Ross Stores Reports Results for Fourth Quarter and Fiscal 2023
Ross Stores, Inc. (ROST) reported strong fourth-quarter and fiscal year 2023 results, with earnings per share rising to $1.82 for the quarter and $5.56 for the year. Net income increased to $610 million for the quarter and $1.9 billion for the year. The company also announced a new two-year $2.1 billion stock repurchase program and a 10% increase in the quarterly cash dividend. Fiscal 2024 guidance projects earnings per share of $5.64 to $5.89 for the year.
Ross Stores, Inc.'s announcement of increased earnings per share (EPS) and net income, alongside robust sales growth, indicates a strong performance in the retail sector. The significant rise from $1.31 to $1.82 EPS for the quarter and a 5% increase in comparable store sales for the fiscal year underscore the company's efficient operations and appeal to consumers. The $308 million sales benefit from the 53rd week provides a one-time boost, but even excluding this, the underlying performance remains solid. The improved operating margin, up by 165 basis points, suggests effective cost management, particularly in the context of lower freight costs.
The new $2.1 billion stock repurchase program and increased quarterly dividend signal the board's confidence in the company's financial health and commitment to shareholder returns. This strategy may also be indicative of the company's assessment that its stock is undervalued or that it is an optimal use of excess cash to deliver shareholder value.
However, the conservative guidance for fiscal 2024, anticipating a 2% to 3% growth in same store sales, reflects cautious optimism amid macroeconomic uncertainties. It's important for investors to monitor how the company navigates inflationary pressures and consumer spending patterns, especially given their target demographic's sensitivity to economic fluctuations.
Ross Stores' performance can be attributed to their 'treasure hunt' retail model, which resonates well with cost-conscious consumers looking for quality branded items at discounted prices. This model has proven to be particularly effective during economic downturns or periods of weak consumer confidence, as it attracts bargain hunters and value-focused shoppers.
The company's ability to deliver an appealing assortment of products is crucial for its continued market share growth. By maintaining this strategy, Ross Stores positions itself well against both traditional and online competitors, leveraging the persistent consumer demand for value deals.
The retail landscape is increasingly competitive and Ross Stores' focus on enhancing customer experience and value proposition is vital. Their performance relative to other discount retailers will be a key indicator of their ability to sustain growth and market share gains in the long term.
The conservative guidance for the coming fiscal year, despite strong past performance, suggests that Ross Stores is aware of the broader economic headwinds that could impact discretionary consumer spending. While the company has fared well, the mention of ongoing uncertainty in the macroeconomic and geopolitical environments, as well as continued high costs for housing, food and gasoline, indicates an understanding that the retail sector is not immune to such pressures.
Consumer spending, particularly among Ross Stores' core demographic of low-to-moderate income customers, is highly sensitive to economic conditions. Inflationary pressures can quickly erode disposable income, leading to reduced spending on non-essential goods. The company's strategy to take a conservative approach to forecasting may be prudent in preparing for potential downturns or shifts in consumer behavior.
Analysis of the broader economic trends and their potential effects on the retail sector will be essential in evaluating the resilience of Ross Stores' business model in the face of these challenges. Monitoring inflation trends, consumer confidence indices and employment data will provide further context to the company's financial outlook and strategic decisions.
03/05/2024 - 04:01 PM
Announces New Two-year Stock Repurchase Authorization and Raises Quarterly Cash Dividend
Provides First Quarter and Fiscal 2024 Guidance
DUBLIN, Calif. --(BUSINESS WIRE)--
Ross Stores, Inc. (NASDAQ: ROST) today reported earnings per share for the 14 weeks ended February 3, 2024 of $1.82 , up from $1.31 per share for the 13 weeks ended January 28, 2023. Net income for the period rose to $610 million versus $447 million last year. Sales for the 14 weeks ended February 3, 2024 grew to $6.0 billion , with comparable store sales for the 13 weeks ended January 27, 2024 up a robust 7% over the same period last year.
Fiscal 2023 earnings per share for the 53 weeks ended February 3, 2024 grew to $5.56 , up from $4.38 in the 52-week fiscal 2022 year ended January 28, 2023. Net earnings for fiscal 2023 were $1.9 billion on sales of $20.4 billion , up from net earnings of $1.5 billion in fiscal 2022 on sales of $18.7 billion . Comparable store sales for the 52 weeks ended January 27, 2024 grew a solid 5% .
The sales results for both the 2023 fourth quarter and fiscal year included a $308 million benefit from the 53rd week. Earnings per share for both periods also benefited from the extra week by approximately $0.20 per share.
Barbara Rentler, Chief Executive Officer, commented, “We are pleased with our fourth quarter sales and earnings results that were well ahead of our expectations. Our above-plan sales were driven by customers’ positive response to our improved assortments of quality branded bargains throughout our stores.”
