Business Wire | Aug 19, 2021 04:01PM EDT

Ross Stores Reports Second Quarter Earnings, Provides Third Quarter Guidance

Aug. 19, 2021

DUBLIN, Calif.--(BUSINESS WIRE)--Aug. 19, 2021--Ross Stores, Inc. (NASDAQ: ROST) today reported earnings per share for the 13 weeks ended July 31, 2021 grew 22% to $1.39 on net income of $494 million. This compares to $1.14 per share on net earnings of $413 million for the 13 weeks ended August 3, 2019. Sales rose 21% to $4.8 billion, with comparable store sales up a robust 15%.

For the six months ended July 31, 2021, earnings per share were $2.73 on net earnings of $971 million, up from $2.29 per share on net income of $834 million for the same period in 2019. Sales for the first half of 2021 rose 20% to $9.3 billion, with comparable store sales up 14%.

Barbara Rentler, Chief Executive Officer, commented, "We are pleased that both second quarter sales and earnings substantially exceeded our expectations. Sales benefited from customers' positive response to our broad assortment of great bargains. In addition, our results were bolstered by a number of external factors, including ongoing government stimulus, increasing vaccination rates, and diminishing COVID restrictions. Operating margin versus 2019 improved to 14.1% as leverage from the robust sales gains was partially offset by the anticipated expense pressures from higher freight, wage, and COVID-related costs."

Ms. Rentler continued, "During the second quarter, we repurchased 1.4 million shares of common stock for an aggregate price of $176 million. As previously announced, we expect to buy back a total of $650 million in common stock during fiscal 2021."

Ms. Rentler further noted, "Looking ahead, there remains much uncertainty regarding the sustainability of the positive external factors that benefited our first half results as well as the potential risks we may face from the spread of COVID variants and worsening industry-wide supply chain congestion. As a result, we are forecasting third quarter same store sales to be up 5% to 7% with earnings per share in the range of $0.61 to $0.69. This guidance reflects our expectation for escalating freight and supply chain costs, and ongoing COVID-related operating expenses."

Ms. Rentler added, "Based on first half results and our third quarter outlook, we are updating our fiscal year 2021 earnings per share forecast to be in the range of $4.20 to $4.38 on a comparable store sales gain of 10% to 11%."

Ms. Rentler concluded, "Moving forward, we remain optimistic about our prospects for continued growth in both sales and profitability over the longer term, especially given consumers' increasing focus on value and convenience. Moreover, the significant number of retail closures and bankruptcies in recent years further enhances our ability to gain additional market share in the future."

The Company will host a conference call on Thursday, August 19, 2021 at 4:15 p.m. Eastern time to provide additional details concerning its second quarter results and management's outlook for the remainder of the year. A real-time audio webcast of the conference call will be available in the Investors section of the Company's website, located at www.rossstores.com. An audio playback will be available at 404-537-3406, PIN #6377123 until 8:00 p.m. Eastern time on August 26, 2021, as well as on the Company's website.

Forward-Looking Statements:This press release contains forward-looking statements regarding projected sales and earnings, planned new store growth, and other financial results and market conditions in future periods that are subject to risks and uncertainties which could cause our actual results to differ materially from management's current expectations. The words "plan," "expect," "target," "anticipate," "estimate," "believe," "forecast," "projected," "guidance," "outlook," "looking ahead," and similar expressions identify forward-looking statements. Risk factors for Ross Dress for Less(r)("Ross") and dd's DISCOUNTS(r)include without limitation, the uncertainties and potential for the recurrence of significant business disruptions arising from the COVID-19 pandemic; changes in the level of consumer spending on or preferences for apparel and home-related merchandise; impacts from the macro-economic environment, financial and credit markets, geopolitical conditions, unemployment levels or public health issues (such as pandemics) that affect consumer confidence and consumer disposable income; our need to effectively manage our inventories, markdowns, and inventory shortage to achieve planned gross margins; competitive pressures in the apparel or home-related merchandise retailing industry; issues associated with importing and selling merchandise produced in other countries, including risks from supply chain disruptions due to port of exit/entry congestion, shipping delays and ocean freight cost increases, and risks from other supply chain related disruptions in other countries, including those due to COVID-19 closures; unseasonable weather that may affect shopping patterns and consumer demand for seasonal apparel and other merchandise, and that may result in temporary store closures and disruptions in deliveries of merchandise to our stores; market availability, quantity, and quality of attractive brand name merchandise at desirable discounts and our buyers' ability to purchase merchandise that enables us to offer customers a wide assortment of merchandise at competitive prices; potential data security breaches, including cyber-attacks on our transaction processing and computer information systems, which could result in theft or unauthorized disclosure of customer, credit card, employee, or other private and valuable information that we handle in the ordinary course of our business; potential disruptions in our supply chain or information systems; issues involving the quality, safety, or authenticity of products we sell, which could harm our reputation, result in lost sales, and/or increase our costs; an adverse outcome in various legal, regulatory, or tax matters; damage to our corporate reputation or brands; our need to continually attract, train, and retain associates to execute our off-price strategies; our need to effectively advertise and market our business; changes in U.S. tax, tariff, or trade policy regarding apparel and home-related merchandise produced in other countries that could adversely affect our business; volatility in revenues and earnings; an additional pandemic, natural or man-made disaster in California or in another region where we have a concentration of stores, offices, or a distribution center; unexpected issues or costs from expanding in existing markets and entering new geographic markets; obtaining acceptable new store sites with favorable consumer demographics; and maintaining sufficient liquidity to support our continuing operations, new store openings and reopenings, and ongoing capital expenditure plans. Other risk factors are set forth in our SEC filings including without limitation, the Form 10-K for fiscal 2020, and fiscal 2021 Form 10-Q and Form 8-Ks on file with the SEC. The factors underlying our forecasts are dynamic and subject to change. As a result, our forecasts speak only as of the date they are given and do not necessarily reflect our outlook at any other point in time. We do not undertake to update or revise these forward-looking statements.

