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Press release from PR Newswire

Ross Stores Reports Strong First Quarter Earnings, Raises Fiscal Year 2011 Guidance

Thursday, May 19, 2011

Ross Stores Reports Strong First Quarter Earnings, Raises Fiscal Year 2011 Guidance08:30 EDT Thursday, May 19, 2011PLEASANTON, Calif., May 19, 2011 /PRNewswire/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for the 13 weeks ended April 30, 2011 of $1.48, up from $1.16 for the 13 weeks ended May 1, 2010.  These results represent a robust 28% increase on top of an exceptional 61% gain for the same period last year.  Net earnings for the 2011 first quarter grew to $173.0 million, up 22% from $142.3 million in the prior year.  Sales for the quarter ended April 30, 2011 increased 7% to $2.075 billion, with comparable store sales up 3% on top of an outstanding 10% gain in 2010.Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, "We are pleased to report that both sales and earnings in the first quarter were better than expected, with solid gains on top of very tough comparisons in the prior year.  These results were mainly driven by our ongoing ability to deliver a wide array of compelling name-brand bargains to today's value-focused customers, while operating our business on leaner in-store inventories."  Mr. Balmuth continued, "Operating margin for the quarter grew about 160 basis points to a record 13.7%.  The largest driver of this increase was a 130 basis point improvement in gross margin, which benefited mainly from higher merchandise gross margin and lower occupancy and distribution expenses as a percent of sales.  Selling, general and administrative costs as a percent of sales declined by about 30 basis points, primarily due to decreases in store operating costs and general and administrative expenses as a percent of sales." Discussing the Company's financial condition, Mr. Balmuth noted, "Our balance sheet and cash flows remain healthy, and we continue to enhance stockholder returns through our stock repurchase and dividend programs.  During the first three months of fiscal 2011, we repurchased 1.6 million shares of common stock for an aggregate purchase price of $112 million.  We remain on track to complete by the end of fiscal 2011 approximately $450 million of our current two-year $900 million stock repurchase authorization."   Looking ahead, Mr. Balmuth said, "For the second quarter ending July 30, 2011, we are currently forecasting same store sales to increase 2% to 3% and earnings per share of $1.15 to $1.20, up from last year's $1.07.  This represents 7% to 12% projected growth on top of 30% and 52% increases for the second quarters of 2010 and 2009, respectively. In addition, we are raising our earnings per share guidance for the 2011 fiscal year ending January 28, 2012 to $5.16 to $5.31, above our initial guidance of $4.90 to $5.10.  This updated range represents projected growth of 11% to 15% over earnings per share of $4.63 in fiscal 2010."The Company will provide additional details about its first quarter results and management's outlook for the second quarter on a conference call to be held on Thursday, May 19, 2011 at 11:00 a.m. Eastern time.  Participants may listen to a real time audio webcast of the conference call by visiting the Investors section of the Company's website located at www.rossstores.com.  A recorded version of the call will also be available at the website address, and via a telephone recording through 8:00 p.m. Eastern time on Thursday, May 26, 2011 at 706-645-9291, ID # 66857586.Forward-Looking Statements:  This press release and the conference call comments on our corporate website contain forward-looking statements regarding expected sales, earnings levels and other financial results in future periods that 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," "looking ahead" and similar expressions identify forward-looking statements. Risk factors for Ross Dress for Less® ("Ross") and dd's DISCOUNTS® include without limitation, competitive pressures in the apparel or home-related merchandise industry; changes in the level of consumer spending on or preferences for apparel or home-related merchandise; the impact from the macro-economic environment and financial and credit markets including but not limited to interest rates, recession, inflation, deflation, energy costs, tax rates and policy, unemployment trends, and fluctuating commodity costs; changes in geopolitical 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; our ability to continue to purchase attractive brand-name merchandise at desirable discounts; our ability to attract and retain personnel with the retail talent necessary to execute our strategies; our ability to effectively operate our various supply chain, core merchandising and other information systems; our ability to improve our merchandising capabilities through the implementation of new processes and systems enhancements; achieving and maintaining targeted levels of productivity and efficiency in our distribution centers; and obtaining acceptable new store locations. Other risk factors are detailed in our SEC filings including without limitation, the Form 10-K for fiscal 2010 and Form 8-Ks for fiscal 2011.  