This excerpt taken from the ROST 8-K filed Aug 16, 2006.
ROSS STORES REPORTS SECOND QUARTER EARNINGS
Pleasanton, California, August 16, 2006 -- Ross Stores, Inc. (ROST) today reported earnings per share for the 13 weeks ended July 29, 2006 of $.32 and net earnings for the period of $45.4 million. These results are after $3.3 million, or an equivalent of about $.01 per share, in stock option related expenses recognized pursuant to FAS No. 123(R), Share-Based Payment. For the 13 weeks ended July 30, 2005, net earnings totaled $42.3 million, and earnings per share were $.29. Fiscal 2006 second quarter sales increased 12% to $1.308 billion, with comparable store sales for the period up 4% on top of a 7% increase in the prior year.
For the six months ended July 29, 2006, earnings per share were $.73 and net earnings totaled $104.6 million. These results are after $6.8 million, or an equivalent of about $.03 per share, in stock option related expenses recognized pursuant to FAS No. 123(R), Share-Based Payment. For the six months ended July 30, 2005, net earnings totaled $92.3 million, and earnings per share were $.62. Sales for the first six months of 2006 increased 13% to $2.600 billion, with comparable store sales for the period up 5% on top of a 5% gain in the prior year.
Michael Balmuth, Vice Chairman, President and Chief Executive Officer, commented, Second quarter sales and earnings were at the high end of our initial forecast for the period, benefiting from broadbased geographic and merchandise trends. Operating margin, before the effect of stock option related expenses was relatively flat to the prior year. As a percent of sales, improvements in distribution costs and merchandise margin were offset by higher shrink accruals, freight, store and occupancy expenses.
Mr. Balmuth continued, Our balance sheet and cash flows as we ended the first half of the year remain strong and healthy. We continue to return capital to stockholders through our stock repurchase and dividend programs. During the first six months of 2006, we repurchased 3.6 million shares of common stock for an aggregate of $99 million as part of the two-year $400 million program authorized by our Board of Directors in the fourth quarter of 2005. Approximately $301 million remains available under the current stock repurchase authorization, which we expect to complete by the end of fiscal 2007.
On a more current note, Mr. Balmuth said, Same store sales for the first two weeks of August were below plan at up 2% from the prior year. In addition, we are entering the fall season with residual inventory and clearance levels that are expected to pressure gross margin during the third quarter. As a result, we are adopting a more conservative outlook for the second half of the year.
The Company now projects the following same store sales and earnings per share ranges for the balance of fiscal 2006:
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 16, 2006 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 23, 2006 at 402-220-5900, PIN #2342.
Forward-Looking Statements: This press release and the recorded comments and transcript on the Companys website contain forward-looking statements regarding expected sales and earnings levels, growth plans and productivity initiatives 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 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 July 29, 2006, the Company operated 744 Ross stores and 26 dds DISCOUNTS locations, compared to 682 Ross stores and 13 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 on the Companys website at www.rossstores.com.
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