10-QPeriod: Q3 FY2020

ROSS STORES, INC. Quarterly Report for Q3 Ended Nov 2, 2019

Filed December 11, 2019For Securities:ROST

Summary

Ross Stores, Inc. reported solid financial results for the third quarter and first nine months of fiscal year 2019, demonstrating continued growth and profitability. Sales increased by 8.4% in the third quarter and 6.9% for the first nine months, driven by both new store openings and a 5% and 3% comparable store sales growth, respectively. Net earnings also saw a significant increase, with diluted EPS rising to $1.03 in the third quarter and $3.32 for the nine-month period, up from $0.91 and $3.06 in the prior year, respectively. The company's strategic focus on expanding its store base and offering value to customers continues to pay off. Despite increased costs associated with distribution and occupancy, merchandise margin improvements and strong sales leverage helped maintain healthy profit margins. Ross Stores also continued its commitment to shareholder returns through significant stock repurchases and dividend payments, underscoring its financial strength and confidence in future performance.

Financial Highlights

50 data points
Beta

Revenue

$3.85B

28.1% Gross Margin

Net Income

$370.93M

9.6% Net Margin

EPS (Diluted)

$1.03

Total Assets

$9.42B

Cash & Equivalents

$1.14B

Free Cash Flow

$176.53M

Financial Statements
Beta
Revenue$3.85B
Cost of Revenue$2.77B
Gross Profit$1.08B
SG&A Expenses$604.61M
Operating Expenses$3.37B
Interest Expense$3.28M
Net Income$370.93M
EPS (Basic)$1.04
EPS (Diluted)$1.03
Shares Outstanding (Basic)356.88M
Shares Outstanding (Diluted)359.30M

Key Highlights

  • 1Total sales increased by 8.4% to $3.85 billion for the third quarter and 6.9% to $11.63 billion for the first nine months, demonstrating robust top-line growth.
  • 2Comparable store sales increased by 5% for the third quarter and 3% for the first nine months, indicating healthy performance in existing stores.
  • 3Net earnings grew to $370.9 million for the third quarter, with diluted EPS of $1.03, compared to $338.1 million and $0.91 in the prior year's quarter.
  • 4The company continued its store expansion, ending the period with 1,810 stores, an increase from 1,720 stores in the prior year.
  • 5Cash used in financing activities increased due to higher stock repurchases ($965.9 million) and dividend payments ($278.4 million) for the nine-month period.
  • 6The company entered into a new $800 million unsecured revolving credit facility, replacing the previous $600 million facility, providing ample liquidity.
  • 7Effective tax rate decreased to approximately 23% for the period, down from 24% in the prior year, partly due to the resolution of tax positions.

Frequently Asked Questions

For the third quarter ended November 2, 2019, Ross Stores reported a sales increase of 8.4% to $3.85 billion compared to the same period in the prior year. For the first nine months of fiscal 2019, sales grew by 6.9% to $11.63 billion.

Net earnings increased to $370.9 million in the third quarter, resulting in a diluted EPS of $1.03, up from $0.91 in the prior year's third quarter. For the nine-month period, net earnings were $1.20 billion, with diluted EPS of $3.32, compared to $1.15 billion and $3.06 in the prior year.

Ross Stores continues to expand its retail footprint, opening new stores based on market penetration, local demographics, and competitive landscape. The company ended the period with 1,810 stores, an increase from 1,720 stores in the prior year, reflecting its ongoing expansion strategy.

Ross Stores generated strong cash flow from operations and maintained significant liquidity through its new $800 million revolving credit facility. The company actively returned capital to shareholders through substantial stock repurchases, totaling $965.9 million for the nine-month period, and dividend payments of $278.4 million during the same period, indicating confidence in its financial health and future prospects.