Business Wire | Nov 18, 2021 04:01PM EST

Ross Stores Reports Third Quarter Results, Provides Fourth Quarter Guidance

Nov. 18, 2021

DUBLIN, Calif.--(BUSINESS WIRE)--Nov. 18, 2021--Ross Stores, Inc. (NASDAQ: ROST) today reported earnings per share for the third quarter ended October 30, 2021 of $1.09 on net income of $385 million. This compares to $1.03 per share on net earnings of $371 million for the 13 weeks ended November 2, 2019. Sales rose 19% to $4.6 billion, with comparable store sales up a strong 14%.

For the nine months ended October 30, 2021, earnings per share were $3.82 on net earnings of $1.4 billion, up from $3.32 per share on net income of $1.2 billion for the same period in 2019. Sales year-to-date rose 20% to $13.9 billion, with comparable store sales up 14%.

Barbara Rentler, Chief Executive Officer, commented, "Third quarter sales and profitability significantly exceeded our expectations as consumers continued to respond favorably to our broad assortment of great bargains. We achieved these results despite waning government stimulus and uncertainty related to the spread of COVID variants. Operating margin of 11.4% was better than plan, though down from 2019 as leverage from the robust sales gains was partially offset by ongoing headwinds from higher freight, wage, and COVID-related costs."

Ms. Rentler continued, "During the third quarter and first nine months of fiscal 2021, we repurchased 2.1 million and 3.5 million shares of common stock, respectively, for an aggregate cost of $241 million in the quarter and $417 million year-to-date. We remain on track to buy back a total of $650 million in common stock during fiscal 2021."

Looking ahead, Ms. Rentler said, "While we are encouraged by the ongoing strength of consumer demand, there remains significant uncertainty related to the worsening industry-wide supply chain congestion as we enter the important holiday season. As a result, and while we hope to do better, we are projecting fourth quarter comparable store sales gains of 7% to 9% and earnings per share in the range of $0.83 to $0.93."

Ms. Rentler added, "Based on our year-to-date results and our updated fourth quarter guidance, we are now planning earnings per share for fiscal 2021 to be in the range of $4.65 to $4.75 on a comparable store sales gain of 12% to 13%."

Ms. Rentler concluded, "Moving forward, consumers' increasing focus on value and convenience along with the large number of recent retail closures and bankruptcies make us confident about our prospects for continued market share gains in the future."

The Company will host a conference call on Thursday, November 18, 2021, at 4:15 p.m. Eastern time to provide additional details concerning its third 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 #9489421 until 8:00 p.m. Eastern time on November 26, 2021, as well as on the Company's website.

Forward-Looking Statements:This press release and the related conference call remarks 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, 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, or the adoption of new federal or state tax legislation that increases tax rates or adds new taxes, could increase our costs; 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-Qs 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 1,629 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 295 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 Nine Months Ended($000, exceptstores and per October October November October 30, October November 2,share data, 30, 2021 31, 2020 2, 2019 2021 31, 2020 2019unaudited) $ $ $ $13,895,595 $ $11,625,628Sales 4,574,541 3,754,509 3,849,117 8,281,894

Costs andExpenses Cost of goods 3,326,004 2,711,419 2,766,432 9,935,271 6,681,530 8,311,950 sold Selling, 725,761 877,857 604,605 2,118,602 1,812,657 1,754,825 general and administrative Interest 18,744 28,740 (4,402) 56,500 64,261 (14,819) expense (income), net Total costs 4,070,509 3,618,016 3,366,635 12,110,373 8,558,448 10,051,956 and expenses Earnings (loss) 504,032 136,493 482,482 1,785,222 (276,554) 1,573,672before taxesProvision(benefit) for 119,002 5,296 111,550 429,455 (123,956) 368,877taxes onearnings (loss)Net earnings $ 385,030 $ 131,197 $ 370,932 $ 1,355,767 $ $ 1,204,795(loss) (152,598)

Earnings (loss)per share Basic $ 1.10 $ 0.37 $ 1.04 $ 3.85 $ (0.43) $ 3.35

Diluted $ 1.09 $ 0.37 $ 1.03 $ 3.82 $ (0.43) $ 3.32

Weighted-averagesharesoutstanding(000) Basic 351,071 352,481 356,879 352,308 352,320 359,919

Diluted 353,081 354,457 359,299 354,477 352,320 362,455

Store count at 1,924 1,869 1,810 1,924 1,869 1,810end of period Ross Stores, Inc.Condensed Consolidated Balance Sheets($000, unaudited)October 30, 2021October 31, 2020November 2, 2019AssetsCurrent AssetsCash and cash equivalents$ 5,259,595

$ 4,416,124

$ 1,142,709

Accounts receivable158,765

122,654

124,853

Merchandise inventory2,231,242

1,630,390

2,168,796

Prepaid expenses and other195,309

347,399

170,304

Total current assets7,844,911

6,516,567

3,606,662

Property and equipment, net2,784,286

2,706,884

2,565,882

Operating lease assets3,032,175

3,132,056

3,042,298

Other long-term assets254,362

215,159

200,999

Total assets$ 13,915,734

$ 12,570,666

$ 9,415,841

Liabilities and Stockholders' EquityCurrent LiabilitiesAccounts payable$ 2,652,881

