior year.
  • 2Comparable store sales increased 3% for the three-month period, contributing to overall sales growth.
  • 3Net earnings for the three months ended August 3, 2019, were $412.7 million, a 5.9% increase from $389.4 million in the prior year.
  • 4Diluted earnings per share (EPS) for the three months increased to $1.14, up from $1.04 in the prior year's quarter, reflecting both earnings growth and a reduction in weighted average shares outstanding due to repurchases.
  • 5The company opened 28 net new stores during the quarter, expanding its retail footprint to 1,772 locations.
  • 6Operating cash flow for the six months ended August 3, 2019, was $1.08 billion, an increase from $1.01 billion in the prior year, indicating strong operational performance.
  • 7The company repurchased approximately $640.3 million of its common stock during the first six months of the fiscal year, demonstrating a commitment to shareholder returns.

Frequently Asked Questions

Ross Stores reported a 6.5% increase in sales for the three months ended August 3, 2019, reaching $3.98 billion. This growth was driven by both the addition of new stores and a 3% increase in comparable store sales.

Net earnings increased by 5.9% to $412.7 million for the quarter. Diluted earnings per share (EPS) saw a significant increase of 9.6% to $1.14, benefiting from earnings growth and a reduced share count due to stock repurchases.

Ross Stores continues its expansion strategy, opening 28 net new stores in the quarter, bringing the total to 1,772 locations. The company also demonstrated a strong commitment to returning capital to shareholders through share repurchases, spending approximately $640.3 million in the first half of the fiscal year, and continued dividend payments.

The adoption of ASC 842 in February 2019 resulted in the recognition of significant operating lease assets and liabilities on the balance sheet. For example, as of August 3, 2019, the company reported operating lease assets of $2.93 billion and lease liabilities of approximately $3.05 billion (with current and non-current portions). This accounting change impacts the balance sheet presentation but did not have a significant impact on earnings or cash flows, according to the company.