This excerpt taken from the ROST 8-K filed Aug 17, 2005.
ROSS STORES REPORTS SECOND QUARTER EARNINGS
Pleasanton, California, August 17, 2005 -- Ross Stores, Inc. (ROST) today reported earnings per share for the 13 weeks ended July 30, 2005 of $.29, compared to $.21 as restated for the 13 weeks ended July 31, 2004. Net earnings for the second quarter ended July 30, 2005 were $42.3 million, compared to $32.2 million as restated for the 13 weeks ended July 31, 2004. Earnings results for the quarter ended July 31, 2004 included a non-cash, after-tax charge of $11.0 million, or $.07 per share, related to the write-down of the Companys former corporate headquarters and distribution center in Newark, California. Current year second quarter sales rose 16% to $1.172 billion, from $1.009 billion for the quarter ended July 31, 2004. Comparable store sales for the period increased 7% over the prior year.
For the six months ended July 30, 2005, earnings per share totaled $.62, compared to $.53 as restated for the six months ended July 31, 2004. Net earnings for the six months ended July 30, 2005 were $92.3 million, compared to $80.4 million as restated for the same period in the prior year. Again, results for the first six months of 2004 included the charge relating to the former headquarters and distribution center. Sales for the first six months of 2005 rose 15% to $2.296 billion, with same store sales up 5% over the prior year period.
Michael Balmuth, Vice Chairman, President and Chief Executive Officer, commented, Sales trends improved during the quarter, led by strength in Juniors and Shoes, which we believe bodes well for our back-to-school business. At the same time, operating margin continued to be affected by higher-than-expected markdowns combined with an increase in distribution center costs as a percent of sales. While partially offset by leverage on occupancy and other expenses from the 7% gain in same store sales, these factors resulted in an approximate 120 basis point decline in operating margin for the second quarter of 2005, excluding the prior year impact of the aforementioned write-down.
Markdowns year-to-date have consistently been higher than planned. Although residual inventory issues from 2004 and modest volatility around actual-versus-plan sales had an impact on markdown activities, we believe that the internal learning curve related to numerous new system processes, procedures and information flow also has contributed to higher markdown levels. We believe we have addressed most of these transitional issues and that their overall impact on margins should diminish going forward. Nevertheless, as previously reported, higher-than-expected clearance balances at the end of the second quarter are expected to pressure both third quarter gross margin and earnings per share, said Mr. Balmuth.
The Company now projects the following same store sales and earnings per share ranges for the balance of fiscal 2005:
Mr. Balmuth concluded, Solid cash flows year-to-date continue to provide the resources to fund capital investments in new store growth and infrastructure, as well as the Companys stock repurchase and dividend programs. During the first six months of 2005, we repurchased 3.2 million shares of common stock for an aggregate of $89.0 million and ended the quarter with 146.2 million shares of common stock outstanding. Approximately $86 million remains available under the current stock repurchase authorization, which we expect to complete by the end of fiscal 2005.
The Company will provide additional details concerning its second quarter results, projected second half guidance and its longer-term business outlook on a conference call to be held on Wednesday, August 17, 2005 at 11:00 a.m. 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 at least the end of the month at the website address and via a telephone recording through August 24, 2005 at 402-220-5900, PIN #2342.
Forward-Looking Statements: This press release and the conference call recording and transcript on the Companys website contain forward-looking statements regarding planned new store growth and expected sales and earnings levels and forward-looking statements concerning the Companys distribution centers and information systems, all of which are subject to risks and uncertainties that 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 effectively operate and integrate various new supply chain and core merchandising systems, including generation
of all necessary information in a timely and cost effective manner; achieving and maintaining targeted levels of productivity and efficiency in its distribution centers; 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; changes in geopolitical and general economic conditions; unseasonable weather trends; disruptions in supply chain; lower than planned gross margin and greater than planned operating costs. Other risk factors are detailed in the Companys Form 10-K for fiscal 2004. 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 2004 revenues of $4.2 billion. As of July 30, 2005, the Company operated 682 Ross stores and 13 dds DISCOUNTS® stores, compared to 616 Ross 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 on the Companys website at www.rossstores.com.
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