$ 2,426,390

$ 1,480,205

Accrued expenses and other625,426

655,408

496,623

Current operating lease liabilities620,675

590,122

559,433

Accrued payroll and benefits512,336

269,709

321,977

Current portion of long-term debt64,991

-

-

Total current liabilities4,476,309

3,941,629

2,858,238

Long-term debt2,451,283

2,512,037

312,778

Non-current operating lease liabilities2,551,162

2,672,139

2,601,372

Other long-term liabilities296,819

290,795

225,934

Deferred income taxes156,944

135,029

140,740

Commitments and contingenciesStockholders' Equity3,983,217

3,019,037

3,276,779

Total liabilities and stockholders' equity$ 13,915,734

$ 12,570,666

$ 9,415,841

Ross Stores, Inc.Condensed Consolidated Balance Sheets ($000, unaudited) October 30, October 31, November 2, 2021 2020 2019Assets Current Assets Cash and cash equivalents $ 5,259,595 $ 4,416,124 $ 1,142,709

Accounts receivable 158,765 122,654 124,853

Merchandise inventory 2,231,242 1,630,390 2,168,796

Prepaid expenses and other 195,309 347,399 170,304

Total current assets 7,844,911 6,516,567 3,606,662

Property and equipment, net 2,784,286 2,706,884 2,565,882

Operating lease assets 3,032,175 3,132,056 3,042,298

Other long-term assets 254,362 215,159 200,999

Total assets $ 13,915,734 $ 12,570,666 $ 9,415,841

Liabilities and Stockholders'Equity Current Liabilities Accounts payable $ 2,652,881 $ 2,426,390 $ 1,480,205

Accrued expenses and other 625,426 655,408 496,623

Current operating lease 620,675 590,122 559,433 liabilities Accrued payroll and benefits 512,336 269,709 321,977

Current portion of long-term 64,991 - - debt Total current liabilities 4,476,309 3,941,629 2,858,238

Long-term debt 2,451,283 2,512,037 312,778

Non-current operating lease 2,551,162 2,672,139 2,601,372liabilitiesOther long-term liabilities 296,819 290,795 225,934

Deferred income taxes 156,944 135,029 140,740

Commitments and contingencies Stockholders' Equity 3,983,217 3,019,037 3,276,779

Total liabilities and $ 13,915,734 $ 12,570,666 $ 9,415,841stockholders' equity Ross Stores, Inc.Condensed Consolidated Statements of Cash FlowsNine Months Ended($000, unaudited)October 30, 2021October 31, 2020November 2, 2019Cash Flows From Operating ActivitiesNet earnings (loss)$ 1,355,767

$ (152,598)

$ 1,204,795

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:Depreciation and amortization262,139

268,193

255,089

Loss on early extinguishment of debt-

239,769

-

Stock-based compensation96,775

74,267

70,600

Deferred income taxes35,077

(14,650)

23,070

Change in assets and liabilities:Merchandise inventory(722,260)

201,949

(418,354)

Other current assets(50,139)

(31,732)

(46,161)

Accounts payable422,277

1,126,574

305,648

Other current liabilities160,984

118,679

43,968

Income taxes(60,442)

(119,513)

(42,619)

Operating lease assets and liabilities, net4,767

8,979

12,911

Other long-term, net(1,292)

63,206

1,983

Net cash provided by operating activities1,503,653

1,783,123

1,410,930

Cash Flows From Investing ActivitiesAdditions to property and equipment(377,916)

(339,545)

(401,251)

Proceeds from investments-

-

517

Net cash used in investing activities(377,916)

(339,545)

(400,734)

Cash Flows From Financing ActivitiesIssuance of common stock related to stock plans18,626

17,088

16,451

Treasury stock purchased(57,092)

(45,091)

(56,920)

Repurchase of common stock(416,979)

(132,467)

(965,909)

Dividends paid(304,520)

(101,411)

(278,370)

Net proceeds from issuance of short-term debt-

805,601

-

Payments of short-term debt-

(804,972)

-

Net proceeds from issuance of long-term debt-

2,965,115

-

Payments of long-term debt-

(775,009)

-

Payments of debt extinguishment and debt issuance costs-

(232,000)

-

Net cash (used in) provided by financing activities(759,965)

1,696,854

(1,284,748)

Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents365,772

3,140,432

(274,552)

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

1,411,410

1,478,079

End of period$ 5,319,541

$ 4,551,842

$ 1,203,527

Reconciliations:Cash and cash equivalents$ 5,259,595

$ 4,416,124

$ 1,142,709

Restricted cash and cash equivalents included in prepaid expenses and other10,790

85,322

10,947

Restricted cash and cash equivalents included in other long-term assets49,156

50,396

49,871

Total cash, cash equivalents, and restricted cash and cash equivalents:$ 5,319,541

$ 4,551,842

$ 1,203,527

Supplemental Cash Flow DisclosuresInterest paid$ 82,209

$ 70,347

$ 10,560

Income taxes paid$ 454,821

$ 10,207

$ 388,426

View source version on businesswire.com: https://www.businesswire.com/news/home/20211118006274/en/

CONTACT: Adam Orvos Executive Vice President, Chief Financial Officer (925) 965-4550

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