Ms. Rentler continued, “Fourth quarter operating margin grew 165 basis points to 12.4% , up from 10.7% in the prior year. This improvement was mainly due to the strong gains in same store sales and lower freight costs that were partially offset by higher incentives. The 53rd week also benefited operating margin by 80 basis points."
Board Approves New Two-Year Stock Repurchase Authorization and Increase in Quarterly Dividend
During the recently completed fourth quarter, 1.9 million shares were repurchased for a total price of $247 million . For fiscal 2023, a total of 8.2 million shares of common stock were repurchased for an aggregate purchase price of $950 million , completing the two-year stock repurchase program as planned.
The Company’s Board of Directors recently approved a new two-year $2.1 billion stock repurchase authorization for fiscal 2024 and 2025. This new program represents an 11% increase over the recently completed repurchase of $1.9 billion of common stock during 2022 and 2023 combined. The Board also authorized a 10% increase in the Company’s quarterly cash dividend to $0.36 75 per share. This higher quarterly dividend amount is payable on March 29, 2024 to stockholders of record as of March 15, 2024.
Ms. Rentler noted, “The increases to our stock repurchase and dividend programs reflect our continued commitment to enhancing stockholder value and returns given the strength of our balance sheet and our ongoing ability to generate significant amounts of cash after funding growth and other capital needs of the business.”
Fiscal 2024 Guidance
Looking ahead, Ms. Rentler said, “While we are encouraged by the sustained sales momentum that began in the second quarter of 2023 and continued through the holiday season, there remains ongoing uncertainty in the macroeconomic and geopolitical environments. In addition, while inflation has moderated, housing, food, and gasoline costs remain elevated and continue to pressure our low-to-moderate income customers’ discretionary spend. As a result, while we hope to do better, we believe it is prudent to continue to take a conservative approach to forecasting our business in 2024.”
For the 52 weeks ending February 1, 2025, the Company is planning same store sales to grow 2% to 3% on top of a solid 5% gain in 2023. Based on these assumptions, fiscal 2024 earnings per share are projected to be $5.64 to $5.89 compared to $5.56 for the fiscal year ended February 3, 2024. Again, last year’s results included an estimated per share benefit of $0.20 from the 53rd week.
For the 13 weeks ending May 4, 2024, comparable store sales are forecast to be up 2% to 3% with earnings per share projected to be $1.29 to $1.35 , up from $1.09 in the first quarter ended April 29, 2023.
Ms. Rentler concluded, “As we move through the coming year, we remain focused on delivering a wide assortment of quality branded bargains for our customers. We believe this will be the most important driver of our ability to gain market share over both the short and long term.”
The Company will host a conference call on Tuesday, March 5, 2024 at 4:15 p.m. Eastern time to provide additional details concerning its fourth quarter and fiscal year 2023 results, and management’s outlook for fiscal 2024. 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 #13744604 until 8:00 p.m. Eastern time on March 12, 2024, as well as on the Company’s website.
Forward-Looking Statements: This press release and the related conference call remarks contain forward-looking statements regarding, without limitation, projected sales, costs, and earnings, planned new store growth, capital expenditures, 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 and operations, and they 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, uncertainties arising from the macroeconomic environment, including inflation, high interest rates, housing costs, energy and fuel costs, financial and credit market conditions, recession concerns, geopolitical conditions (including the current Russia -Ukraine and Middle East conflicts), public health and public safety issues, that affect our costs, consumer confidence, and consumer disposable income and shopping behavior; 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 or extreme temperatures 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 disrupt our operations, and result in theft or unauthorized disclosure of our confidential and valuable business information or 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; a public health or public safety crisis, demonstrations, or a natural or man-made disaster in a region where we have a concentration of stores, offices, or a distribution center, that could harm our business; and 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 10-Qs and 8-Ks on file with the SEC. The factors underlying our forecasts and plans 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.
About Ross Stores, Inc.
Ross Stores, Inc. is an S&P 500, Fortune 500, and Nasdaq 100 (ROST) company headquartered in Dublin, California , with fiscal 2023 revenues of $20.4 billion . Currently, the Company operates Ross Dress for Less® (“Ross”), the largest off-price apparel and home fashion chain in the United States with 1,764 locations in 43 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 345 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
Twelve Months Ended
($000 , except stores and per share data, unaudited)
February 3, 2024
January 28, 2023
February 3, 2024
January 28, 2023
Sales
$
6,022,501
$
5,214,231
$
20,376,941
$
18,695,829
Costs and Expenses
Cost of goods sold
4,375,360
3,926,203
14,801,601
13,946,230
Selling, general and administrative
903,087
729,342
3,267,677
2,759,268
Interest (income) expense, net
(52,188
)
(22,719
)
(164,118
)
2,842
Total costs and expenses
5,226,259
4,632,826
17,905,160
16,708,340
Earnings before taxes
796,242
581,405
2,471,781
1,987,489
Provision for taxes on earnings
186,559
134,362
597,261
475,448
Net earnings
$
609,683
$
447,043
$
1,874,520
$
1,512,041
Earnings per share
Basic
$
1.83
$
1.32
$
5.59
$
4.40
Diluted
$
1.82
$
1.31
$
5.56
$
4.38
Weighted-average shares outstanding (000)
Basic
332,399
339,752
335,187
343,452
Diluted
335,018
342,045
337,433
345,222
Store count at end of period
2,109
2,015
2,109
2,015
Ross Stores, Inc.