Ross Stores, Inc. is an S&P 500, Fortune 500, and Nasdaq 100 (ROST) company headquartered in Dublin, California, with fiscal 2020 revenues of $12.5 billion. Currently, the Company operates Ross Dress for Less(r) ("Ross"), the largest off-price apparel and home fashion chain in the United States with 1,611 locations in 40 states, the District of Columbia, and Guam. Ross offers first-quality, in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day. The Company also operates 285 dd's DISCOUNTS(r) stores in 21 states that feature a more moderately-priced assortment of first-quality, in-season, name brand apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 70% off moderate department and discount store regular prices every day. Additional information is available at www.rossstores.com.

Ross Stores, Inc.Condensed Consolidated Statements of Operations Three Months Ended Six Months Ended($000, exceptstores and per July 31, August 1, August 3, July 31, August 1, August 3,share data, 2021 2020 2019 2021 2020 2019unaudited) Sales $ 4,804,974 $ 2,684,712 $ 3,979,869 $ 9,321,054 $ 4,527,385 $ 7,776,511

Costs andExpenses Cost of goods 3,410,871 2,080,120 2,843,850 6,609,267 3,970,111 5,545,518 sold Selling, general 717,788 519,495 591,970 1,392,841 934,800 1,150,220 and administrative Interest expense 18,707 28,855 (4,782 ) 37,756 35,521 (10,417 ) (income), net Total costs and 4,147,366 2,628,470 3,431,038 8,039,864 4,940,432 6,685,321 expenses Earnings (loss) 657,608 56,242 548,831 1,281,190 (413,047 ) 1,091,190 before taxesProvision(benefit) for 163,350 34,195 136,110 310,453 (129,252 ) 257,327 taxes on earnings(loss)Net earnings $ 494,258 $ 22,047 $ 412,721 $ 970,737 $ (283,795 ) $ 833,863 (loss) Earnings (loss)per share Basic $ 1.40 $ 0.06 $ 1.15 $ 2.75 $ (0.81 ) $ 2.31

Diluted $ 1.39 $ 0.06 $ 1.14 $ 2.73 $ (0.81 ) $ 2.29

Weighted-averagesharesoutstanding (000) Basic 352,865 352,276 359,794 352,927 352,239 361,439

Diluted 354,935 354,232 362,074 355,161 352,239 364,007

Store count at 1,896 1,832 1,772 1,896 1,832 1,772 end of period Ross Stores, Inc.Condensed Consolidated Balance Sheets($000, unaudited)July 31, 2021August 1, 2020August 3, 2019AssetsCurrent AssetsCash and cash equivalents$

5,569,071

$

3,793,043

$

1,382,025

Accounts receivable159,163

162,723

130,439

Merchandise inventory1,751,027

1,117,983

1,835,869

Prepaid expenses and other193,588

273,612

167,585

Total current assets7,672,849

5,347,361

3,515,918

Property and equipment, net2,746,208

2,706,105

2,505,040

Operating lease assets2,973,907

3,053,735

2,932,199

Other long-term assets248,436

215,044

198,790

Total assets$

13,641,400

$

11,322,245

$

9,151,947

Liabilities and Stockholders' EquityCurrent LiabilitiesAccounts payable$

2,588,551

$

1,009,704

$

1,359,829

Accrued expenses and other609,719

557,475

474,273

Current operating lease liabilities608,123

579,277

549,841

Accrued payroll and benefits445,307

204,109

295,465

Income taxes payable19,526

-

-

Short-term debt-

802,507

-

Current portion of long-term debt64,964

-

-

Total current liabilities4,336,190

3,153,072

2,679,408

Long-term debt2,450,245

2,286,295

312,665

Non-current operating lease liabilities2,503,332

2,601,254

2,496,230

Other long-term liabilities292,715

258,869

227,842

Deferred income taxes154,932

155,556

139,538

Commitments and contingenciesStockholders' Equity3,903,986

2,867,199

3,296,264

Total liabilities and stockholders' equity$

13,641,400

$

11,322,245

$

9,151,947

Ross Stores, Inc.Condensed Consolidated Balance Sheets ($000, unaudited) July 31, August 1, August 3, 2021 2020 2019Assets Current Assets Cash and cash equivalents $ 5,569,071 $ 3,793,043 $ 1,382,025

