Ross Stores Reports Strong Fourth Quarter and Fiscal Year 2010 Earnings Growth
PLEASANTON, Calif., March 17, 2011 /PRNewswire via COMTEX/ — Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for the 13 weeks ended January 29, 2011 of $1.37, up from $1.16 for the 13 weeks ended January 30, 2010. These results represent a strong 18% increase on top of an outstanding 53% gain for the same period last year. Net earnings for the 2010 fourth quarter grew to a record $161.8 million, up 13% from $142.9 million in the prior year. Sales for the fourth quarter ended January 29, 2011 grew 8% to $2.145 billion, with comparable store sales up 4% on top of a 10% gain in 2009.
For the 52 weeks ended January 29, 2011, earnings per share were $4.63, up a robust 31% on top of a 52% gain in fiscal 2009 when earnings per share totaled $3.54. Net earnings for fiscal 2010 grew 25% to a record $554.8 million, from $442.8 million in the prior year. Sales for fiscal 2010 rose 9% to $7.866 billion, with same store sales up 5% on top of a 6% increase in 2009.
Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, “We are extremely pleased with our robust sales and earnings gains for the fourth quarter and full year that were well ahead of our expectations. This strong growth is even more notable considering that it was on top of very large increases in the prior year. These results demonstrate that we continue to benefit from our favorable position as a value retailer as well as the efficient execution of our off-price strategies.”
Mr. Balmuth continued, “Earnings before interest and taxes for the 2010 fourth quarter grew to 12.3% of sales, up about 60 basis points on top of an exceptional 260 basis point increase in the prior year. Our improved profit margin for the quarter was due to a 105 basis point decline in cost of goods sold partially offset by a 45 basis point increase in selling, general and administrative costs, which primarily reflects a timing difference related to benefit costs versus the prior year. For fiscal 2010, operating margin rose to a record 11.5%, up 140 basis points on top of a 250 basis point gain in 2009. This higher level of profitability was driven by a 130 basis point increase in gross margin combined with a 10 basis point reduction in selling, general and administrative expenses. The key factors contributing to our improved profitability for 2010 were much higher merchandise gross margin, lower shortage costs and leverage on operating expenses from the solid gain in same store sales.”
Healthy operating cash flows continued throughout the year, providing the resources to make capital investments in new store growth and infrastructure as well as to fund the Company’s ongoing stock repurchase and dividend programs. A total of 6.7 million shares of common stock were repurchased during fiscal 2010, for an aggregate purchase price of $375 million. As the Company announced last month, its Board of Directors approved a new repurchase program for up to $900 million of common stock over the next two years through fiscal 2012. This new authorization, which represented approximately 12% of the Company’s total market capitalization at the time of the announcement, replaced the $375 million remaining under the prior two-year $750 million stock repurchase program. The Board also raised the quarterly cash dividend to $.22 per share, up 38% on top of a 45% increase in the prior year.
In commenting on these actions, Mr. Balmuth noted, “Our larger stock repurchase authorization and substantial increase in the quarterly cash dividend demonstrate our confidence in the Company’s ongoing ability to generate significant amounts of excess cash after self funding the capital needs of our business. We have repurchased stock as planned every year since 1993 and have also raised our quarterly cash dividend annually since 1994. This consistent record of returning excess cash reflects our unwavering commitment to enhancing stockholder value and returns.”
Looking ahead, Mr. Balmuth said, “We believe that the current record level of operating profitability we achieved in 2010 is sustainable, mainly due to our ongoing ability to offer customers desirable name-brand bargains while running our business with much lower inventory levels. Reducing the amount of merchandise in our stores has stimulated sales growth by increasing the freshness of our assortments. It has also been a key driver of record levels of merchandise gross margin, as faster inventory turns have resulted in much lower markdowns as a percent of sales. Going forward, we remain confident that our steadfast focus on diligently executing our off-price strategies will enable us to continue to deliver compelling bargains and achieve our targets for both sales and earnings growth in 2011 and beyond.”
The Company will host a conference call on Thursday, March 17, 2011 at 11:00 a.m. Eastern time to provide additional details concerning the fourth quarter and fiscal year 2010 results and management’s outlook and plans for fiscal 2011. A real time audio webcast of the conference call will be available in the Investors section of the Company’s website, located at http://www.rossstores.com/. An audio playback will be available at 706-645-9291, ID #47993893 until 8:00 p.m. Eastern time on March 24, 2011, as well as at the Company’s website address.
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