Condensed Consolidated Balance Sheets
($000 , unaudited)
February 3, 2024
January 28, 2023
Assets
Current Assets
Cash and cash equivalents
$
4,872,446
$
4,551,876
Accounts receivable
130,766
145,694
Merchandise inventory
2,192,220
2,023,495
Prepaid expenses and other
202,706
183,654
Total current assets
7,398,138
6,904,719
Property and equipment, net
3,531,901
3,181,527
Operating lease assets
3,126,841
3,098,134
Other long-term assets
243,229
232,083
Total assets
$
14,300,109
$
13,416,463
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable
$
1,955,850
$
2,009,924
Accrued expenses and other
671,867
638,561
Current operating lease liabilities
683,625
655,976
Accrued payroll and benefits
548,371
279,710
Income taxes payable
76,370
52,075
Current portion of long-term debt
249,713
—
Total current liabilities
4,185,796
3,636,246
Long-term debt
2,211,017
2,456,510
Non-current operating lease liabilities
2,603,349
2,593,961
Other long-term liabilities
232,383
224,104
Deferred income taxes
196,238
217,059
Commitments and contingencies
Stockholders’ Equity
4,871,326
4,288,583
Total liabilities and stockholders’ equity
$
14,300,109
$
13,416,463
Ross Stores, Inc.
Condensed Consolidated Statements of Cash Flows
Twelve Months Ended
($000 , unaudited)
February 3, 2024
January 28, 2023
Cash Flows From Operating Activities
Net earnings
$
1,874,520
$
1,512,041
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
419,432
394,655
Stock-based compensation
145,490
121,936
Deferred income taxes
(20,821
)
79,417
Change in assets and liabilities:
Merchandise inventory
(168,725
)
238,778
Other current assets
(2,261
)
(39,487
)
Accounts payable
(65,327
)
(365,262
)
Other current liabilities
296,980
(304,454
)
Income taxes
22,931
33,876
Operating lease assets and liabilities, net
8,330
9,261
Other long-term, net
3,941
8,612
Net cash provided by operating activities
2,514,490
1,689,373
Cash Flows From Investing Activities
Additions to property and equipment
(762,812
)
(654,070
)
Net cash used in investing activities
(762,812
)
(654,070
)
Cash Flows From Financing Activities
Issuance of common stock related to stock plans
24,900
24,702
Treasury stock purchased
(48,568
)
(48,855
)
Repurchase of common stock
(949,996
)
(949,996
)
Dividends paid
(454,814
)
(431,295
)
Net cash used in financing activities
(1,428,478
)
(1,405,444
)
Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents
323,200
(370,141
)
Cash, cash equivalents, and restricted cash and cash equivalents:
Beginning of period
4,612,241
4,982,382
End of period
$
4,935,441
$
4,612,241
Reconciliations:
Cash and cash equivalents
$
4,872,446
$
4,551,876
Restricted cash and cash equivalents included in prepaid expenses and other
14,489
12,677
Restricted cash and cash equivalents included in other long-term assets
48,506
47,688
Total cash, cash equivalents, and restricted cash and cash equivalents:
$
4,935,441
$
4,612,241
Supplemental Cash Flow Disclosures
Interest paid
$
80,316
$
80,316
Income taxes paid
$
595,152
$
362,156
View source version on businesswire.com: https://www.businesswire.com/news/home/20240305014900/en/
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
Source: Ross Stores, Inc.
Ross Stores, Inc. (ROST) reported earnings per share of $1.82 for the 14 weeks ended February 3, 2024.
Ross Stores, Inc. (ROST) repurchased a total of 8.2 million shares of common stock for $950 million in fiscal 2023.
Ross Stores, Inc. (ROST) approved a new two-year $2.1 billion stock repurchase authorization for fiscal 2024 and 2025.
Ross Stores, Inc. (ROST) authorized a 10% increase in the Company’s quarterly cash dividend to $0.3675 per share.
Ross Stores, Inc. (ROST) projects earnings per share of $5.64 to $5.89 for fiscal 2024.