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Ross Stores Reports First Quarter Earnings

Provides Second Quarter and Updated Fiscal 2023 Guidance

Ross Stores, Inc. (NASDAQ: ROST) today reported earnings per share for the 13 weeks ended April 29, 2023 of $1.09 on net earnings of $371 million. These results compare to earnings per share of $0.97 on net income of $338 million for the 13 weeks ended April 30, 2022. Sales for the first quarter of 2023 were $4.5 billion, up from $4.3 billion in the prior year period. Comparable store sales were up 1%.

Barbara Rentler, Chief Executive Officer, commented, “Despite continued inflationary pressures impacting our low-to-moderate income customers, first quarter sales were relatively in line with our expectations. Operating margin for the period was 10.1%, down from 10.8% in 2022, primarily reflecting higher incentive compensation versus last year when we underperformed our expectations.”

Ms. Rentler continued, “During the first quarter of fiscal 2023, we repurchased 2.2 million shares of common stock for an aggregate price of $234 million. As planned, we remain on track to buy back a total of $950 million in common stock during fiscal 2023.”

Looking ahead, Ms. Rentler commented, “For the 13 weeks ending July 29, 2023, comparable store sales are projected to be relatively flat. Earnings per share for this year’s second quarter are forecast to be $1.07 to $1.14 versus $1.11 for the same period last year.”

She continued, “There remains a high level of uncertainty in today’s macro-economic and geopolitical environments. In addition, prolonged inflationary pressures continue to negatively impact our low-to-moderate income customers’ discretionary spend. As such, we remain focused on delivering the most compelling values possible to maximize our opportunities for growth.”

Ms. Rentler concluded, “Based on our first quarter results and guidance for the second quarter, comparable store sales for the 52 weeks ending January 27, 2024, are still planned to be relatively flat. We now project earnings per share for the 53 weeks ending February 3, 2024 to be $4.77 to $4.99 compared to $4.38 for the 52 weeks ended January 28, 2023. This guidance includes an estimated benefit to full year 2023 earnings per share of approximately $0.15 from the 53rd week.”

The Company will host a conference call on Thursday, May 18, 2023 at 4:15 p.m. Eastern time to provide additional details concerning its first quarter results and management’s outlook for the second quarter and fiscal year 2023. 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 201-612-7415, PIN #13738510 until 8:00 p.m. Eastern time on May 25, 2023, as well as on the Company’s website.

Forward-Looking Statements: This press release and the related conference call remarks contains a number of forward-looking statements regarding, without limitation, projected sales, costs and earnings, planned new store growth, capital expenditures, liquidity, and other matters. These forward-looking statements reflect our then-current beliefs, plans, and estimates with respect to future events and our projected financial performance, operations, 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® (“Ross”) and dd’s DISCOUNTS® include without limitation, the uncertainties and potential for the recurrence of significant business disruptions arising from the macroeconomic environment, including inflation, interest rates, fears concerning the current federal debt ceiling negotiations, housing costs, energy and fuel costs, financial and credit market conditions, recession concerns, geopolitical conditions (including the current Russia-Ukraine conflict), the COVID-19 pandemic, or public health and public safety issues, that affect our costs, consumer confidence, and consumer disposable income; unexpected changes in the level of consumer spending on, or preferences for, apparel and home-related merchandise, which could adversely affect us; competitive pressures in the apparel and home-related merchandise retailing industry; our need to effectively manage our inventories, markdowns, and inventory shortage in order to achieve our planned gross margins; risks associated with importing and selling merchandise produced in other countries, including risks from supply chain disruption, shipping delays, and higher than expected ocean freight costs; unseasonable weather that may affect shopping patterns and consumer demand for seasonal apparel and other merchandise; our dependence on the market availability, quantity, and quality of attractive brand name merchandise at desirable discounts, and on the ability of our buyers to anticipate consumer preferences and to purchase merchandise to enable us to offer customers a wide assortment of merchandise at competitive prices; information or 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; disruptions in our supply chain or in our information systems, including from ransomware or other cyber-attacks, that could impact our ability to process sales and to deliver product to our stores in a timely and cost-effective manner; our need to obtain acceptable new store sites with favorable consumer demographics to achieve our planned new store openings; our need to expand in existing markets and enter new geographic markets in order to achieve planned market penetration; consumer problems or legal 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, that could increase our costs; damage to our corporate reputation or brands that could adversely affect our sales and operating results; our need to continually attract, train, and retain associates with the retail talent necessary to execute our off-price retail 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, which could adversely affect our business; possible volatility in our revenues and earnings; an additional public health or public safety crisis, demonstrations, natural or man-made disaster in California or in another region where we have a concentration of stores, offices, or a distribution center that could harm our business; our need to maintain sufficient liquidity to support our continuing operations and our new store openings. Other risk factors are set forth in our SEC filings including without limitation, the Form 10-K for fiscal 2022 and fiscal 2023 Form 8-Ks on file with the SEC. The factors underlying our forecasts are dynamic and subject to change. As a result, any forecasts or forward-looking statements speak only as of the date they are given and do not necessarily reflect our outlook at any other point in time. We disclaim any obligation 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 2022 revenues of $18.7 billion. Currently, the Company operates Ross Dress for Less® (“Ross”), the largest off-price apparel and home fashion chain in the United States with 1,704 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 330 dd’s DISCOUNTS® stores in 22 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 Earnings
 