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 our outlook at any other point in time.  We do not undertake to update or revise these forward-looking statements.Ross Stores, Inc., an S&P 500, Fortune 500 and Nasdaq 100 (ROST) company headquartered in Pleasanton, California, is the nation's second largest off-price retailer with fiscal 2010 revenues of $7.9 billion.  As of April 30, 2011 the Company operated 998 Ross Dress for Less® ("Ross") stores and 70 dd's DISCOUNTS® locations, compared to 967 Ross and 54 dd's DISCOUNTS locations at the end of the same period last year.  Ross 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.  dd's 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. Ross Stores, Inc.Condensed Consolidated Statements of EarningsThree Months Ended April 30,May 1, ($000, except stores and per share data, unaudited)20112010Sales$2,074,576$1,934,778Costs and ExpensesCosts of goods sold1,481,2061,406,082Selling, general and administrative309,160294,472Interest expense, net2,4952,388Total costs and expenses1,792,8611,702,942Earnings before taxes281,715231,836Provision for taxes on earnings108,74289,489Net earnings$   172,973$   142,347Earnings per shareBasic$         1.51$         1.19Diluted$         1.48$         1.16Weighted average shares outstanding (000)Basic114,764119,829Diluted116,773122,332Dividends Cash dividends declared per share$             -$             -Stores open at end of period1,0681,021Ross Stores, Inc.Condensed Consolidated Balance SheetsApril 30,May 1,($000, unaudited)20112010AssetsCurrent AssetsCash and cash equivalents$   671,005$   823,652Short-term investments3,2751,941Accounts receivable61,68354,268Merchandise inventory1,172,716908,065Prepaid expenses and other72,90067,895Current deferred income taxes, net15,6623,923Total current assets1,997,2411,859,744Property and equipment, net1,005,674933,654Long-term investments12,19115,857Other long-term assets86,88873,352Total assets$3,101,994$2,882,607Liabilities and Stockholders? EquityCurrent LiabilitiesAccounts payable    $   742,600$   748,779Accrued expenses and other265,586231,927Accrued payroll and benefits141,268148,913Income taxes payable89,34099,932Total current liabilities1,238,7941,229,551Long-term debt150,000150,000Other long-term liabilities200,575185,375Long-term deferred income taxes, net106,51988,328Commitments and contingenciesStockholders? Equity1,406,1061,229,353Total liabilities and stockholders? equity$3,101,994$2,882,607Ross Stores, Inc.Condensed Consolidated Statements of Cash FlowsThree Months EndedApril 30,May 1, ($000, unaudited)20112010Cash Flows From Operating ActivitiesNet earnings$ 172,973$ 142,347Adjustments to reconcile net earnings to net cashprovided by operating activities:Depreciation and amortization39,93439,844Stock-based compensation9,8948,910Deferred income taxes9,657(14,772)Tax benefit from equity issuance10,0216,810Excess tax benefit from stock-based compensation(9,727)(6,482)Change in assets and liabilities:Merchandise inventory(85,799)(35,567)Other current assets(25,392)(19,311)Accounts payable1,120110,149Other current liabilities (80,429)(43,557)Other long-term, net(1,201)810Net cash provided by operating activities41,051189,181Cash Flows From Investing ActivitiesAdditions to property and equipment(70,096)(35,519)Proceeds from investments1,814848Net cash used in investing activities(68,282)(34,671)Cash Flows From Financing ActivitiesExcess tax benefit from stock-based compensation9,7276,482Proceeds from issuance of common stock related to stock plans5,82715,004Treasury stock purchased(12,837)(6,776)Repurchase of common stock(112,500)(94,298)Dividends paid(25,905)(19,613)Net cash used in financing activities(135,688)(99,201)Net (decrease) increase in cash and cash equivalents(162,919)55,309Cash and cash equivalents:Beginning of period833,924768,343End of period$ 671,005$ 823,652Supplemental Cash Flow DisclosuresInterest paid$             -$             -Income taxes paid$   54,705$   47,250Non-Cash Investing Activities(Decrease) increase in fair value of investment securities$           (4)$          44SOURCE Ross Stores, Inc.For further information: John G. Call, Senior Vice President, Chief Financial Officer, +1-925-965-4315, or Bobbi Chaville, Senior Director, Investor Relations, +1-925-965-4289, bobbi.chaville@ros.com