Accounts receivable 159,163 162,723 130,439

Merchandise inventory 1,751,027 1,117,983 1,835,869

Prepaid expenses and other 193,588 273,612 167,585

Total current assets 7,672,849 5,347,361 3,515,918

Property and equipment, net 2,746,208 2,706,105 2,505,040

Operating lease assets 2,973,907 3,053,735 2,932,199

Other long-term assets 248,436 215,044 198,790

Total assets $ 13,641,400 $ 11,322,245 $ 9,151,947

Liabilities and Stockholders' Equity Current Liabilities Accounts payable $ 2,588,551 $ 1,009,704 $ 1,359,829

Accrued expenses and other 609,719 557,475 474,273

Current operating lease liabilities 608,123 579,277 549,841

Accrued payroll and benefits 445,307 204,109 295,465

Income taxes payable 19,526 - -

Short-term debt - 802,507 -

Current portion of long-term debt 64,964 - -

Total current liabilities 4,336,190 3,153,072 2,679,408

Long-term debt 2,450,245 2,286,295 312,665

Non-current operating lease 2,503,332 2,601,254 2,496,230liabilitiesOther long-term liabilities 292,715 258,869 227,842

Deferred income taxes 154,932 155,556 139,538

Commitments and contingencies Stockholders' Equity 3,903,986 2,867,199 3,296,264

Total liabilities and stockholders' $ 13,641,400 $ 11,322,245 $ 9,151,947equity Ross Stores, Inc.Condensed Consolidated Statements of Cash FlowsSix Months Ended($000, unaudited)July 31, 2021August 1, 2020August 3, 2019Cash Flows From Operating ActivitiesNet earnings (loss)$

970,737

$

(283,795

)

$

833,863

Adjustments to reconcile net earnings (loss) to net cashprovided by operating activities:Depreciation and amortization174,094

179,626

166,898

Stock-based compensation58,258

46,897

44,613

Deferred income taxes33,065

5,877

21,868

Change in assets and liabilities:Merchandise inventory(242,045

)

714,356

(85,427

)

Other current assets(63,420

)

(51,924

)

(55,309

)

Accounts payable360,891

(289,710

)

187,050

Other current liabilities77,963

(44,671

)

(8,529

)

Income taxes(27,596

)

(145,001

)

(31,193

)

Operating lease assets and liabilities, net2,654

5,569

8,276

Other long-term, net794

35,197

1,353

Net cash provided by operating activities1,345,395

172,421

1,083,463

Cash Flows From Investing ActivitiesAdditions to property and equipment(254,437

)

(250,047

)

(250,314

)

Proceeds from investments-

-

517

Net cash used in investing activities(254,437

)

(250,047

)

(249,797

)

Cash Flows From Financing ActivitiesIssuance of common stock related to stock plans12,534

11,075

10,906

Treasury stock purchased(49,015

)

(32,346

)

(52,349

)

Repurchase of common stock(175,784

)

(132,467

)

(640,259

)

Dividends paid(203,384

)

(101,414

)

(186,642

)

Net proceeds from issuance of short-term debt-

805,601

-

Payments of short-term debt-

(3,094

)

-

Net proceeds from issuance of long-term debt-

1,976,030

-

Payments of debt issuance costs-

(3,254

)

-

Net cash (used in) provided by financing activities(415,649

)

2,520,131

(868,344

)

Net increase (decrease) in cash, cash equivalents, and restrictedcash and cash equivalents675,309

2,442,505

(34,678

)

Cash, cash equivalents, and restricted cash and cash equivalents:Beginning of period4,953,769

1,411,410

1,478,079

End of period$

5,629,078

$

3,853,915

$

1,443,401

Reconciliations:Cash and cash equivalents$

5,569,071

$

3,793,043

$

1,382,025

Restricted cash and cash equivalents included in prepaid expenses and other10,801

10,348

11,048

Restricted cash and cash equivalents included in other long-term assets49,206

50,524

50,328

Total cash, cash equivalents, and restricted cash and cash equivalents:$

5,629,078

$

3,853,915

$

1,443,401

Supplemental Cash Flow DisclosuresInterest paid$

42,051

$

10,069

$

6,341

Income taxes paid$

304,984

$

9,872

$

266,653

View source version on businesswire.com: https://www.businesswire.com/news/home/20210819005736/en/

CONTACT: Connie Kao Group Vice President, Investor & Media Relations (925) 965-4668 connie.kao@ros.com