 
Three Months Ended
($000, except stores and per share data, unaudited)

April 29, 2023

April 30, 2022

 
Sales

$

4,494,686

$

4,333,100

 
Costs and Expenses
Cost of goods sold

 

3,292,606

 

3,196,446

Selling, general and administrative

 

746,222

 

669,496

Interest (income) expense, net

 

(31,397)

 

17,696

Total costs and expenses

 

4,007,431

 

3,883,638

 
Earnings before taxes

 

487,255

 

449,462

Provision for taxes on earnings

 

116,064

 

111,017

Net earnings

$

371,191

$

338,445

 
Earnings per share
Basic

$

1.10

$

0.98

Diluted

$

1.09

$

0.97

 
 
Weighted-average shares outstanding (000)
Basic

 

338,049

 

347,053

Diluted

 

340,044

 

348,820

 
 
Store count at end of period

 

2,034

 

1,951

 
Ross Stores, Inc.
Condensed Consolidated Balance Sheets
 
 
($000, unaudited)

April 29, 2023

April 30, 2022

Assets
 
Current Assets
Cash and cash equivalents

$

4,416,480

$

4,015,567

Accounts receivable

 

170,816

 

164,071

Merchandise inventory

 

2,241,735

 

2,673,551

Prepaid expenses and other

 

210,597

 

194,813

Total current assets

 

7,039,628

 

7,048,002

 
Property and equipment, net

 

3,224,733

 

2,887,926

Operating lease assets

 

3,122,474

 

3,057,641

Other long-term assets

 

232,069

 

240,129

Total assets

$

13,618,904

$

13,233,698

 
Liabilities and Stockholders’ Equity
 
Current Liabilities
Accounts payable

$

2,061,529

$

2,175,350

Accrued expenses and other

 

607,294

 

582,792

Current operating lease liabilities

 

654,709

 

635,799

Accrued payroll and benefits

 

299,465

 

272,760

Income taxes payable

 

158,170

 

89,361

Total current liabilities

 

3,781,167

 

3,756,062

 
 
Long-term debt

 

2,457,561

 

2,453,367

Non-current operating lease liabilities

 

2,619,466

 

2,567,286

Other long-term liabilities

 

222,463

 

236,211

Deferred income taxes

 

227,851

 

166,875

 
Commitments and contingencies
 
Stockholders’ Equity

 

4,310,396

 

4,053,897

Total liabilities and stockholders’ equity

$

13,618,904

$

13,233,698

 
Ross Stores, Inc.
Condensed Consolidated Statements of Cash Flows
     
   
  Three Months Ended
($000, unaudited)  

April 29, 2023

 

April 30, 2022

Cash Flows From Operating Activities    
Net earnings  

$

371,191

 

$

338,445

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:    
Depreciation and amortization  

 

99,379

 

 

92,108

Stock-based compensation  

 

33,063

 

 

36,071

Deferred income taxes  

 

10,792

 

 

29,233

Change in assets and liabilities:    
Merchandise inventory  

 

(218,240)

 

 

(411,278)

Other current assets  

 

(51,914)

 

 

(70,331)

Accounts payable  

 

46,577

 

 

(189,888)

Other current liabilities  

 

16,336

 

 

(325,075)

Income taxes  

 

105,225

 

 

81,625

Operating lease assets and liabilities, net  

 

(102)

 

 

2,902

Other long-term, net  

 

845

 

 

(79)

Net cash provided by (used in) operating activities  

 

413,152

 

 

(416,267)

     
Cash Flows From Investing Activities    
Additions to property and equipment  

 

(167,253)

 

 

(109,848)

Net cash used in investing activities  

 

(167,253)

 

 

(109,848)

     
Cash Flows From Financing Activities    
Issuance of common stock related to stock plans  

 

6,149

 

 

5,917

Treasury stock purchased  

 

(37,522)

 

 

(38,113)

Repurchase of common stock  

 

(234,468)

 

 

(239,565)

Dividends paid  

 

(114,794)

 

 

(108,908)

Net cash used in financing activities  

 

(380,635)

 

 

(380,669)

     
Net decrease in cash, cash equivalents, and restricted cash and cash equivalents  

 

(134,736)

 

 

(906,784)

     
Cash, cash equivalents, and restricted cash and cash equivalents:    
Beginning of period  

 

4,612,241

 

 

4,982,382

End of period  

$

4,477,505

 

$

4,075,598

     
Reconciliations:    
Cash and cash equivalents  

$

4,416,480

 

$

4,015,567

Restricted cash and cash equivalents included in prepaid expenses and other  

 

12,815

 

 

11,406

Restricted cash and cash equivalents included in other long-term assets  

 

48,210

 

 

48,625

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

$

4,477,505

 

$

4,075,598

     
Supplemental Cash Flow Disclosures    
Interest paid  

$

40,158

 

$

40,158

Income taxes paid  

$

47

 

$

160

       

 

Contacts

Adam Orvos

Executive Vice President, Chief Financial Officer

(925) 965-4550

Connie Kao

Group Vice President, Investor Relations

(925) 965-4668

connie.kao@ros.com

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