This excerpt taken from the ROST 8-K filed Nov 14, 2006.
ROSS STORES REPORTS THIRD QUARTER EARNINGS
Pleasanton, California, November 14, 2006 -- Ross Stores, Inc. (Nasdaq: ROST) today reported that earnings per share for the 13 weeks ended October 28, 2006 rose 24% to $.31, from $.25 for the 13 weeks ended October 29, 2005. Net earnings for the fiscal 2006 third quarter were $43.9 million, compared to $36.3 million for the third quarter of 2005. The current year third quarter results include pre-tax stock option related expenses of $3.2 million, or about $.01 per share, recognized pursuant to FAS No. 123(R), Share-Based Payment. Third quarter earnings per share before these non-cash charges grew 32% over the prior year period. Fiscal 2006 third quarter sales rose 10% to $1.362 billion, from $1.237 billion for the quarter ended October 29, 2005. Same store sales for the period increased 4% on top of a strong 9% gain in the prior year comparable quarter.
For the nine months ended October 28, 2006, earnings per share grew 20% to $1.04 from $.87 for the nine months ended October 29, 2005. Net earnings for the fiscal 2006 year-to-date period were $148.5 million, compared to $128.7 million for the same period in the prior year. The fiscal 2006 year-to-date results include pre-tax stock option related expenses of $10.0 million, or about $.04 per share, recognized pursuant to FAS No. 123(R), Share-Based Payment. Before these non-cash charges, earnings per share for the first nine months of 2006 grew 24% over the prior year. Sales for the first nine months rose 12% to $3.962 billion, with same store sales up 5% on top of a 6% increase in the prior year comparable period.
Michael Balmuth, Vice Chairman, President and Chief Executive Officer, commented, Third quarter earnings were better than planned, benefiting from healthy sales trends and a measurable improvement in operating margin. Regionally, the strongest sales performance during the quarter was in the Southwest and Texas, while Home and Shoes remained the top-performing merchandise categories. Before approximately 25 basis points in stock option-related costs, earnings before interest and taxes increased about 65 basis points during the quarter. Improvements over the prior year period in shrink-related expenses and selling, general and administrative costs were partially offset by higher supply chain and incentive plan costs along with slight increases in markdown and occupancy expenses. Better-than-plan shrink results from our recent annual physical inventory of our merchandise contributed about $.02 to our improved earnings per share during the quarter.
Our balance sheet and cash flows as we ended the third quarter remain solid and healthy, and we continue to return capital to stockholders through our stock repurchase and dividend programs. During the first nine months of 2006, we repurchased 5.4 million shares of common stock for an aggregate of $147.7 million as part of the two-year $400 million program authorized by our Board of Directors in the fourth quarter of 2005. We ended the third quarter with 139.9 million shares of common stock issued and outstanding. Approximately $252.3 million remains available under the current stock repurchase authorization, which we expect to complete by the end of fiscal 2007.
The Company will provide additional details concerning its third quarter results and business outlook on a conference call to be held on Tuesday, November 14, 2006 at 12:00 noon Eastern time. Participants may listen to a real time audio webcast of the conference call by visiting the Companys website located at www.rossstores.com. A recorded version of the call will also be available until the end of the fourth quarter at the website address and via a telephone recording through November 21, 2006 at 402-220-5900, PIN #2342.
Forward-Looking Statements: This press release, the conference call recording and other material on the Companys website contain forward-looking statements that are subject to risks and uncertainties which could cause the Companys actual results to differ materially from managements current expectations. The words plan, expect, anticipate, estimate, believe, forecast, projected, guidance, looking ahead and similar expressions identify forward-looking statements. Risk factors for Ross Stores and dds DISCOUNTS® include, without limitation, the Companys ability to convert certain Albertsons real estate sites to the Ross and dds DISCOUNTS formats in a timely and cost effective manner and on acceptable terms, and the ability to achieve targeted levels of sales, profits and cash flows from these acquired store locations;the Companys ability to effectively operate its various supply chain, core merchandising and other information systems; its ability to improve its micro-merchandising capabilities through the implementation of new processes and systems enhancements; achieving and maintaining targeted levels of productivity and efficiency in its distribution centers; potential pressure on freight costs from higher-than-expected fuel surcharges; obtaining acceptable new store locations; competitive pressures in the apparel industry; changes in the level of consumer spending on or preferences for apparel or home-related merchandise, including the potential impact from higher gas prices on consumer spending; changes in geopolitical and general economic conditions; unseasonable weather trends; disruptions in supply chain; lower than planned gross margin, including higher than planned markdowns and higher than expected inventory shortage; greater than planned operating costs; the Companys ability to continue to purchase attractive brand-name merchandise at desirable discounts; the Companys ability to identify and successfully enter new geographic markets; and the Companys ability to attract and retain personnel with the retail talent necessary to execute its strategies. Other risk factors are detailed in the Companys SEC filings including, without limitation, the Form 10-K for fiscal 2005 and the Form 10-Qs and 8-Ks for fiscal 2006. 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 the Companys outlook at any other point in time. The Company does not undertake to update or revise these forward-looking statements.
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Ross Stores, Inc., a Fortune 500 and Nasdaq 100 (ROST) company headquartered in Pleasanton, California, is the nations second largest off-price company with fiscal 2005 revenues of $4.9 billion. As of October 28, 2006, the Company operated 772 Ross stores and 26 dds DISCOUNTS locations, compared to 715 Ross stores and 20 dds DISCOUNTS locations at the end of the same period last year. Ross Stores offers first-quality, in-season, name brand and designer apparel, accessories, footwear and home fashions for the entire family at everyday savings of 20 to 60 percent off department and specialty store regular prices. dds DISCOUNTS features a more moderately-priced assortment of first-quality, in-season, name brand apparel, accessories, footwear and home fashions for the entire family at everyday savings of 20 to 70 percent off moderate department and discount store regular prices. Additional information is available at www.rossstores.com.
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