Ross Stores Reports Third Quarter Results, Provides Fourth Quarter Guidance | Financial Buzz

Ross Stores Reports Third Quarter Results, Provides Fourth Quarter Guidance

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® (“Ross”) and dd’s DISCOUNTS® 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® (“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® 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, except stores and per share data, unaudited) October 30, 2021 October 31, 2020 November 2, 2019 October 30, 2021 October 31, 2020 November 2, 2019
 
Sales

$ 4,574,541

$ 3,754,509

$ 3,849,117

$13,895,595

$ 8,281,894

$11,625,628

 
Costs and Expenses
Cost of goods sold

3,326,004

2,711,419

2,766,432

9,935,271

6,681,530

8,311,950

Selling, general and administrative

725,761

877,857

604,605

2,118,602

1,812,657

1,754,825

Interest expense (income), net

18,744

28,740

(4,402)

56,500

64,261

(14,819)

Total costs and expenses

4,070,509

3,618,016

3,366,635

12,110,373

8,558,448

10,051,956

 
Earnings (loss) before taxes

504,032

136,493

482,482

1,785,222

(276,554)

1,573,672

Provision (benefit) for taxes on earnings (loss)

119,002

5,296

111,550

429,455

(123,956)

368,877

Net earnings (loss)

$ 385,030

$ 131,197

$ 370,932

$ 1,355,767

$ (152,598)

$ 1,204,795

 
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-average shares outstanding (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 end of period

1,924

1,869

1,810

1,924

1,869

1,810

 
 
Ross Stores, Inc.
Condensed Consolidated Balance Sheets
 
($000, unaudited) October 30, 2021 October 31, 2020 November 2, 2019
Assets
 
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 liabilities

620,675

590,122

559,433

Accrued payroll and benefits

512,336

269,709

321,977

Current portion of long-term debt

64,991

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 liabilities

2,551,162

2,672,139

2,601,372

Other 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 stockholders’ equity

$ 13,915,734

$ 12,570,666

$ 9,415,841

 
 
Ross Stores, Inc.
Condensed Consolidated Statements of Cash Flows
 
Nine Months Ended
($000, unaudited) October 30, 2021 October 31, 2020 November 2, 2019
 
Cash Flows From Operating Activities
Net 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 amortization

262,139

268,193

255,089

Loss on early extinguishment of debt

239,769

Stock-based compensation

96,775

74,267

70,600

Deferred income taxes

35,077

(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 payable

422,277

1,126,574

305,648

Other current liabilities

160,984

118,679

43,968

Income taxes

(60,442)

(119,513)

(42,619)

Operating lease assets and liabilities, net

4,767

8,979

12,911

Other long-term, net

(1,292)

63,206

1,983

Net cash provided by operating activities

1,503,653

1,783,123

1,410,930

 
Cash Flows From Investing Activities
Additions 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 Activities
Issuance of common stock related to stock plans

18,626

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 equivalents

365,772

3,140,432

(274,552)

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

4,953,769

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 other

10,790

85,322

10,947

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

49,156

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 Disclosures
Interest paid

$ 82,209

$ 70,347

$ 10,560

Income taxes paid

$ 454,821

$ 10,207

$ 388,426

 

 

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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